Exhibit (c)(1)
MERGER AGREEMENT
DATED AS OF JANUARY 6, 1999
AMONG
MARRIOTT INTERNATIONAL, INC.
XXXXXXXXX CORPORATION
AND
MI SUBSIDIARY I, INC.
TABLE OF CONTENTS
Page
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ARTICLE 1 THE OFFER ........................................................1
SECTION 1.1. The Offer .....................................................1
SECTION 1.2. Company Action ................................................2
SECTION 1.3. Boards of Directors and Committees; Section 14(f) .............3
ARTICLE 2 THE MERGER .......................................................4
SECTION 2.1. Issuance of Class A and Class B Preferred Stock ...............4
SECTION 2.2. The Merger ....................................................5
SECTION 2.3. Closing of the Merger .........................................5
SECTION 2.4. Effective Time ................................................5
SECTION 2.5. Effects of the Merger .........................................5
SECTION 2.6. Charter and Bylaws ............................................5
SECTION 2.7. Directors .....................................................5
SECTION 2.8. Officers ......................................................6
SECTION 2.9. Conversion of A Shares ........................................6
SECTION 2.10. Conversion of Class B Shares .................................6
SECTION 2.11. Conversion of Shares .........................................6
SECTION 2.12. Payment of Cash Merger Consideration .........................7
SECTION 2.13 Exchange of Certificates ......................................8
SECTION 2.14. Stock Options ................................................10
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY ....................10
SECTION 3.1. Organization and Qualification; Subsidiaries ..................10
SECTION 3.2. Capitalization of the Company and its Subsidiaries ............11
SECTION 3.3. Authority Relative to this Agreement; Recommendation ..........12
SECTION 3.4. SEC Reports; Financial Statements .............................12
SECTION 3.5. Information Supplied ..........................................13
SECTION 3.6. Consents and Approvals; No Violations .........................13
SECTION 3.7. Compliance with Applicable Law ................................14
SECTION 3.8. No Undisclosed Liabilities; Absence of Changes ................14
SECTION 3.9. Litigation ....................................................15
SECTION 3.10. Year 2000 Compliance .........................................15
SECTION 3.11. Employee Benefit Plans, Labor Matters ........................15
SECTION 3.12. Environmental Laws and Regulations ...........................18
SECTION 3.13. Taxes ........................................................18
SECTION 3.14. Properties ...................................................20
SECTION 3.15. Material Contracts and Commitments ...........................20
SECTION 3.16. Intangible Property ..........................................21
SECTION 3.17. Brokers ......................................................22
SECTION 3.18 CERTAIN BUSINESS PRACTICES ....................................22
SECTION 3.19 EMPLOYEES .....................................................22
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PARENT AND ACQUISITION .........23
SECTION 4.1. Organization ..................................................23
SECTION 4.2. Authority Relative to this Agreement ..........................23
SECTION 4.3. Information Supplied ..........................................23
SECTION 4.4. Financing .....................................................24
SECTION 4.5. Consents and Approvals; No Violations .........................24
SECTION 4.6. SEC Reports; Financial Statements .............................24
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ARTICLE 5 COVENANT .........................................................25
SECTION 5.1. Interim Operations ............................................25
SECTION 5.2. Stockholders' Meeting and Issuance of Parent Shares ...........27
SECTION 5.3. Termination of Registration of Shares .........................27
SECTION 5.4. Other Potential Acquirers .....................................28
SECTION 5.5. Access to Information .........................................29
SECTION 5.6. Further Actions ...............................................29
SECTION 5.7. Public Announcements ..........................................30
SECTION 5.8. Employee Benefit Matters ......................................30
SECTION 5.9. Expenses ......................................................30
SECTION 5.10. Notification of Certain Matters ..............................30
SECTION 5.11. Guarantee of Performance .....................................31
SECTION 5.12. Tax Treatment ................................................31
SECTION 5.13 XXXX-XXXXX-XXXXXX FILING ......................................31
SECTION 5.14 INDEMNIFICATION, DIRECTORS' AND OFFICERS' INSURANCE ...........31
ARTICLE 6 DISSENTING SHARES; EXCHANGE OF SHARES ............................31
SECTION 6.1 Dissenting Shares ..............................................31
ARTICLE 7 CONDITIONS TO THE OFFER ..........................................32
SECTION 7.1. Conditions to the Offer .......................................34
ARTICLE 8 CONDITIONS TO CONSUMMATION OF THE MERGER .........................34
SECTION 8.1. Conditions to Each Party's Obligations to Effect the Merger ...35
ARTICLE 9 TERMINATION; AMENDMENT; WAIVER ...................................35
SECTION 9.1. Termination ...................................................35
SECTION 9.2. Effect of Termination .........................................36
SECTION 9.3. Fees and Expenses .............................................36
SECTION 9.4. Amendment .....................................................36
SECTION 9.5. Extension; Waiver .............................................36
ARTICLE 10 MISCELLANEOUS ...................................................37
SECTION 10.1. Nonsurvival of Representations and Warranties ................37
SECTION 10.2. Entire Agreement; Assignment .................................37
SECTION 10.3. Validity .....................................................37
SECTION 10.4. Notices ......................................................37
SECTION 10.5. Governing Law ................................................38
SECTION 10.6. Descriptive Headings .........................................38
SECTION 10.7. Parties in Interest ..........................................38
SECTION 10.8. Certain Definitions ..........................................38
SECTION 10.9. Personal Liability ...........................................39
SECTION 10.10. Specific Performance ........................................39
SECTION 10.11. Counterparts ................................................39
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TABLE OF DEFINED TERMS
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Cross Reference
Term in Agreement Page
---- ---------------------- ----
401(k) Plan.................................Section 3.11(h) ............17
Acquisition........................................Preamble .............1
affiliate...................................Section 10.8(a) ............39
Blue Sky Laws...................................Section 3.6 ............13
Board..............................................Preamble .............1
business day................................Section 10.8(b) ............39
Cash Merger Consideration...................Section 2.12(b) .............7
Certificates................................Section 2.12(b) .............7
Class A Exchange Ratio.......................Section 2.9(b) .............6
Class A Holder..................................Section 2.1 .............4
Class A Merger Consideration....................Section 2.9 .............6
Class A Share...................................Section 2.1 .............4
Class B Exchange Ratio......................Section 2.10(b) .............6
Class B Holder..................................Section 2.1 .............4
Class B Merger Consideration................Section 2.10(a) .............6
Class B Share...................................Section 2.1 .............4
Closing Time....................................Section 2.3 .............5
Code........................................Section 3.11(c) ............16
Company............................................Preamble .............1
Company Disclosure Schedule..............Article 3 Preamble ............10
Company Employee Plan.......................Section 3.11(a) ............16
Company IRS Letter..........................Section 3.11(h) ............17
Company Option Plan.........................Section 2.14(a) ............10
Company Personnel...........................Section 3.11(a) ............16
Company Real Assets............................Section 3.14 ............20
Company SEC Reports..........................Section 3.4(a) ............13
Company Securities...........................Section 3.2(a) ............12
Company Stock Option........................Section 2.14(a) ............10
Contracts......................................Section 3.15 ............20
Cure Time....................................Section 7.1(c) ............35
DGCL............................................Section 2.4 .............5
Disclosure Statements...........................Section 3.5 ............13
Dissenting Shares...............................Section 6.1 ............32
Effective Time..................................Section 2.4 .............5
Environmental Claim.........................Section 3.12(b) ............19
Environmental Laws..........................Section 3.12(a) ............18
ERISA.......................................Section 3.11(a) ............16
Exchange Act.................................Section 1.1(a) .............1
Exchange Fund...............................Section 2.13(a) .............8
Governmental Entity.............................Section 3.6 ............13
HSR Act.........................................Section 3.6 ............13
Intangible Property.........................Section 3.16(c) ............22
Knowledge.......................................Section 3.7 ............14
Lien.........................................Section 3.2(b) ............12
Liquidated Damages Amount....................Section 9.3(a) ............37
Maryland Department.............................Section 2.4 .............5
Material Adverse Effect......................Section 3.1(b) ............11
Merger Certificate..............................Section 2.4 .............5
Merger..........................................Section 2.2 .............5
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Merger Fund.................................Section 2.12(a) .............7
MGCL.........................................Section 1.2(a) .............3
Millennial Dates...............................Section 3.10 ............15
Minimum Condition............................Section 1.1(a) .............2
Notice of Superior Proposal..................Section 5.4(b) ............28
NYSE.........................................Section 2.9(b) .............6
Offer..............................................Preamble .............1
Offer Documents..............................Section 1.1(b) .............2
Parent Common Stock..........................Section 2.9(a) .............6
Parent.............................................Preamble .............1
Parent Material Adverse Effect...............Section 4.1(b) ............23
Parent SEC Reports...........................Section 4.6(a) ............24
Payment Agent...............................Section 2.13(a) .............7
Permitted Liens................................Section 3.14 ............20
Per Share Amount...................................Preamble .............1
person......................................Section 10.8(d) ............39
Potential Proposal...........................Section 5.4(a) ............28
Preferred Certificate.......................Section 2.13(b) .............8
Preferred Stock Issuance........................Section 2.1 .............4
Proxy Statement.................................Section 3.5 ............13
Schedule 14D-9...............................Section 1.2(b) .............3
SEC..........................................Section 1.1(b) .............2
Securities Act...............................Section 3.4(a) ............13
Shares..........................................Section 2.1 .............4
stock.......................................Section 10.8(c) ............38
Stockholder Agreements..........................Section 2.1 .............4
Stockholders' Meeting.....................Section 5.2(a)(i) ............27
subsidiary..................................Section 10.8(e) ............39
Superior Proposal............................Section 5.4(b) ............29
Surviving Corporation...........................Section 2.2 .............5
Systems........................................Section 3.10 ............15
Tax......................................Section 3.13(a)(i) ............19
Tax Return..............................Section 3.13(a)(ii) ............19
Tender Offer Purchase Time...................Section 1.3(a) .............3
Third Party Acquisition......................Section 5.4(b) ............29
Third Party..................................Section 5.4(b) ............29
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MERGER AGREEMENT
THIS MERGER AGREEMENT (this "Agreement") dated as of January
6, 1999, is among XXXXXXXXX CORPORATION, a Maryland corporation ("Company"),
MARRIOTT INTERNATIONAL, INC., a Delaware corporation ("Parent"), and MI
SUBSIDIARY I, INC., a Delaware corporation and a wholly owned, direct subsidiary
of Parent ("Acquisition").
WHEREAS, the Board of Directors of the Company (the "Board")
has, in light of and subject to the terms and conditions set forth herein, (i)
determined that each of the Offer and the Merger (each as defined below) is
advisable on substantially the terms and conditions set forth herein and is fair
to the stockholders of the Company and in the best interests of such
stockholders and (ii) approved and adopted this Agreement and the transactions
contemplated hereby and resolved to recommend acceptance of the Offer and
approval and adoption by the stockholders of the Company, if necessary, of this
Agreement;
WHEREAS, in furtherance thereof, it is proposed that
Acquisition shall, within five (5) business days after the public announcement
hereof, commence a tender offer (the "Offer") to acquire all of the
publicly-held Shares (defined herein), at a price of $14.00 per Share (such
amount, being hereinafter referred to as the "Per Share Amount"), net to the
seller in cash, less any required withholding of taxes, in accordance with the
terms and subject to the conditions provided herein; and
WHEREAS, in anticipation of consummation of the Merger, it is
proposed that newly-designated Class A Shares and Class B Shares (each as
defined herein) of the Company will be issued to certain stockholders of the
Company in exchange for their Shares;
NOW THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements herein contained and
intending to be legally bound hereby, the Company, Parent and Acquisition hereby
agree as follows:
ARTICLE 1
THE OFFER
SECTION 1.1. The Offer. (a) Provided that this Agreement shall
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not have been terminated in accordance with Section 9.1 and none of the events
or conditions set forth in Article 7 shall have occurred and be existing, as
promptly as practicable, but in no event later than five (5) business days after
the public announcement of the execution hereof by the parties, Acquisition
shall commence (within the meaning of Rule 14d-2 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), the Offer; and Acquisition shall
use reasonable efforts to consummate the Offer, including, without limitation,
engaging an information agent in connection therewith. Acquisition shall accept
for payment Shares which have been validly tendered and not withdrawn pursuant
to the Offer at the earliest time following expiration of the Offer that all
conditions to the Offer shall have been satisfied or waived by Acquisition. The
obligation of Acquisition to accept for payment, purchase and pay for Shares
tendered pursuant to the Offer shall be subject only to the condition that at
least 2,000,000 Shares be validly tendered (the
"Minimum Condition") and the other conditions set forth in Article 7.
Acquisition expressly reserves the right to increase the price per Share payable
in the Offer or to make any other changes in the terms and conditions of the
Offer (provided that, unless previously approved by the Company in writing, no
change may be made which decreases the Per Share Amount, which changes the form
of consideration to be paid in the Offer, which imposes conditions to the Offer
in addition to those set forth in Article 7 or which broadens the scope of such
conditions). It is agreed that the conditions set forth in Article 7 are for the
sole benefit of Acquisition and may be asserted by Acquisition regardless of the
circumstances giving rise to any such condition (including any action or
inaction by Acquisition) or may be waived by Acquisition, in whole or in part at
any time and from time to time, in its sole discretion. The failure by
Acquisition at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right and each such right shall be deemed an ongoing
right which may be asserted at any time and from time to time. Any determination
(which shall be made in good faith) by Acquisition with respect to any of the
foregoing conditions (including, without limitation, the satisfaction of such
conditions) shall be final and binding on the parties. The Per Share Amount
shall be paid net to the seller in cash, less any required withholding of taxes,
upon the terms and subject to such conditions of the Offer. The Company agrees
that no Shares held by the Company or any of its subsidiaries will be tendered
in the Offer. Pursuant to separate agreements, the persons listed in Schedules
2.1(a) and 2.1(b) have agreed not to tender in the Offer the number of Shares
listed in such Schedules without Parent's consent.
(b) As soon as practicable after the date hereof,
Acquisition shall file with the Securities and Exchange Commission (the "SEC") a
Tender Offer Statement on Schedule 14D-1 with respect to the Offer, which shall
include an offer to purchase and form of transmittal letter (together with any
amendments thereof or supplements thereto, collectively the "Offer Documents").
The Offer Documents will comply in all material respects with the provisions of
applicable federal securities laws. The information provided and to be provided
by the Company, Parent a nd Acquisition for use in the Offer Documents shall
not, on the date filed with the SEC and on the date first published or sent or
given to the Company's stockholders, as the case may be, contain any untrue
statement of a material fact nor omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading, provided, however,
that no representation or warranty is made by Parent or Acquisition with respect
to information supplied by the Company or any of its stockholders for inclusion
in the Offer Documents. The Company agrees that information provided by the
Company for inclusion or incorporation in the Offer Documents shall not contain
any untrue statement of a material fact nor omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Parent, Acquisition and the Company each agrees promptly to correct
any information provided by it for use in the Offer Documents if and to the
extent that such information shall have become false or misleading in any
material respect and Acquisition further agrees to take all steps necessary to
cause the Offer Documents as so corrected to be filed with the SEC and to be
disseminated to holders of Shares, in each case as and to the extent required by
applicable federal securities laws.
SECTION 1.2. Company Action. (a) The Company hereby approves
--------------
of and consents to the Offer and the Merger and represents and warrants that the
Board, including all of the independent directors of the Company, at a meeting
duly called and held, has, subject to the terms and conditions set forth herein,
adopted final and binding resolutions, which have not been amended or repealed,
pursuant to which the Board (i) determined that this Agreement and the
transactions contemplated hereby, including the Offer and the Merger, are fair
to, and in the best interests of, the stockholders of the
2
Company, (ii) declared that the Merger is advisable on substantially the terms
and conditions set forth in such resolutions and approved this Agreement and the
transactions contemplated hereby, including the Offer, the Preferred Stock
Issuance and the Merger, in all respects and such approval constitutes approval
of the Offer, this Agreement and the Merger for purposes of Section 3-105 of the
Maryland General Corporation Law (the "MGCL") and similar provisions of any
other similar state statutes that might be deemed applicable to the transactions
contemplated hereby, (iii) took all action that the Board reasonably believes to
be necessary, including but not limited to all actions required to render the
provisions of Title 3, Subtitles 2, 6 and 7 of the MGCL, "Rights of Objecting
Stockholders", "Special Voting Requirements" and "Voting Rights of Certain
Control Shares", respectively, inapplicable to Parent, Acquisition and the Class
A and Class B Holders, and (iv) recommended that the stockholders of the Company
accept the Offer, tender their Shares thereunder to Acquisition and, if required
by law, approve and adopt this Agreement and the Merger; and in addition that
the Company consents to the inclusion of such recommendation and approval in the
Offer Documents.
(b) The Company hereby agrees to file with the SEC as soon
as practicable after the date hereof a Solicitation/Recommendation Statement on
Schedule 14D-9 pertaining to the Offer (together with any amendments thereof or
supplements thereto, the "Schedule 14D-9") containing the recommendation
described in Section 1.2(a) and to promptly mail the Schedule 14D-9 to the
stockholders of the Company. The Company represents and warrants that the
Schedule 14D-9 will comply in all material respects with the provisions of
applicable federal securities laws and, on the date filed with the SEC and on
the date first published, sent or given to the Company's stockholders, shall not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that no representation is made by the Company with respect to
information supplied by Parent or Acquisition in writing for inclusion in the
Schedule 14D-9. The Company, Parent and Acquisition each agrees promptly to
correct any information provided by it for use in the Schedule 14D-9 if and to
the extent that such information shall have become false or misleading in any
material respect and the Company further agrees to take all steps necessary to
cause the Schedule 14D-9 as so corrected to be filed with the SEC and
disseminated to the holders of Shares, in each case as and to the extent
required by applicable federal securities laws.
(c) In connection with the Offer, the Company will promptly
furnish Parent and Acquisition with mailing labels, security position listings
and any available listing or computer files containing the names and addresses
of the record holders of the Shares as of a recent date and shall furnish
Acquisition with such additional information and assistance (including, without
limitation, updated lists of stockholders, mailing labels and lists of
securities positions) as Acquisition or its agents may reasonably request in
communicating the Offer to the record and beneficial holders of Shares. Subject
to the requirements of applicable law, and except for such steps as are
necessary to disseminate the Offer Documents and any other documents necessary
to consummate the Merger, Parent, Acquisition and their affiliates, associates,
agents and advisors shall use the information contained in any such labels,
listings and files only in connection with the Offer and the Merger, and, if
this Agreement shall be terminated, will deliver to the Company all copies of
such information then in their possession.
SECTION 1.3. Boards of Directors and Committees; Section
-------------------------------------------
14(f). (a) Promptly upon the purchase by Acquisition of Shares following the
-----
expiration date (as such date may be extended) of, and pursuant to the Offer
(the "Tender Offer Purchase Time") and from time to time thereafter, and subject
to the last sentence of this
3
Section 1.3(a), Acquisition shall be entitled to designate directors of the
Company constituting a majority of the Board, and the Company shall use its best
efforts to, upon request by Acquisition, promptly, at the Company's election,
either increase the size of the Board (subject to the provisions of Article
Eleventh of the Company's charter) or secure the resignation of such number of
directors as is necessary to enable Acquisition's designees to be elected to the
Board and to cause Acquisition's designees to be so elected and to constitute at
all times after the Tender Offer Purchase Time a majority of the Board. At such
times, and subject to the last sentence of this Section 1.3(a), the Company will
use its best efforts to cause persons designated by Acquisition to constitute
the same percentage as is on the Board of (i) each committee of the Board (other
than any committee of the Board established to take action under this
Agreement), (ii) each board of directors of each subsidiary of the Company and
(iii) each committee of each such board. Notwithstanding the foregoing, the
Company shall use its best efforts to ensure that Xxxx X. Xxxxxxxx, Xxxx X.
Xxxxxx and Xxxxxx X. Xxxxx shall remain members of the Board until the Effective
Time (as defined in Section 2.3 hereof).
(b) The Company's obligation to appoint designees to the
Board shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder. The Company shall promptly take all action required
pursuant to such Section and Rule in order to fulfill its obligations under this
Section 1.3 and shall include in the Schedule 14D-9 such information with
respect to the Company and its officers and directors as is required under such
Section and Rule in order to fulfill its obligations under this Section 1.3.
Acquisition will supply to the Company in writing and be solely responsible for
any information with respect to itself and its nominees, officers, directors and
affiliates required by such Section and Rule.
(c) Following the election or appointment of Acquisition's
designees pursuant to this Section 1.3 and prior to the Effective Time, if there
shall be any directors of the Company who were directors as of the date hereof,
any amendment of this Agreement, any termination of this Agreement by the
Company, any extension by the Company of the time for the performance of any of
the obligations or other acts of Acquisition or Parent or waiver of any of the
Company's rights hereunder, will require the concurrence of a majority of such
directors.
ARTICLE 2
THE MERGER
SECTION 2.1. Issuance of Class A and Class B Preferred Stock.
-----------------------------------------------
Within two days prior to the Closing Time (defined below), the Company will
provide for the issuance ("Preferred Stock Issuance") of (a) shares of a
newly-designated Class A preferred stock, par value $.01 per share (individually
a "Class A Share" and collectively, the "Class A Shares"), to the persons listed
on Schedule 2.1(a) hereto (the "Class A Holders"), on a share-for-share basis in
exchange for a certain number (as set forth in the applicable Stockholder
Agreement by and between Parent and Acquisition, on one hand, and Class A
Holders and the Class B Holders, respectively, on the other hand, dated as of
January 6, 1999, each referred to herein as a "Stockholder Agreement") of the
issued and outstanding shares of common stock, par value $.01 per share, of the
Company (individually a "Share" and collectively, the "Shares"), owned of record
or beneficially by such persons, and (b) shares of a newly-designated Class B
preferred stock, par value $.01 per share (individually a "Class B Share" and
collectively, the "Class B Shares"), to the persons listed on Schedule 2.1(b)
hereto (the "Class B Holders"), on a share-for-share basis in exchange for a
certain number (as set forth in the applicable Stockholder Agreement) of the
issued and outstanding Shares owned of record or beneficially by such
4
persons. The Class A Shares and the Class B Shares shall have no voting rights,
but shall have the same rights to dividends, distributions and other economic
benefits (other than a liquidation preference as to par value) as the Shares.
Except as to the Shares so exchanged by the Class A Holders and the Class B
Holders, all the Shares will remain issued and outstanding. Outstanding but
unexercised options to purchase Shares held by the Class A Holders and the Class
B Holders will be treated in accordance with Section 2.14.
SECTION 2.2. The Merger. At the Effective Time (as defined
----------
below) and upon the terms and subject to the conditions of this Agreement and in
accordance with the MGCL, the Company shall be merged with and into Acquisition
(the "Merger"). Following the Merger, Acquisition shall continue as the
surviving corporation (the "Surviving Corporation") and the separate corporate
existence of the Company shall cease. Parent, as the sole stockholder of
Acquisition, hereby approves this Agreement, the Merger and the other
transactions contemplated hereby.
SECTION 2.3. Closing of the Merger. The closing of the Merger
---------------------
will take place at a time (the "Closing Time") and on a date to be specified by
the parties, which shall be no later than the second business day after
satisfaction of the latest to occur of the conditions set forth in Article 8 at
the offices of Xxxxxx, Xxxx & Xxxxxxxx LLP, 0000 Xxxxxxxxxxx Xxxxxx, X.X.,
Xxxxxxxxxx, X.X. 00000, unless another time, date or place is agreed to in
writing by the parties hereto.
SECTION 2.4. Effective Time. Subject to the terms and
--------------
conditions set forth in this Agreement, Articles of Merger and a Certificate of
Merger or Certificate of Ownership and Merger, if applicable (the foregoing,
collectively, "Merger Certificate") shall be duly executed and acknowledged by
Acquisition and the Company and thereafter delivered at the Closing Time (as
defined in Section 2.3) to the State Department of Assessments and Taxation of
Maryland (the "Maryland Department") and the Secretary of State of the State of
Delaware for filing pursuant to the MGCL and the Delaware General Corporation
Law (the "DGCL"), respectively. The Merger shall become effective at such time
as a properly executed and certified copy of the Merger Certificate is duly
accepted for record (i) by the Maryland Department pursuant to the MGCL, and
(ii) by the Secretary of State of the State of Delaware for filing pursuant to
the DGCL, or such later time as Acquisition and the Company may agree upon and
set forth in the Merger Certificate (not exceeding 30 days after the Merger
Certificate is accepted for record; the time the Merger becomes effective being
referred to herein as the "Effective Time").
SECTION 2.5. Effects of the Merger. The Merger shall have the
---------------------
effects set forth in the MGCL and the DGCL. Without limiting the generality of
the foregoing and subject thereto at the Effective Time, all the properties,
rights, privileges, powers and franchises of the Company and Acquisition shall
vest in the Surviving Corporation and all debts, liabilities and duties of the
Company and Acquisition shall become the debts, liabilities and duties of the
Surviving Corporation.
SECTION 2.6. Charter and Bylaws. The Certificate of
------------------
Incorporation of Acquisition in effect at the Effective Time shall be the
charter of the Surviving Corporation until amended in accordance with applicable
law. The Bylaws of Acquisition in effect at the Effective Time shall be the
Bylaws of the Surviving Corporation until amended in accordance with applicable
law.
SECTION 2.7. Directors. The directors of Acquisition at the
---------
Effective Time shall be the initial directors of the Surviving Corporation, each
to hold office in accordance with the charter and Bylaws of the Surviving
Corporation until the next annual
5
meeting of stockholders and until each such director's successor is duly elected
or appointed and qualified.
SECTION 2.8. Officers. The officers of the Company at the
--------
Effective Time shall be the initial officers of the Surviving Corporation, each
to hold office in accordance with the charter and Bylaws of the Surviving
Corporation until such officer's successor is duly elected or appointed and
qualified.
SECTION 2.9. Conversion of Class A Shares.
----------------------------
(a) At the Effective Time, each Class A Share issued and
outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of Acquisition, the Company or the
holder thereof, be converted into and shall become a number of fully paid and
nonassessable shares of common stock, $.01 par value per share, of Parent
("Parent Common Stock") equal to the Class A Exchange Ratio (as defined below)
(the "Class A Merger Consideration"). Notwithstanding the foregoing if, between
the date of this Agreement and the Effective Time, the outstanding shares of
Parent Common Stock or the Shares shall have been changed into a different
number of shares or a different class by reason of any stock dividend,
subdivision, reclassification, recapitalization, split, combination or exchange
of shares, then the exchange ratio contemplated by the Merger shall be
correspondingly adjusted to reflect such stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares.
(b) The "Class A Exchange Ratio" is 0.4484, which represents
a fraction, the numerator of which is 13 and the denominator of which is the
average of the closing prices for Parent Common Stock as reported on the New
York Stock Exchange (the "NYSE") Composite Transactions reporting system for the
10 full business days prior to the date hereof.
SECTION 2.10. Conversion of Class B Shares.
----------------------------
(a) At the Effective Time, each Class B Share issued and
outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of Acquisition, the Company or the
holder thereof, be converted into and shall become a number of fully paid and
nonassessable shares of Parent Common Stock equal to the Class B Exchange Ratio
(as defined below) (the "Class B Merger Consideration"). Notwithstanding the
foregoing if, between the date of this Agreement and the Effective Time, the
outstanding shares of Parent Common Stock or the Shares shall have been changed
into a different number of shares or a different class by reason of any stock
dividend, subdivision, reclassification, recapitalization, split, combination or
exchange of shares, then the exchange ratio contemplated by the Merger shall be
correspondingly adjusted to reflect such stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares.
(b) The "Class B Exchange Ratio" is 0.4829, which represents
a fraction, the numerator of which is 14 and the denominator of which is the
average of the closing prices for Parent Common Stock as reported on the NYSE
Composite Transactions reporting system for the 10 full business days prior to
the date hereof.
SECTION 2.11. Conversion of Shares.
--------------------
(a) At the Effective Time, each Share issued and outstanding
immediately prior to the Effective Time (other than (i) Shares held by any of
the
6
Company's subsidiaries and (ii) Shares held by Parent, Acquisition or any other
subsidiary of Parent) shall, by virtue of the Merger and without any action on
the part of Acquisition, the Company or the holder thereof, be converted into
and shall become the right to receive the Per Share Amount in cash, without
interest (the "Cash Merger Consideration"). Notwithstanding the foregoing, if
between the date of this Agreement and the Effective Time, the Shares shall have
been changed into a different number of shares or a different class by reason of
any stock dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares, then the Cash Merger Consideration
contemplated by the Merger shall be correspondingly adjusted to reflect such
stock dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares.
(b) At the Effective Time, each Share held by Parent,
Acquisition or any subsidiary of Parent, Acquisition or the Company immediately
prior to the Effective Time shall, by virtue of the Merger and without any
action on the part of Acquisition, the Company or the holder thereof, be
canceled and retired and will cease to exist and no payment shall be made with
respect thereto.
SECTION 2.12. Payment of Cash Merger Consideration.
------------------------------------
(a) As of the Effective Time, Acquisition shall deposit with
such agent or agents as may be appointed by Parent and Acquisition (the "Payment
Agent") for the benefit of the holders of Shares in cash the aggregate amount
necessary to pay the Cash Merger Consideration (such cash is hereinafter
referred to as the "Merger Fund") payable pursuant to Section 2.11 in exchange
for outstanding Shares.
(b) As soon as reasonably practicable after the Effective
Time, the Payment Agent shall mail to each holder of record of a certificate or
certificates which immediately prior to the Effective Time represented
outstanding Shares (the "Certificates") whose shares were converted into the
right to receive the Cash Merger Consideration pursuant to Section 2.11: (i) a
letter of transmittal (which shall specify that delivery shall be effected and
risk of loss and title to the Certificates shall pass only upon delivery of the
Certificates to the Payment Agent and shall be in such form and have such other
provisions as Parent and the Company may reasonably specify) and (ii)
instructions on how to surrender the Certificates in exchange for the Cash
Merger Consideration. Upon surrender to the Payment Agent of a Certificate for
cancellation, together with such letter of transmittal duly executed, the holder
of such Certificate shall be entitled to receive in exchange therefor a check
representing the Cash Merger Consideration which such holder has the right to
receive pursuant to the provisions of this Article 2 and the Certificate so
surrendered shall forthwith be canceled. In the event of a transfer of ownership
of Shares which is not registered in the transfer records of the Company,
payment of the Cash Merger Consideration may be made to a transferee if the
Certificate representing such Shares is presented to the Payment Agent
accompanied by all documents required to evidence and effect such transfer and
by evidence that any applicable stock transfer taxes have been paid. Until
surrendered as contemplated by this Section 2.12, each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the Cash Merger Consideration as contemplated by
this Section 2.12.
(c) In the event that any Certificate shall have been lost,
stolen or destroyed, the Payment Agent shall issue in exchange therefor, upon
the making of an affidavit of that fact by the holder thereof, such Cash Merger
Consideration as may be required pursuant to this Agreement; provided, however,
that Acquisition or its Payment Agent may, in its discretion, require the
delivery of a suitable bond or indemnity.
7
(d) All Cash Merger Consideration paid upon the surrender
for exchange of Shares in accordance with the terms hereof shall be deemed to
have been paid in full satisfaction of all rights pertaining to such Shares;
subject, however, to the Surviving Corporation's obligation to pay any dividends
or make any other distributions with a record date prior to the Effective Time
which may have been declared or made by the Company on such Shares in accordance
with the terms of this Agreement, or prior to the date hereof and which remain
unpaid at the Effective Time, and there shall be no further registration of
transfers on the stock transfer books of the Surviving Corporation of the Shares
which were outstanding immediately prior to the Effective Time. If after the
Effective Time Certificates are presented to the Surviving Corporation for any
reason they shall be canceled and exchanged as provided in this Article 2.
(e) Any portion of the Merger Fund which remains
undistributed to the stockholders of the Company for six months after the
Effective Time shall be delivered to Parent upon demand and any stockholders of
the Company who have not theretofore complied with this Article 2 shall
thereafter look only to Parent for payment of their claim for the Cash Merger
Consideration.
(f) Neither Acquisition nor the Company shall be liable to
any holder of Shares for cash from the Merger Fund delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
SECTION 2.13 Exchange of Certificates.
------------------------
(a) From time to time following the Effective Time, as
required by subsections (b) and (c) below, Parent shall deliver to the Surviving
Corporation for the benefit of the holders of Class A Shares and Class B Shares
for exchange in accordance with this Article 2 through the Surviving
Corporation: (i) certificates representing the appropriate number of shares of
Parent Common Stock and (ii) cash to be paid in lieu of fractional shares of
Parent Common Stock (such shares of Parent Common Stock and such cash are
hereinafter referred to as the "Exchange Fund") issuable pursuant to Sections
2.9 and 2.10 in exchange for outstanding Class A Shares and Class B Shares,
respectively.
(b) As soon as reasonably practicable after the Effective
Time, the Surviving Corporation shall mail to each holder of a certificate or
certificates (each a "Preferred Certificate") which immediately prior to the
Effective Time represented outstanding Class A Shares or Class B Shares whose
shares were converted into the right to receive shares of Parent Common Stock
pursuant to Section 2.9 or 2.10: (i) a letter of transmittal (which shall
specify that delivery shall be effected and risk of loss and title to the
Preferred Certificates shall pass only upon delivery of the Preferred
Certificates to the Surviving Corporation and shall be in such form and have
such other provisions as Parent and the Company may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Preferred Certificates in
exchange for certificates representing shares of Parent Common Stock. Upon
surrender to the Surviving Corporation of a Preferred Certificate for
cancellation, together with such letter of transmittal duly executed, the holder
of such Preferred Certificate shall be entitled to receive in exchange therefor
a certificate representing that number of whole shares of Parent Common Stock
and, if applicable, a check representing the cash consideration to which such
holder may be entitled on account of a fractional share of Parent Common Stock
which such holder has the right to receive pursuant to the provisions of this
Article 2 and the Preferred Certificate so surrendered shall forthwith be
canceled. In the event of a transfer of ownership of Class A or Class B Shares
which are not registered in the transfer records of the Company, a certificate
representing the proper number of shares of Parent Common
8
Stock may be issued to a transferee if the Preferred Certificate representing
such Class A Shares or Class B Shares is presented to the Surviving Corporation
accompanied by all documents required to evidence and effect such transfer and
by evidence that any applicable stock transfer taxes have been paid. Until
surrendered as contemplated by this Section 2.13, each Preferred Certificate
shall be deemed at any time after the Effective Time to represent only the right
to receive upon such surrender the certificate representing shares of Parent
Common Stock and cash in lieu of any fractional shares of Parent Common Stock as
contemplated by this Section 2.13.
(c) No dividends or other distributions declared or made
after the Effective Time with respect to Parent Common Stock with a record date
after the Effective Time shall be paid to the holder of any unsurrendered
Preferred Certificate with respect to the shares of Parent Common Stock
represented thereby and no cash payment in lieu of fractional shares shall be
paid to any such holder pursuant to Section 2.13(f) until the holder of record
of such Preferred Certificate shall surrender such Preferred Certificate.
Subject to the effect of applicable laws, following surrender of any such
Preferred Certificate there shall be paid to the record holder of the
certificates representing whole shares of Parent Common Stock issued in exchange
therefor without interest (i) at the time of such surrender the amount of any
cash payable in lieu of a fractional share of Parent Common Stock to which such
holder is entitled pursuant to Section 2.13(f) and the amount of dividends or
other distributions with a record date after the Effective Time theretofore paid
with respect to such whole shares of Parent Common Stock and (ii) at the
appropriate payment date the amount of dividends or other distributions with a
record date after the Effective Time but prior to surrender and a payment date
subsequent to surrender payable with respect to such whole shares of Parent
Common Stock.
(d) In the event that any Preferred Certificate shall have
been lost, stolen or destroyed, the Surviving Corporation shall issue in
exchange therefor, upon the making of an affidavit of that fact by the holder
thereof, certificates representing such shares of Parent Common Stock and cash
in lieu of fractional shares if any as may be required pursuant to this
Agreement provided, however, that Parent or its Surviving Corporation may, in
its discretion, require the delivery of a suitable bond or indemnity.
(e) All shares of Parent Common Stock issued upon the
surrender for exchange of Preferred Certificates in accordance with the terms
hereof (including any cash paid pursuant to Section 2.13(c) or 2.13(f)) shall be
deemed to have been issued in full satisfaction of all rights pertaining to such
Class A Shares or Class B Shares; subject, however, to the Surviving
Corporation's obligation to pay any dividends or make any other distributions
with a record date prior to the Effective Time which may have been declared or
made by the Company on such Class A Shares or Class B Shares in accordance with
the terms of this Agreement, and which remain unpaid at the Effective Time, and
there shall be no further registration of transfers on the stock transfer books
of the Surviving Corporation of the Class A Shares or Class B Shares which were
outstanding immediately prior to the Effective Time. If after the Effective Time
Preferred Certificates are presented to the Surviving Corporation for any reason
they shall be canceled and exchanged as provided in this Article 2.
(f) No fractions of a share of Parent Common Stock shall be
issued in the Merger but in lieu thereof each holder of Class A Shares or Class
B Shares otherwise entitled to a fraction of a share of Parent Common Stock
shall upon surrender of his or her Preferred Certificate or Preferred
Certificates be entitled to receive an amount of cash (without interest)
determined by multiplying the closing price for Parent Common Stock as reported
on the NYSE Composite Transactions reporting system on the business day five
days prior to the Effective Time by the fractional share interest to which such
holder
9
would otherwise be entitled. The parties acknowledge that payment of the cash
consideration in lieu of issuing fractional shares was not separately bargained
for consideration but merely represents a mechanical rounding off for purposes
of simplifying the corporate and accounting complexities which would otherwise
be caused by the issuance of fractional shares.
(g) Neither Parent nor the Company shall be liable to any
holder of Class A Shares or Class B Shares or Parent Common Stock as the case
may be for such shares (or dividends or distributions with respect thereto) or
cash from the Exchange Fund delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
SECTION 2.14. Stock Options.
-------------
(a) At the Effective Time, each outstanding option to
purchase Shares (a "Company Stock Option" or collectively "Company Stock
Options") issued pursuant to the Company's 1997 Incentive and Stock Option Plan
("Company Option Plan") shall vest in full and the Surviving Corporation shall
pay to the holder of each outstanding Company Stock Option an amount equal to
the excess, if any, of the Per Share Amount over the exercise price per Share of
such Company Stock Option, less the amount of Taxes (defined below) required to
be withheld under Federal, state or local laws and regulations multiplied by the
number of Shares subject to such Company Stock Option. If and to the extent
required by the terms of the Company Option Plan or the terms of any Company
Stock Option granted thereunder, the Company shall cooperate with Parent and
Acquisition in obtaining the consent of each holder of outstanding Company Stock
Options to the foregoing treatment of such Company Stock Options and to take any
other action necessary to effectuate the foregoing provisions. The Surviving
Corporation may require each such holder to execute such a consent, in form and
substance reasonably satisfactory to the Surviving Corporation.
(b) Except as provided herein or as otherwise agreed to by
the parties and to the extent permitted by the Company Option Plan, the Company
Option Plan shall terminate as of the Effective Time and any rights under any
provisions under the Company Option Plan and any awards issued thereunder shall
be canceled as of the Effective Time.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the Disclosure Schedule previously
delivered by the Company to Parent (the "Company Disclosure Schedule"), the
Company hereby represents and warrants to each of Parent and Acquisition, as of
the date hereof and as of the Tender Offer Purchase Time as follows:
SECTION 3.1. Organization and Qualification; Subsidiaries.
--------------------------------------------
(a) Section 3.1 of the Company Disclosure Schedule
identifies each subsidiary of the Company as of the date hereof and its
respective jurisdiction of incorporation or organization, as the case may be.
Each of the Company and each of its subsidiaries is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization as set forth in Section 3.1 of the Company
Disclosure Schedule and has all requisite power and authority to own lease and
operate its properties and to carry on its businesses as now being conducted.
The Company has heretofore provided Acquisition or Parent with access to
accurate and complete copies of
10
the charter and Bylaws (or similar governing documents), as currently in effect,
of the Company and its subsidiaries.
(b) Except as disclosed in Section 3.1(b) of the Company Disclosure
Schedule, each of the Company and 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 or licensing necessary, except in such jurisdictions
where the failure to be so duly qualified or licensed and in good standing would
not have a Material Adverse Effect (as defined below) on the Company. When used
in connection with the Company or its subsidiaries, the term "Material Adverse
Effect" means any change or effect (i) that is materially adverse to the
business, growth over the next four years in "EBITDA" (earnings before interest
expense, income taxes, depreciation and amortization), properties, financial
condition or results of operations of the Company and its subsidiaries, taken as
whole, or (ii) that would materially impair the ability of the Company to
consummate the transactions contemplated hereby.
SECTION 3.2. Capitalization of the Company and its Subsidiaries.
--------------------------------------------------
(a) As of the date hereof and as of the Tender Offer Purchase Time,
the authorized stock of the Company consists of 45,000,000 Shares, of which, as
of September 30, 1998, 8,235,806 Shares were issued and outstanding, and
5,000,000 shares of preferred stock, par value $.01 per share, no shares of
which are outstanding. All of the outstanding Shares have been validly issued
and are fully paid, nonassessable and free of preemptive rights. As of October
31, 1998, approximately 356,500 Shares were reserved for issuance and issuable
upon or otherwise deliverable in connection with the exercise of outstanding
Company Stock Options issued pursuant to the Company Option Plan referred to in
Section 2.14(a). Between September 30, 1998 and the date hereof, no shares of
the Company's stock have been issued other than pursuant to Company Stock
Options, and between October 31, 1998 and the date hereof no stock options have
been granted. Except as set forth above and in Sections 3.2(a) and 3.19 of the
Company Disclosure Schedule, as of the date hereof, there are issued, reserved
for issuance, or outstanding (i) no shares of stock or other voting securities
of the Company, (ii) no securities of the Company or its subsidiaries
convertible into or exchangeable for shares of stock or voting securities of the
Company, (iii) no options or other rights to acquire from the Company or its
subsidiaries and, except as described in the Company SEC Reports (as defined
below), no obligations of the Company or its subsidiaries to issue any stock,
voting securities or securities convertible into or exchangeable for stock or
voting securities of the Company, (iv) no bonds, debentures, notes or other
indebtedness or obligations of the Company or any of its subsidiaries entitling
the holders thereof to have the right to vote (or which are convertible into, or
exercisable or exchangeable for, securities entitling the holders thereof to
have the right to vote) with the stockholders of the Company or any of its
subsidiaries on any matter, and (v) no equity equivalent interests in the
ownership or earnings of the Company or its subsidiaries or other similar rights
(collectively "Company Securities"). As of the date hereof, other than the
provisions of Section 2.1, there are no outstanding obligations of the Company
or its subsidiaries (absolute, contingent or otherwise) to repurchase, redeem or
otherwise acquire any Company Securities. There are no Shares outstanding
subject to rights of first refusal of the Company, nor are there any pre-emptive
rights with respect to any Shares. Other than this Agreement, there are no
stockholder agreements, voting trusts or other agreements or understandings to
which the Company is a party or by which it is bound relating to the voting or
registration of any shares of stock of the Company.
11
(b) Except as disclosed in Section 3.2(b) of the Company Disclosure
Schedule, all of the outstanding stock of the Company's subsidiaries is owned by
the Company, directly or indirectly, free and clear of any Lien (as defined
below) or any other limitation or restriction (including any restriction on the
right to vote or sell the same except as may be provided as a matter of law).
There are no securities of the Company or its subsidiaries convertible into or
exchangeable for, no options or other rights to acquire from the Company or its
subsidiaries and no other contract, understanding, arrangement or obligation
(whether or not contingent) providing for, the issuance or sale, directly or
indirectly, of any stock or other ownership interests in, or any other
securities of any subsidiary of, the Company. There are no outstanding
contractual obligations of the Company or its subsidiaries to repurchase, redeem
or otherwise acquire any outstanding shares of capital stock or other ownership
interests in any subsidiary of the Company. For purposes of this Agreement,
"Lien" means, with respect to any asset (including without limitation any
security), any mortgage, lien, pledge, charge, security interest or encumbrance
of any kind in respect of such asset.
(c) The Shares constitute the only class of equity securities of the
Company or its subsidiaries registered or required to be registered under the
Exchange Act.
SECTION 3.3. Authority Relative to this Agreement; Recommendation.
----------------------------------------------------
The Company has all necessary corporate power and authority to execute
and deliver this Agreement and 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 by the
Board and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby except, if required by law, the approval and adoption of
this Agreement and the Merger by the holders of the outstanding Shares. This
Agreement has been duly and validly executed and delivered by the Company and
constitutes a valid, legal and binding agreement of the Company enforceable
against the Company in accordance with its terms, except as such enforceability
may be limited by any applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally, and except as the availability of equitable remedies may be limited
by the application of general principles of equity (regardless of whether such
equitable principle is applied in a proceeding at law or in equity).
The Board has duly and validly approved, and taken all corporate
actions required to be taken by the Board (including but not limited to all
actions the Board reasonably believes to be required to render the provisions of
Title 3, Subtitles 2, 6 and 7 of the MGCL, "Special Voting Requirements" and
"Voting Rights of Certain Control Shares", respectively, inapplicable to Parent
and Acquisition) for the consummation of, the transactions contemplated hereby,
including the Offer and the acquisition of the Shares pursuant thereto, the
Preferred Stock Issuance and the Merger.
SECTION 3.4. SEC Reports; Financial Statements.
---------------------------------
(a) The Company has filed all required forms, reports and documents
("Company SEC Reports") with the SEC since August 27, 1997, each of which has
complied in all material respects with all applicable requirements of the
Securities Act of 1933, as amended (the "Securities Act"), and the Exchange Act,
each as in effect on the dates such forms, reports and documents were filed.
None of such Company SEC Reports, including, without limitation, any financial
statements or schedules included or
12
incorporated by reference therein, contained when filed any untrue statement of
a material fact or omitted to state a material fact required to be stated or
incorporated by reference therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The audited consolidated financial statements of the Company
included in the Company SEC Reports fairly present in conformity with GAAP
(except as may be indicated in the notes thereto or, in the case of unaudited
consolidated quarterly statements, as permitted by Form 10-Q of the SEC) the
consolidated financial position of the Company and its consolidated subsidiaries
as of the dates thereof and their consolidated results of operations and changes
in financial position for the periods then ended.
(b) The Company has heretofore made available or promptly will make
available to Acquisition or Parent a complete and correct copy of any amendments
or modifications which are required to be filed with the SEC but have not yet
been filed with the SEC to agreements, documents or other instruments which
previously had been filed by the Company with the SEC pursuant to the Exchange
Act.
SECTION 3.5. Information Supplied. None of the information supplied or
--------------------
to be supplied by the Company for inclusion or incorporation by reference in the
Offer Documents, Schedule 14D-9, any other tender offer materials, Schedule 14A
or 14C, or the proxy statement or information statement ("Proxy Statement")
relating to any meeting of the Company's stockholders to be held in connection
with the Merger (all of the foregoing documents, collectively, the "Disclosure
Statements") will, at the date each and any of the Disclosure Statements is
mailed to stockholders of the Company and at the time of the meeting of
stockholders of the Company to be held, if necessary, in connection with the
Merger, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading. The Disclosure Statements will comply as to form in all material
respects with all provisions of applicable law. None of the information supplied
by the Company in writing for inclusion in the Disclosure Statements or provided
by the Company in the Schedule 14D-9 will, at the respective times that any
Disclosure Statement and the Schedule 14D-9 or any amendments thereof or
supplements thereto are filed with the SEC and are first published or sent or
given to holders of Shares, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
SECTION 3.6. Consents and Approvals; No Violations. Except for
-------------------------------------
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Exchange Act, state securities
laws ("Blue Sky Laws"), the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended (the "HSR Act"), and the filing and recordation and acceptance
for record of the Merger Certificate as required by the MGCL and the DGCL,
respectively, no filing with or notice to and no permit, authorization, consent
or approval of any court or tribunal, or administrative governmental or
regulatory body, agency or authority (a "Governmental Entity") is necessary for
the execution and delivery by the Company of this Agreement or the consummation
by the Company of the transactions contemplated hereby, except where the failure
to obtain such permits, authorizations, consents or approvals or to make such
filings or give such notice would not have a Material Adverse Effect. Neither
the execution, delivery and performance of this Agreement by the Company nor the
consummation by the Company of the transactions contemplated hereby will (i)
conflict with or result in any breach of any provision of the respective charter
or Bylaws (or similar governing documents) of the Company or any of its
subsidiaries, (ii) result in a violation or
13
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, amendment, cancellation or
acceleration or Lien) under any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, lease, license, contract, agreement or other
instrument or obligation to which the Company or any of its subsidiaries is a
party or by which any of them or any of their respective properties or assets
may be bound or (iii) conflict with or violate any order, writ, injunction,
decree, law, statute, rule or regulation applicable to the Company or any of its
subsidiaries or any of their respective properties or assets except, in the case
of (ii) or (iii), for violations, breaches or defaults which would not have a
Material Adverse Effect.
SECTION 3.7. Compliance with Applicable Law. Neither the Company nor
------------------------------
any of its subsidiaries is in conflict with, or in default or violation of, (a)
its respective charter or certificate of incorporation, bylaws, or other charter
or organization documents, (b) to the Company's Knowledge (defined below), any
law, statute, rule, regulation, order, judgment, writ, injunction or decree
applicable to the Company or any of its subsidiaries or any of their respective
properties or assets, or (c) any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries or any property or asset of the Company or
any of its subsidiaries may be bound or affected, the effect of which conflict,
default or violation, either individually or in the aggregate, would be
reasonably likely to be a Material Adverse Effect. To the Company's Knowledge,
the Company and its subsidiaries hold all material licenses, permits, approvals
and other authorizations of Governmental Entities, and are in substantial
compliance with all applicable laws and governmental regulations in connection
with their businesses as now being conducted. For the purposes hereof, the term
"Knowledge" with respect to the Company means the actual knowledge of any of the
Class A Holders, Xxxxx X. Xxxxxxxx or any of the managers of the regional
offices of the Company.
SECTION 3.8. No Undisclosed Liabilities; Absence of Changes. Except to
----------------------------------------------
the extent publicly disclosed in the Company's SEC Reports or in the Company
Disclosure Schedule, as of September 30, 1998, none of the Company or any of its
subsidiaries had any liabilities or obligations of any nature, whether or not
accrued, contingent or otherwise, that would be required by GAAP to be reflected
on a consolidated balance sheet of the Company and its subsidiaries (including
the notes thereto) or which would have a Material Adverse Effect and since such
date, the Company has incurred no such liability or obligation. Since December
31, 1997, except as disclosed in the Company SEC Reports, (a) the Company and
its subsidiaries have conducted their respective businesses only in the ordinary
course and in a manner consistent with past practice and (b) there has not been
(i) any change, event, occurrence or circumstance in the business, operations,
properties, financial condition or results of operations of the Company or any
of its subsidiaries which, individually or in the aggregate, has a Material
Adverse Effect (except for changes, events, occurrences or circumstances (A)
with respect to general economic or lodging industry conditions or (B) arising
as a result of the transactions contemplated hereby), (ii) any material change
by the Company in its accounting methods, principles or practices, (iii) any
authorization, declaration, setting aside or payment of any dividend or
distribution or capital return in respect of any stock of, or other equity
interest in, the Company or any of its subsidiaries, (iv) any material
revaluation for financial statement purposes by the Company or any of its
subsidiaries of any asset (including, without limitation, any writing down of
the value of any property, investment or asset or writing off of notes or
accounts receivable), (v) other than payment of compensation for services
rendered to the Company or any of its subsidiaries in the ordinary course of
business consistent with past practice or the grant of Company Stock
14
Options as described in (and in amounts consistent with) Section 3.2, any
material transactions between the Company or any of its subsidiaries, on the one
hand, and any (A) officer or director of the Company or any of its subsidiaries,
(B) record or beneficial owner of five percent (5%) or more of the voting
securities of the Company, or (C) affiliate of any such officer, director or
beneficial owner, on the other hand, or (vi) other than pursuant to the terms of
the plans, programs or arrangements specifically referred to in Section 3.11 or
in the ordinary course of business consistent with past practice, any increase
in or establishment of any bonus, insurance, welfare, severance, deferred
compensation, pension, retirement, profit sharing, stock option (including,
without limitation, the granting of stock options, stock appreciation rights,
performance awards or restricted stock awards), stock purchase or other employee
benefit plan, or any other increase in the compensation payable or to become
payable to any employees, officers, directors or consultants of the Company or
any of its subsidiaries, which increase or establishment, individually or in the
aggregate, will result in a material liability.
SECTION 3.9. Litigation. Except as publicly disclosed in the
----------
Company SEC Reports, there is no suit, claim, action, proceeding or
investigation pending or, to the Company's Knowledge, threatened against the
Company or any of its subsidiaries or any of their respective properties or
assets before any Governmental Entity which individually or in the aggregate
could reasonably be expected to have a Material Adverse Effect on the Company or
could reasonably be expected to prevent or delay the consummation of the
transactions contemplated by this Agreement. Except as publicly disclosed by the
Company in the Company SEC Reports, none of the Company or its subsidiaries nor
any property or asset of the Company or any of its subsidiaries is subject to
any outstanding order, writ, injunction or decree which insofar as can be
reasonably foreseen in the future could reasonably be expected to have a
Material Adverse Effect on the Company or could reasonably be expected to
prevent or delay the consummation of the transactions contemplated hereby.
SECTION 3.10. Year 2000 Compliance. To the Company's Knowledge,
--------------------
all equipment, products, software and systems utilized or relied on by the
Company or its subsidiaries in the conduct of its business, which operate,
create, store, process and/or output information (including, without limitation,
all computer software, computer firmware, computer hardware (whether general or
specific purpose), automated systems, systems that utilize embedded microchips,
HVAC systems, elevators, fire and life safety systems, alarm and security
systems, computer systems, telephone systems and television systems)
(collectively, the "Systems") are designed to correctly operate, create, store,
process and output information related to or including dates before, on or after
January 1, 2000 ("Millennial Dates"). To the Company's Knowledge, the occurrence
in or use by the Systems of Millennial Dates will not adversely affect those
Systems' performance with respect to date-dependent data, computations, output,
operations or other functions (including, without limitation, calculating,
comparing and sequencing), and the Systems will not malfunction, cease to
function, or provide invalid or incorrect results as a result of date/time data,
to the extent that other Systems, used in combination with the Systems of the
Company and its subsidiaries, properly exchange date/time data with the Systems
of Company and its subsidiaries.
SECTION 3.11. Employee Benefit Plans; Labor Matters.
-------------------------------------
(a) Section 3.11(a) of the Company Disclosure Schedule sets
forth each plan which is subject to the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), and each other material agreement, arrangement or
commitment which is an employment or consulting agreement, executive or
incentive compensation plan, bonus plan, deferred compensation agreement,
employee pension, profit sharing,
15
savings or retirement plan, employee stock option or stock purchase plan, group
life, health, or accident insurance or other employee benefit plan, agreement,
arrangement or commitment, including, without limitation, severance, vacation,
holiday or other bonus plans, currently maintained by the Company or any of its
subsidiaries for the benefit of any present or former employees, officers or
directors of the Company or any of its subsidiaries ("Company Personnel") or
with respect to which the Company or any of its subsidiaries has liability or
makes or has an obligation to make contributions (each such plan, agreement,
arrangement or commitment set forth in Section 3.11(a) of the Company Disclosure
Schedule being hereinafter referred to as a "Company Employee Plan").
(b) The Company has made available to the Parent (i) copies of
all Company Employee Plans or in the case of an unwritten plan, a written
description thereof, (ii) copies of the most recent annual, financial and, if
applicable, actuarial reports and Internal Revenue Service determination letters
relating to such Company Employee Plans and (iii) copies of all summary plan
descriptions relating to such Company Employee Plans and distributed to Company
Personnel.
(c) Except as disclosed in Section 3.11(c) of the Company
Disclosure Schedule, there are no Company Personnel who are entitled to any
medical, dental or life insurance benefits to be paid under any Company Employee
Plans after termination of employment other than as required by Section 601 of
ERISA, Section 4980B of the Internal Revenue Code of 1986, as amended (the
"Code"), or applicable state law.
(d) Each Company Employee Plan that is an employee welfare
benefit plan under Section 3(1) of ERISA is either (i) funded through an
insurance company contract and is not a "welfare benefit fund" within the
meaning of Section 419 of the Code or (ii) unfunded. There is no liability in
the nature of a retroactive rate adjustment or loss-sharing or similar
arrangement, with respect to any such Company Employee Plan which is an employee
welfare benefit plan.
(e) All contributions or payments due with respect to any
periods prior to the Closing Time under any Company Employee Plan have been made
or appropriate charges have been made on the financial statements. Except as
disclosed in Section 3.11(e) of the Company Disclosure Schedule, each Company
Employee Plan by its terms and operation is in compliance in all material
respects with all applicable laws (including, but not limited to, ERISA, the
Code and the Age Discrimination in Employment Act of 1967, as amended).
(f) There are no actions, suits or claims pending or, to the
Company's Knowledge, threatened (other than routine noncontested claims for
benefits), against any Company Employee Plan or, to the Company's Knowledge, any
administrator or fiduciary of any such Company Employee Plan. As to each Company
Employee Plan for which an annual report is required to be filed under ERISA or
the Code, all such filings, including schedules, have been made on a timely
basis and, with respect to the most recent report regarding each such Company
Employee Plan, which is a funded pension benefit plan, liabilities do not exceed
assets, and no material adverse change has occurred with respect to the
financial materials covered thereby.
(g) Except as disclosed in Section 3.11(g) of the Company
Disclosure Schedule:
(x) neither the Company nor any of its subsidiaries
(nor any entity that is treated as a single employer with the Company or any of
its subsidiaries under Section 414(b), (c), (m) or (o) of the Code) maintains,
contributes to or is required to
16
contribute to any plan under which more than one employer makes contributions
(within the meaning of Section 4064(a) of ERISA), any plan that is a
multiemployer plan within the meaning of Section 3(37) of ERISA, or any plan
subject to the minimum funding requirements of Section 412 of the Code;
(y) neither the Company nor any of its subsidiaries (nor
any entity that is or was at the relevant time treated as a single employer with
the Company or any of its subsidiaries under Section 414(b), (c), (m) or (o) of
the Code) has at any time incurred any liability to the Pension Benefit Guaranty
Corporation or otherwise under Title IV of ERISA (other than the payment of
premiums, none of which is overdue) which liability has not been satisfied; and
(z) neither the Company nor any of its subsidiaries (nor
any entity that is or was at the relevant time treated as a single employer with
the Company or any of its subsidiaries under Section 414(b), (c), (m) or (o) of
the Code) has at any time incurred liability in connection with an "accumulated
funding deficiency" within the meaning of Section 412 of the Code, whether or
not waived, which liability has not been satisfied and which can result in a
Material Adverse Effect on the Company. No notice of a "reportable event,"
within the meaning of Section 4043 of ERISA, for which the 30-day reporting
requirement has not been waived has been required to be filed for any Company
Employee Plan.
(h) The Executive Amenities, Inc. 401(k) Profit Sharing Plan
maintained by the Company (the "401(k) Plan") has received a favorable
determination letter from the Internal Revenue Service which provides that the
401(k) Plan is qualified under Sections 401(a) and 401(k) of the Code (the
"Company IRS Letter"). To the Company's Knowledge, nothing has occurred since
the date of the most recent Company IRS Letter to cause such letter to be no
longer valid or effective, except for changes in the law which may be in effect
but with respect to which amendments to such Plan do not have to be adopted on
or before the date hereof.
(i) Neither the Company nor any of its subsidiaries (nor, to
the Company's Knowledge, any other person, including any fiduciary) has engaged
in any "prohibited transaction" (as defined in Section 4975 of the Code or
Section 406 of ERISA) or committed any breach of fiduciary duty, which could
subject any of the Company Employee Plans (or their trusts), the Company, any of
its subsidiaries or any person whom the Company or any of its subsidiaries has
an obligation to indemnify, to any material tax or penalty or other liability
imposed under the Code or ERISA.
(j) None of the assets of the Company Employee Plans is
invested in any property constituting employer real property or an employer
security within the meaning of Section 407(d) of ERISA.
(k) Except as disclosed in Section 3.11(k) of the Company
Disclosure Schedule, the transactions contemplated by this Agreement (either
alone or together with any other transaction(s) or event(s)) will not (i)
entitle any Company Personnel to severance pay or other similar payments under
any Company Employee Plan, (ii) accelerate the time of payment or vesting or
increase the amount of benefits due under any Company Employee Plan or
compensation to any Company Personnel, (iii) result in any payments (including
parachute payments) under any Company Employee Plan becoming due to any Company
Personnel, or (iv) terminate or modify or give a third party a right to
terminate or modify the provisions or terms of any Company Employee Plan.
Section 3.11(k) of the Company Disclosure Schedule sets forth, for each employee
of the Company or any of its subsidiaries that will receive any parachute
payment within the
17
meaning of Section 280G of the Code, a preliminary calculation of the base
amount for such employee and of the amount of each such parachute payment, based
upon information currently known by the Company and assuming all circumstances
that could give rise to such payment occur.
(l) Except as set forth in Section 3.11(l) of the Company
Disclosure Schedule, neither the Company nor any of its subsidiaries is a party
to any collective bargaining or other labor union contract applicable to any
Company Personnel. There is no pending or, to the Company's Knowledge,
threatened labor dispute, strike or work stoppage against the Company or any of
its subsidiaries. Neither the Company nor any of its subsidiaries nor their
respective representatives or employees has committed any unfair labor practices
in connection with the operation of the respective businesses of the Company or
its subsidiaries, and there is no pending or, to the Company's Knowledge,
threatened charge or complaint against the Company or its subsidiaries by the
National Labor Relations Board or any comparable state governmental agency. To
the Company's Knowledge, the Company and its subsidiaries are in compliance in
all material respects with all applicable laws and regulations respecting
employment, employment practices, labor relations, employment discrimination,
safety and health, wages, hours and terms and conditions of employment.
SECTION 3.12. Environmental Laws and Regulations.
----------------------------------
(a) Except as publicly disclosed in the Company SEC Reports, to
the Company's Knowledge, (i) the properties, assets and operations of the
Company and its subsidiaries are in material compliance with all applicable
federal, state, local and foreign laws and regulations, orders, decrees,
judgments, permits and licenses relating to public and worker health and safety
and to the protection and clean-up of the natural environment (including,
without limitation, ambient air, surface water, ground water, land surface or
subsurface strata) and activities or conditions relating thereto, including,
without limitation, those relating to the generation, handling, disposal,
transportation or release of hazardous materials (collectively "Environmental
Laws"), except for non-compliance that would not have a Material Adverse Effect,
which compliance includes but is not limited to, the possession by the Company
and its subsidiaries of all material permits and other governmental
authorizations required under applicable Environmental Laws and compliance with
the terms and conditions thereof; (ii) none of the Company or its subsidiaries
has received written notice of or, to the Company's Knowledge, is the subject of
any Environmental Claim (defined below) that could reasonably be expected to
have a Material Adverse Effect on the Company; and (iii) to the Company's
Knowledge, there are no circumstances that are reasonably likely to prevent or
interfere with such material compliance in the future.
(b) Except as disclosed in the Company SEC Reports, there is no
action, cause of action, claim, investigation, demand or notice by any person or
entity alleging liability under or non-compliance with any Environmental Law (an
"Environmental Claim") which could reasonably be expected to have a Material
Adverse Effect that is pending or, to the Company's Knowledge, threatened
against the Company or its subsidiaries or, to the Company's Knowledge, against
any person or entity whose liability for any Environmental Claim the Company or
any of its subsidiaries has or may have retained or assumed either contractually
or by operation of law.
SECTION 3.13. Taxes.
-----
(a) For purposes of this Agreement: (i) "Tax" or "Taxes" means
any taxes, charges, fees, levies, or other assessments imposed by any U.S. or
foreign governmental
18
entity, whether national, state, county, local or other political subdivision,
including, without limitation, all net income, gross income, sales and use, rent
and occupancy, value added, ad valorem, transfer, gains, profits, excise,
franchise, real and personal property, gross receipt, capital stock, business
and occupation, disability, employment, payroll, license, estimated, or
withholding taxes or charges imposed by any governmental entity, and includes
any interest and penalties on or additions to any such taxes (and includes taxes
for which the Company and/or any of its subsidiaries, as the case may be, may be
liable in its own right, or as the transferee of the assets of, or as successor
to, any other corporation, association, partnership, joint venture, or other
entity, or under Treasury Regulation Section 1.1502-6 or any similar provision
of foreign, state or local law), provided, however, that to the extent that the
following representations relate to state and local sales taxes or lodging
taxes, such representations are limited to the Company's Knowledge; and (ii)
"Tax Return" means a report, return or other information required to be supplied
to a governmental entity with respect to Taxes including, where permitted or
required, group, combined or consolidated returns for any group of entities that
includes the Company or any of its subsidiaries.
(b) Except as set forth in Section 3.13(b) of the Company
Disclosure Schedule, the Company and each of its subsidiaries, and any
affiliated or combined group of which the Company or any of its subsidiaries is
or was a member for applicable Tax purposes, have (i) filed all federal income
and all other Tax Returns required to be filed by applicable law and all such
federal income and other Tax Returns (A) reflect the liability for Taxes of the
Company and each of its subsidiaries, and (B) were filed on a timely basis and
(ii) within the time and in the manner prescribed by law, paid (and until the
Closing Time will pay within the time and in the manner prescribed by law) all
Taxes that were or are due and payable as set forth in such Tax Returns.
(c) Each of the Company and, where applicable, the Company's
subsidiaries has established (and until the Closing Time will maintain) on its
books and records reserves adequate to pay all Taxes of the Company or such
respective subsidiary, as the case may be, in accordance with GAAP, which are
reflected in the most recent consolidated financial statements of the Company
and its subsidiaries contained in the Company SEC Documents, as applicable, to
the extent required by GAAP.
(d) Except as disclosed in Section 3.13(d) of the Company
Disclosure Schedule, neither the Company nor any subsidiary thereof has
requested any extension of time within which to file any income, franchise or
other Tax Return, which Tax Return has not been filed as of the date hereof.
(e) Except as disclosed in Section 3.13(d) of the Company
Disclosure Schedule, neither the Company nor any subsidiary thereof has executed
any outstanding waivers or comparable consents regarding the application of the
statute of limitations with respect to any income, franchise or other Taxes or
Tax Returns.
(f) Except as disclosed in Section 3.13(f) of the Company
Disclosure Schedule, no deficiency for any Tax which, alone or in the aggregate
with any other deficiency or deficiencies, would exceed $25,000, has been
proposed, asserted, or assessed against the Company and/or any subsidiary
thereof that has not been resolved and paid in full or otherwise settled, no
audits or other administrative proceedings are presently in progress or pending
or threatened in writing with regard to any Taxes or Tax Returns of the Company
and/or any subsidiary thereof, and no written claim is currently being made by
any authority in a jurisdiction where any of the Company or any subsidiary
thereof, as the case may be, does not file Tax Returns that it is or may be
subject to Tax in that jurisdiction.
19
(g) Except as disclosed on Section 3.13(g) of the Company
Disclosure Schedule, neither the Company nor any of its subsidiaries is a party
to any agreement relating to allocating or sharing of the payment of, or
liability for, Taxes.
(h) The Company does not constitute and for the past five
years has not constituted a "United States real property holding corporation"
within the meaning of Section 897(c)(2) of the Code.
SECTION 3.14. Properties. Section 3.14 of the Company
----------
Disclosure Schedule contains a true and complete list (identifying the relevant
owners, lessors and lessees) of all real properties owned by the Company or any
of its subsidiaries. Each of the Company and its subsidiaries has good and
marketable title to all properties, assets and rights of any kind whatsoever
(whether real, personal or mixed, and whether tangible or intangible) owned by
it (collectively, the "Company Real Assets"), in each case free and clear of any
mortgage, security interest, deed of trust, claim, charge, title defect or other
lien or encumbrance, except (a) as shown on the consolidated balance sheet of
the Company and its subsidiaries dated September 30, 1998 and the notes thereto,
(b) for any mortgage, security interest, deed of trust, claim, charge, title
defect or other lien or encumbrance arising by reason of (i) taxes, assessments
or governmental charges not yet delinquent or which are being contested in good
faith, (ii) deposits to secure public or statutory obligations in lieu of surety
or appeal bonds entered into in the ordinary course of business, and (iii)
operation of law in favor of carriers, warehousemen, landlords, mechanics,
materialmen, laborers, employees or suppliers, incurred in the ordinary course
of business for sums which are not yet delinquent or are being contested in good
faith by negotiations or by appropriate proceedings which suspend the collection
thereof ("Permitted Liens"), or (c) as set forth on Section 3.14 of the Company
Disclosure Schedule. There are no pending or, to the Company's Knowledge,
threatened condemnation proceedings against or affecting any material Company
Real Assets, and none of the material Company Real Assets is subject to any
commitment or other arrangement for its sale to a third party outside the
ordinary course of business.
SECTION 3.15. Material Contracts and Commitments.
----------------------------------
(a) Section 3.15 of the Company Disclosure Schedule contains a
true and complete list of all of the following contracts, agreements and
commitments, whether oral or written ("Contracts"), to which the Company or any
of its subsidiaries is a party or by which any of them or any of their material
Company Real Assets is bound, as each such contract or commitment may have been
amended, modified or supplemented:
(i) all Contracts pursuant to which the Company or its
subsidiaries holds a leasehold interest in or otherwise has an
economic interest in any real property, other than property
described in Section 3.14 of the Company Disclosure Schedule
and other than apartment leases entered into in the ordinary
course of business by the Company;
(ii) all Contracts providing for management of any temporary
lodging business by the Company or any of its subsidiaries;
(iii) all Contracts granting or obtaining a franchise or
license to utilize a brand name or other rights of a system
providing residential services, or granting a license or
sublicense of any material trademark, trade name, copyright,
patent, service xxxx or trade secret, or any rights therein or
application therefor;
20
(iv) all partnership or joint venture Contracts;
(v) all loan agreements, notes, bonds, debentures, debt
instruments, evidences of indebtedness, debt securities, or
other Contracts relating to any indebtedness of the Company or
any of its subsidiaries in an amount in excess of $100,000, or
involving the direct or indirect guaranty or suretyship by the
Company or any of its subsidiaries of any indebtedness in an
amount in excess of $100,000;
(vi) all Contracts that, after the date hereof, obligate the
Company or any of its subsidiaries to pay, pledge, or encumber
or restrict assets in an aggregate amount in excess of
$100,000;
(vii) all Contracts by which the Company has committed to
extend credit to third parties;
(viii) all Contracts with customers of the Company that
involve payments which, in the aggregate, exceed $50,000; and
(ix) all Contracts that limit or restrict the ability of the
Company or any of its affiliates to compete or otherwise to
conduct business in any material manner or place.
(b) The Company has heretofore made available to the Parent
true and complete copies of all of the Contracts required to be set forth in
Section 3.15 of the Company Disclosure Schedule. Each such Contract is valid and
binding in accordance with its terms, and is in full force and effect (except as
set forth in Section 3.15 of the Company Disclosure Schedule). Neither the
Company nor any of its subsidiaries is in default in any material respect with
respect to any such Contract, nor (to the Company's Knowledge) does any
condition exist that with notice or lapse of time or both would constitute such
a material default thereunder or permit any other party thereto to terminate
such Contract. To the Company's Knowledge, no other party to any such Contract
is in default in any material respect with respect to any such Contract. No
party has given any written or (to the Company's Knowledge) oral notice (i) of
termination or cancellation of any such Contract or (ii) that it intends to
assert a breach of any such Contract, whether as a result of the transactions
contemplated hereby or otherwise. Each Contract identified in Section 3.15 of
the Company Disclosure Schedule in response to any item under this Section 3.15
shall be deemed incorporated by reference to all other items in this Section
3.15.
SECTION 3.16. Intangible Property.
-------------------
(a) The Company has made available to the Parent a list of
the Intangible Property (as defined below) which is material to the Company and
its subsidiaries in which the Company or any of its subsidiaries has an
interest.
(b) Except as set forth on Section 3.16 of the Company
Disclosure Schedule:
(i) the Company and its subsidiaries own and have the right
to use, sell, license or dispose of all Intangible Property
used in the conduct of their business as presently conducted;
21
(ii) the Company and its subsidiaries have performed all
material obligations required to be performed by them, and are
not in default under any material contract or arrangement
relating to any Intangible Property;
(iii) the execution, delivery and performance of this
Agreement and the consummation of the transactions
contemplated hereby will not breach, violate or conflict with
any material Intangible Property, will not cause the
forfeiture or termination or give rise to a right of
forfeiture or termination of, or in any material way impair
the right of the Company or any of its subsidiaries to use,
sell, license or dispose of or to bring any action for the
infringement of, any material Intangible Property or material
portion thereof;
(iv) there are no royalties, honoraria, fees or other
payments payable by the Company or any of its subsidiaries to
any person by reason of the ownership, use, license, sale or
disposition of any material Intangible Property;
(v) the conduct of the business by the Company and its
subsidiaries does not violate any license or agreement with
any third party; and
(vi) neither the Company nor any of its subsidiaries has
received any notice to the effect (or is otherwise aware) that
any material Intangible Property or the use thereof by the
Company or any of its subsidiaries conflicts with any rights
of any person.
(c) As used herein "Intangible Property" means all
intellectual property rights, including patents, patent applications (pending or
otherwise), computer software, research findings, market and competitive
analyses, brand names, copyrights, service marks, trademarks, tradenames, and
all registrations or applications for registration of any of the foregoing.
SECTION 3.17. Brokers. No broker, finder or investment banker
-------
(other than X.X. Xxxxxxx & Sons, Inc., the Company's financial adviser, a true
and correct copy of whose entire engagement agreement has been provided to
Acquisition or Parent) is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Company.
SECTION 3.18. Certain Business Practices. None of the Company,
--------------------------
any of its subsidiaries or any directors or officers of the Company or any of
its subsidiaries, nor to the Company's Knowledge, agents or employees of the
Company or any of its subsidiaries, has (a) used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to
political activity, (b) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties or
campaigns or violated any provision of the Foreign Corrupt Practices Act of
1977, as amended, or (c) made any other unlawful payment.
SECTION 3.19. Employees. Section 3.19 of the Company
---------
Disclosure Schedule sets forth the following information concerning each of the
Company Personnel: (a) name; (b) base salary and bonuses paid in 1998; (c)
whether or not the employee has an employment contract, and if so, its
expiration date; (d) if the employee has been granted options to purchase
Shares, the number of Shares for which the options are
22
exercisable; and (e) if there is an employment contract, whether it is
assignable by its terms.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF PARENT AND ACQUISITION
Parent and Acquisition hereby represent and warrant to the
Company as follows:
SECTION 4.1. Organization.
------------
(a) Each of Parent and Acquisition is duly organized, validly
existing and in good standing under the laws of the State of Delaware, and has
all requisite power and authority to own, lease and operate its properties and
to carry on its businesses as now being conducted. Parent has heretofore
delivered to the Company accurate and complete copies of their Certificates of
Incorporation and Bylaws as currently in effect.
(b) Each of Parent and Acquisition 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 or licensing necessary, except in such
jurisdictions where the failure to be so duly qualified or licensed and in good
standing would not have a Parent Material Adverse Effect. The term "Parent
Material Adverse Effect" means any change or effect that is (i) materially
adverse to the business, results of operations condition (financial or
otherwise) or prospects of Parent and its subsidiaries, taken as a whole, other
than any change or effect arising out of general economic conditions unrelated
to any businesses in which Parent and its subsidiaries are engaged or (ii) that
may impair the ability of Parent and/or Acquisition to consummate the
transactions contemplated hereby.
SECTION 4.2. Authority Relative to this Agreement. Each of
------------------------------------
Parent and Acquisition has all necessary corporate power and authority to
execute and deliver this Agreement and 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 by the boards of directors of Parent and Acquisition and by Parent as
the sole stockholder of Acquisition and no other corporate proceedings on the
part of Parent or Acquisition are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by each of Parent and Acquisition and
constitutes a valid, legal and binding agreement of each of Parent and
Acquisition enforceable against each of Parent and Acquisition in accordance
with its terms, except as such enforceability may be limited by any applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally, and except as the
availability of equitable remedies may be limited by the application of general
principles of equity (regardless of whether such equitable principle are applied
in a proceeding at law or in equity).
SECTION 4.3. Information Supplied. None of the information
--------------------
supplied by Parent or Acquisition in writing for inclusion in the Disclosure
Statements or the Schedule 14D-9 will, at the respective times that the Proxy
Statement (if necessary) and the Schedule 14D-9 and any amendments thereof or
supplements thereto are filed with the SEC and are first published or sent or
given to holders of Shares, and in the case of any required Proxy Statement, at
the time that it or any amendment thereof or supplement
23
thereto is mailed to the Company's stockholders, at the time of the
Stockholders' Meeting, if such is required, or at the Effective Time, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
SECTION 4.4. Financing. Parent has or will have sufficient
---------
funds available to purchase all of the Shares that Parent agrees, subject to the
terms and conditions hereof, to purchase hereunder and to pay all related fees
and expenses, and will make such funds available to Acquisition when required
for the performance of its obligations hereunder. Sufficient unissued shares of
Parent Common Stock are authorized under Parent's Certificate of Incorporation
to fulfill Parent's obligations under Article 2 hereof.
SECTION 4.5. Consents and Approvals; No Violations. Except for
-------------------------------------
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Securities Act, the Exchange
Act, Blue Sky Laws, the HSR Act and the filing and acceptance for record or
recordation of the Merger Certificate as required by the MGCL and the DGCL,
respectively, no filing with or notice to, and no permit, authorization, consent
or approval of, any Governmental Entity is necessary for the execution and
delivery by Parent or Acquisition of this Agreement or the consummation by
Parent or Acquisition of the transactions contemplated hereby, except where the
failure to obtain such permits, authorizations, consents or approvals or to make
such filings or give such notice would not have a Parent Material Adverse
Effect. Neither the execution, delivery and performance of this Agreement by
Parent or Acquisition nor the consummation by Parent or Acquisition of the
transactions contemplated hereby will (i) conflict with or result in any breach
of any provision of the respective Certificates of Incorporation or Bylaws (or
similar governing documents) of Parent or Acquisition, (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, amendment,
cancellation or acceleration or Lien) under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which Parent or Acquisition or
any of Parent's other subsidiaries is a party or by which any of them or any of
their respective properties or assets may be bound or (iii) violate any order,
writ, injunction, decree, law, statute, rule or regulation applicable to Parent
or Acquisition or any of Parent's other subsidiaries or any of their respective
properties or assets except, in the case of (ii) or (iii), for violations,
breaches or defaults which would not have a Parent Material Adverse Effect.
SECTION 4.6. SEC Reports; Financial Statements. Parent and any
---------------------------------
predecessor company have filed all required forms, reports and documents
("Parent SEC Reports") with the SEC since December 31, 1996, each of which has
complied in all material respects with all applicable requirements of the
Securities Act and the Exchange Act, each as in effect on the dates such forms,
reports and documents were filed. None of such Parent SEC Reports, including,
without limitation, any financial statements or schedules included or
incorporated by reference therein, contained when filed any untrue statement of
a material fact or omitted to state a material fact required to be stated or
incorporated by reference therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The audited consolidated financial statements of Parent included in
the Parent SEC Reports fairly present in conformity with GAAP (except as may be
indicated in the notes thereto) the consolidated financial position of Parent
and its consolidated subsidiaries as of the dates thereof and their consolidated
results of operations and changes in financial position for the periods then
ended.
24
ARTICLE 5
COVENANTS
SECTION 5.1. Interim Operations. From the date of this
------------------
Agreement until the Closing Time, except as set forth in Section 5.1 of the
Company Disclosure Schedule or as expressly contemplated by any other provision
of this Agreement, unless the Parent has consented in writing thereto, the
Company shall, and shall cause each of its subsidiaries to:
(a) conduct its business and operations only in the ordinary
course of business consistent with past practice;
(b) use reasonable efforts to preserve intact the business,
organization, goodwill, rights, licenses, permits and
franchises of the Company and its subsidiaries and maintain
their existing relationships with customers, suppliers and
other persons having business dealings with them;
(c) use reasonable efforts to keep in full force and effect
adequate insurance coverage and maintain and keep its
properties and assets in good repair, working order and
condition, normal wear and tear excepted;
(d) not amend or modify its respective charter or certificate
of incorporation, by-laws, partnership agreement or other
charter or organization documents;
(e) except as required under Section 2.1, not authorize for
issuance, issue, sell, grant, deliver, pledge or encumber or
agree or commit to issue, sell, grant, deliver, pledge or
encumber any shares of any class or series of capital stock of
the Company or any of its subsidiaries or any other equity or
voting security or equity or voting interest in the Company or
any of its subsidiaries, any securities convertible into or
exercisable or exchangeable for any such shares, securities or
interests, or any options, warrants, calls, commitments,
subscriptions or rights to purchase or acquire any such
shares, securities or interests (other than issuances of
Shares upon exercise of Company Stock Options granted prior to
the date of this Agreement to directors, officers, employees
and consultants of the Company in accordance with the Company
Stock Plan as currently in effect);
(f) not (i) split, combine or reclassify any shares of its
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 stock, (ii) in solely the case of the
Company, declare, set aside or pay any dividends on, or make
other distributions in respect of, any of the Company's stock,
or (iii) except as required under Section 2.1, repurchase,
redeem or otherwise acquire, or agree or commit to repurchase,
redeem or otherwise acquire, any shares of stock or other
equity or debt securities or equity interests of the Company
or any of its subsidiaries;
(g) not amend or otherwise modify the terms of any Company
Stock Options or the Company Option Plan, the effect of which
shall be to make such terms more favorable to the holders
thereof or persons eligible for participation therein;
25
(h) other than regularly scheduled seniority increases in the
ordinary course of business consistent with past practice, not
increase the compensation payable or to become payable to any
directors, officers or employees of the Company or any of its
subsidiaries, or grant any severance or termination pay to, or
enter into any employment or severance agreement with any
director or officer of the Company or any of its subsidiaries,
or establish, adopt, enter into or amend in any material
respect or take action to accelerate any material rights or
benefits under any collective bargaining, bonus, profit
sharing, thrift, compensation, stock option, restricted stock,
pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund,
policy or arrangement for the benefit of any director, officer
or employee of the Company of any of its subsidiaries;
(i) not acquire or agree to acquire (including, without
limitation, by merger, consolidation, or acquisition of stock,
equity securities or interests, or assets) any corporation,
partnership, joint venture, association or other business
organization or division thereof or otherwise acquire or agree
to acquire any assets of any other person outside the ordinary
course of business consistent with past practice or any
interest in any real properties (whether or not in the
ordinary course of business);
(j) not incur, assume or guarantee any indebtedness for
borrowed money (including draw-downs on letters or lines of
credit) or issue or sell any notes, bonds, debentures, debt
instruments, evidences of indebtedness or other debt
securities of the Company or any of its subsidiaries or any
options, warrants or rights to purchase or acquire any of the
same, except for (i) renewals of existing bonds and letters of
credit in the ordinary course of business not to exceed
$100,000 in the aggregate; and (ii) advances, loans or other
indebtedness in the ordinary course of business consistent
with past practice in an aggregate amount not to exceed
$100,000;
(k) not sell, lease, license, encumber or otherwise dispose
of, or agree to sell, lease, license, encumber or otherwise
dispose of, any material properties or assets of the Company
or any of its subsidiaries;
(l) not authorize or make any capital expenditures (including
by lease) in excess of $100,000 in the aggregate for the
Company and all of its subsidiaries;
(m) not make any material change in any of its accounting or
financial reporting (including tax accounting and reporting)
methods, principles or practices, except as may be required by
GAAP;
(n) not make any material tax election or settle or compromise
any material United States or foreign tax liability;
(o) except in the ordinary course of business consistent with
past practice, not amend, modify or terminate any Contract
required to be listed in Section 3.15 of the Company
Disclosure Schedule or waive, release or assign any material
rights or claims thereunder;
26
(p) not adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization of the Company or any
of its subsidiaries;
(q) not take any action that would, or would be reasonably
likely to, result in any of the representations and warranties
set forth in this Agreement not being true and correct in any
material respect (as if such representation or warranty were
made and in effect on the date such action would have been
taken, notwithstanding any other provisions hereof) or (except
as to any action permitted under Section 5.4) any of the
conditions set forth in Article 7 or 8 not being satisfied;
and
(r) except as to subsections (a), (b) and (c) of Section 5.1,
not agree or commit in writing or otherwise to do any of the
foregoing.
SECTION 5.2. Stockholders' Meeting and Issuance of Parent
--------------------------------------------
Shares.
------
(a) The Company, acting through the Board, shall, if required
for the Merger under the MGCL:
(i) duly call, give notice of, convene and hold a
meeting of its stockholders (the "Stockholders' Meeting"), to
be held as soon as practicable after the Tender Offer Purchase
Time for the purpose of considering and taking action upon
this Agreement, using a record date, to the extent possible,
that is a day on which the Shares are listed on the Nasdaq
National Market;
(ii) except as otherwise permitted under Section
5.4, include in the Proxy Statement (A) the recommendation of
the Board that stockholders of the Company vote in favor of
the approval and adoption of this Agreement, the Merger and
the other transactions contemplated hereby (including the Plan
and Agreement of Merger attached hereto as Exhibit A), and (B)
a statement that the Board believes that the consideration to
be received by the stockholders of the Company pursuant to the
Merger is fair to such stockholders;
(iii) except as otherwise permitted under Section
5.4, use reasonable efforts (A) to obtain and furnish the
information required to be included by it in the Disclosure
Statements and, after consultation with Parent and
Acquisition, cause the Proxy Statement to be mailed to its
stockholders at the earliest practicable time following the
Tender Offer Purchase Time, and (B) to obtain the necessary
approvals by its stockholders of this Agreement and the
transactions contemplated hereby. At such meeting, Parent,
Acquisition will, and will cause their affiliates to, vote all
Shares owned by them in favor of approval and adoption of this
Agreement, the Merger and the transactions contemplated
hereby.
SECTION 5.3. Termination of Registration of Shares. The
-------------------------------------
Company, acting through its Board, at the earliest practicable time following
the Tender Offer Purchase Time (but in no event prior to the record date for a
stockholders' meeting, if necessary, called for the purpose of approving the
Merger), if the number of holders of record of the Shares at such time is
smaller than 300, take all steps necessary or
27
appropriate to terminate registration of the Shares under the Exchange Act,
including without limitation the filing of Exchange Act Form 15 with the SEC and
of a notice to the Nasdaq National Market to delist the Shares.
SECTION 5.4. Other Potential Acquirers.
-------------------------
(a) The Company, its affiliates and their respective officers,
directors, employees, representatives and agents shall immediately cease any
discussions or negotiations with any parties with respect to any Third Party
Acquisition (as defined below). Neither the Company nor any of its affiliates
shall, nor shall the Company authorize or permit any of its or their respective
officers, directors, employees, representatives or agents to, directly or
indirectly, encourage, solicit, participate in or initiate discussions or
negotiations with or provide any non-public information to any person or group
(other than Parent and Acquisition or any designees of Parent and Acquisition)
concerning any Third Party Acquisition; provided, however, that nothing herein
shall prevent the Board from taking and disclosing to the Company's stockholders
a position contemplated by Rules 14d-9 and 14e-2 promulgated under the Exchange
Act with regard to any tender offer; and provided further, that notwithstanding
the foregoing, if, prior to the Tender Offer Purchase Time, the Company receives
a "Potential Proposal" (defined as an unsolicited Superior Proposal (defined
below) or an unsolicited proposal, offer or indication that the Company in good
faith believes may lead to a Superior Proposal), then following written notice
to Parent and Acquisition, the Company may provide the person making the
Potential Proposal with the same non-public information that the Company
supplied to Parent. The Company shall promptly, and in any event before
furnishing non-public information to any such person, notify the Parent in the
event it receives any proposal or inquiry concerning a Third Party Acquisition,
including the terms and conditions thereof and the identity of the party
submitting such proposal; and shall advise the Parent from time to time of the
status and any material developments concerning the same.
(b) Except as set forth in this Section 5.4(b), the Board
shall not withdraw its recommendation of the transactions contemplated hereby or
approve or recommend, or cause the Company to enter into any agreement with
respect to, any Third Party Acquisition. Notwithstanding the provisions of
Section 5.4(a), if prior to the Tender Offer Purchase Time the Board by a
majority vote determines in its good faith judgment, after consultation with and
consistent with the advice of legal counsel, that it is required to do so in
order to comply with its fiduciary duties, the Board may withdraw its
recommendation of the transactions contemplated hereby or approve or recommend a
Superior Proposal, but in each case only (i) after providing reasonable written
notice to Parent (a "Notice of Superior Proposal") advising Parent that the
Board has received a Superior Proposal, specifying the material terms and
conditions of such Superior Proposal and identifying the person making such
Superior Proposal and (ii) if Parent does not, within three business days of
Parent's receipt of the Notice of Superior Proposal, make an offer which the
Company Board by a majority vote determines in its good faith judgment
(consistent with the advice of a financial adviser of nationally recognized
reputation) to be as favorable to the Company's stockholders as such Superior
Proposal; provided, however, that the Company shall not be entitled to enter
into any agreement with respect to a Superior Proposal unless and until this
Agreement is terminated by its terms pursuant to Section 9.1. For the purposes
of this Agreement, "Third Party Acquisition" means the occurrence of any of the
following events: (i) the acquisition of the Company by merger or otherwise by
any person (which includes a "person" as such term is defined in Section
13(d)(3) of the Exchange Act) other than Parent, Acquisition or any affiliate
thereof (a "Third Party"); (ii) the acquisition by a Third Party of more than
20% of the total assets of the Company and its subsidiaries taken as a whole;
(iii) the acquisition by a Third Party of
28
20% or more of the outstanding Shares; (iv) the adoption by the Company of a
plan of liquidation or the declaration or payment of an extraordinary dividend;
(v) the repurchase by the Company or any of its subsidiaries of more than 20% of
the outstanding Shares (other than the exchange planned in connection with the
Preferred Stock Issuance); or (vi) the acquisition by the Company or any
subsidiary by merger, purchase of stock or assets, joint venture or otherwise of
a direct or indirect ownership interest or investment in any business whose
annual revenues net income or assets is equal or greater than 20% of the annual
revenues net income or assets of the Company. For purposes of this Agreement a
"Superior Proposal" means any bona fide proposal to acquire directly or
indirectly for consideration consisting of cash and/or securities more than 50%
of the Shares then outstanding or all or substantially all the assets of the
Company and otherwise on terms which the Company Board by a majority vote
determines in its good faith judgment (consistent with the advice of a financial
adviser of nationally recognized reputation) to be more favorable to the
Company's stockholders than the Merger and the Offer. At and after the Tender
Offer Purchase Time, the Company shall not under any circumstances withdraw its
recommendation of the transactions contemplated hereby or approve or recommend,
or cause the Company to enter into any agreement with respect to, any Third
Party Acquisition.
SECTION 5.5 Access to Information. From the date of this
---------------------
Agreement until the Closing Time, upon reasonable prior notice, the Company
shall (and shall cause each of its subsidiaries to) give the Parent and its
representatives (including lenders to and financing sources for such party) full
access, during normal business hours and at other reasonable times without
disruption to the Company's normal business affairs, to the officers, employees,
agents, books, records, contracts, commitments, properties, offices and other
facilities of it and its subsidiaries, and shall furnish promptly to the Parent
and its representatives such financial and operating data and other information
concerning the business, operations, properties, contracts, records and
personnel of the Company and its subsidiaries as the Parent may from time to
time reasonably request. All information obtained by the Parent pursuant to this
Section 5.5 shall be kept confidential in accordance with the confidentiality
provisions of the Letter Agreement between Parent and the Company dated July 30,
1998. No representations and warranties or conditions to the consummation of the
Merger contained herein or in any certificate or instrument delivered in
connection herewith shall be deemed waived or otherwise affected by any
investigation made by the parties or their respective representatives.
SECTION 5.6. Further Actions. (a) Each of the parties hereto
---------------
shall use reasonable efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations, and consult and fully cooperate with and
provide reasonable assistance to each other party hereto and their respective
representatives in order, to consummate and make effective the transactions
contemplated by this Agreement as promptly as practicable hereafter, including,
without limitation, (i) using reasonable efforts to make all filings,
applications, notifications, reports, submissions and registrations with, and to
obtain all consents, approvals, authorizations or permits of, Governmental
Entities or other persons or entities as are necessary for the consummation of
the Merger and the other transactions contemplated hereby (including, without
limitation, pursuant to the HSR Act, the Securities Act, the Exchange Act, Blue
Sky Laws, Maryland law and other applicable laws and regulations in effect in
the United States or any other jurisdiction), and (ii) taking such actions and
doing such things as any other party hereto may reasonably request in order to
cause any of the conditions to such other party's obligation to consummate the
Merger as specified in Article 8 of this Agreement to be fully satisfied. Prior
to making any application to or filing with any Governmental Entity or other
person or entity in connection with this Agreement, the Company, on the one
hand, and the Parent, on the
29
other hand, shall provide the other with drafts thereof and afford the other a
reasonable opportunity to comment on such drafts.
(b) Without limiting the generality of the foregoing, each
of the Parent and the Company agree to cooperate and use reasonable efforts to
vigorously contest and resist any action, suit, proceeding or claim, and to have
vacated, lifted, reversed or overturned any injunction, order, judgment or
decree (whether temporary, preliminary or permanent), that delays, prevents or
otherwise restricts the consummation of the Merger or any other transaction
contemplated by this Agreement, and to take any and all actions (including,
without limitation, the disposition of assets, divestiture of businesses, or the
withdrawal from doing business in particular jurisdictions) as may be required
by Governmental Entities as a condition to the granting of any such necessary
approvals or as may be required to avoid, vacate, lift, reverse or overturn any
injunction, order, judgment, decree or regulatory action (provided, however,
that in no event shall any party hereto take, or be required to take, any action
that could reasonably be expected to have a Material Adverse Effect on the
Company or that, individually or in the aggregate, could reasonably be expected
to have a Parent Material Adverse Effect).
SECTION 5.7. Public Announcements. Parent, Acquisition and
--------------------
the Company, as the case may be, will consult with one another before issuing
any press release or otherwise making any public statements with respect to the
transactions contemplated by this Agreement, including, without limitation, the
Merger, and shall not issue any such press release or make any such public
statement prior to such consultation except to the extent that such consultation
may be prohibited by applicable law or by obligations pursuant to any listing
agreement with the NYSE as determined by Parent, Acquisition or the Company, as
the case may be.
SECTION 5.8. Employee Benefit Matters; Company Stock Options.
-----------------------------------------------
The Company shall, or shall cause one of its subsidiaries to, take such action
effective as of the Effective Time with respect to any Company Employee Plan as
Parent shall reasonably request, including termination of any such plan. The
Company shall (a) cooperate with Parent and Acquisition in obtaining waivers, in
form and substance reasonably satisfactory to Parent and Acquisition, of all
terms of the Company Option Plan and all terms of outstanding Company Stock
Options, which terms could prevent, restrict or impair the ability of Parent,
Acquisition and the Company to effectuate fully the provisions of Section 2.14,
and (b) use reasonable efforts to cause its Compensation Committee to interpret
the Company Option Plan, to the extent possible, so as to enable the Company,
Parent and Acquisition to effectuate fully the provisions of Section 2.14.
SECTION 5.9. Expenses. Whether or not the Merger is
--------
consummated, subject to Section 9.3 hereof, all costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby
(including, without limitation, fees and disbursements of representatives) shall
be borne by the party which incurs such cost or expense; provided, however, that
(a) the filing fee in connection with the filings under the HSR Act by the
parties hereto required in connection herewith, and (b) all out-of-pocket costs
and expenses related to the printing, filing and mailing (as applicable) of the
Offer Documents, and all SEC and other regulatory filing fees incurred in
connection with the Offer, shall be borne by the Parent.
SECTION 5.10. Notification of Certain Matters. The Company
-------------------------------
shall give prompt notice to Parent and Acquisition, and Parent and Acquisition
shall give prompt notice to the Company, of (i) the occurrence or nonoccurrence
of any event the occurrence or nonoccurrence of which would be likely to cause
(A) any representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at
30
or prior to the Effective Time or (B) any covenant, condition or agreement
contained in this Agreement not to be complied with or satisfied in all material
respects and (ii) any material failure of the Company, Parent or Acquisition, as
the case may be to comply with or 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 5.10 shall not cure such breach
or non-compliance or limit or otherwise affect the remedies available hereunder
to the party receiving such notice.
SECTION 5.11. Guarantee of Performance. Parent hereby
------------------------
guarantees the performance by Acquisition of its obligations under this
Agreement.
SECTION 5.12. Tax Treatment. The Company, Parent and
-------------
Acquisition acknowledge that it is their intention that the Merger shall be
treated as a reorganization as that term is defined in Section 368(a) of the
Code. The parties will proceed with the Merger and the other transactions
contemplated hereby in a manner consistent with such intention.
SECTION 5.13 Xxxx-Xxxxx-Xxxxxx Filing. The Company may lend to
------------------------
the Class A Holders the amounts necessary (the "Loans") to pay filing fees for
any filings required to be made by the Class A Holders under the HSR Act in
connection with the transactions contemplated hereby and by the Stockholders
Agreements. The Company will require repayment of each Loan in full on the
earlier of (a) the third anniversary of the date the Loan was made, or (b) the
date the applicable Loan recipient effects his first sale of Parent Common Stock
following the Merger. Such amounts may be advanced only as a Loan; the Company
shall not pay or reimburse any Class A Holder the amount of such filing fees, or
any part thereof, as bonus, salary or other business expense.
SECTION 5.14 Indemnification; Directors' and Officers'
----------------------------------------
Insurance. Subject to the occurrence of the Effective Time, until the third
---------
anniversary thereof, the Surviving Corporation will cause its Certificate of
Incorporation and Bylaws to continue to provide indemnification provisions, for
the benefit of those individuals who have served as directors or officers of the
Company at any time prior to the Effective Time, comparable to such provisions
as are currently contained in the Company's charter and Bylaws. In the event the
Surviving Corporation or any of its successors or assigns (a) consolidates with
or merges into any other person and the Surviving Corporation shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(b) transfer all or substantially all of its properties and assets to any
person, then, and in each such case, proper provision shall be made so that the
successors and assigns of the Surviving Corporation shall assume the obligations
set forth in this Section 5.14. The Surviving Corporation shall obtain and
maintain in effect for not less than three years after the Effective Time,
insurance coverage substantially equivalent to the current directors' and
officers' liability insurance policies currently maintained by the Company, with
no lapse in such coverage and on similar terms and conditions, with respect to
all matters, including the transactions contemplated hereby, occurring prior to,
and including, the Effective Time; provided, however, that the Surviving
Corporation may, at its option, provide such coverage as part of the insurance
or self-insurance provided or guaranteed by Parent for the directors and
officers of Parent and other subsidiaries of Parent.
ARTICLE 6
DISSENTING SHARES; EXCHANGE OF SHARES
SECTION 6.1 Dissenting Shares. Notwithstanding anything in
-----------------
this Agreement to the contrary, in the event that dissenters' rights are
available in connection
31
with the Merger pursuant to Title 3, Subtitle 2 of the MGCL, Shares that are
issued and outstanding immediately prior to the Effective Time and that are held
by stockholders who did not vote in favor of the Merger and who comply with all
of the relevant provisions of Title 3, Subtitle 2 of the MGCL (the "Dissenting
Shares") shall not be converted into or be exchangeable for the right to receive
the Cash Merger Consideration, but instead shall be converted into the right to
receive such consideration as may be determined to be due to such stockholders
pursuant to Title 3, Subtitle 2 of the MGCL, unless and until such holders shall
have failed to perfect or shall have effectively withdrawn or lost their rights
to appraisal under the MGCL. If any such holder shall have failed to perfect or
shall have effectively withdrawn or lost such right, such holder's Shares shall
thereupon be deemed to have been converted into and to have become exchangeable
for the right to receive, as of the Effective Time, the Cash Merger
Consideration without any interest thereon. The Company shall give Parent (i)
prompt notice of any written demands for appraisal of Shares received by the
Company and (ii) the opportunity to participate in all negotiations and
proceedings with respect to any such demands. The Company shall not, without the
prior written consent of Parent, voluntarily make any payment with respect to,
or settle or offer to settle, any such demands.
ARTICLE 7
CONDITIONS TO THE OFFER
SECTION 7.1. Conditions to the Offer. (a) Notwithstanding any
-----------------------
other provisions of the Offer, to the extent that the Tender Offer Purchase Time
has not occurred prior to March 1, 1999, Acquisition shall have no further
obligations hereunder (other than to comply with applicable law) with respect to
the Offer. Furthermore, notwithstanding any other provisions of the Offer,
Acquisition shall not be required to accept for payment or, subject to any
applicable rules and regulations of the SEC including Rule 14e-l(c) under the
Exchange Act (relating to Acquisition's obligation to pay for or return tendered
Shares promptly after termination or withdrawal of the Offer), pay for, and may
delay the acceptance for payment of or, subject to the restrictions referred to
above, the payment for, any tendered Shares, and may amend the Offer consistent
with the terms of this Agreement, including extending the deadline for tendering
Shares, or terminate the Offer, if any of the following events shall occur:
(i) from the date of this Agreement until the Tender Offer
Purchase Time, there shall have occurred any change, event,
occurrence or circumstance which, individually or in the
aggregate, has a Material Adverse Effect on the Company
(except for changes, events, occurrences or circumstances with
respect to general economic or lodging industry conditions);
(ii) from the date of this Agreement until the Tender Offer
Purchase Time, any Governmental Entity or court of competent
jurisdiction shall have enacted, issued, promulgated, enforced
or entered any statute, rule, regulation, executive order,
decree, injunction or other order (and if temporary or
preliminary, not vacated within five business days of its
entry) which is in effect at the Tender Offer Purchase Time
and which (1) makes the acceptance for payment of, or the
payment for, some or all of the Shares illegal or otherwise
prohibits or restricts consummation of the Offer, the Merger
or any of the other transactions contemplated hereby, (2)
imposes material limitations on the ability of Acquisition to
acquire or hold or to exercise any rights of ownership of the
Shares, or effectively to manage or control the Company and
its business, assets and properties or (3) has a Material
Adverse Effect on the Company; provided, however, that
32
the parties shall use reasonable efforts (subject to the
proviso in Section 5.6(b)) to cause any such decree, judgment
or other order to be vacated or lifted prior to March 1, 1999;
(iii) the representations and warranties of the Company set
forth in this Agreement shall not (A) have been true and
correct in one or more material respects on the date hereof or
(B) be true and correct in one or more material respect as of
the scheduled expiration date (as such date may be extended)
of the Offer as though made on or as of such date or the
Company shall have breached or failed in any respect to
perform or comply with any material obligation, agreement or
covenant required by this Agreement to be performed or
complied with by it except, in each case with respect to
clause (B), (1) for changes specifically permitted by this
Agreement and (2)(x) for those representations and warranties
that address matters only as of a particular date which are
true and correct as of such date or (y) where the failure of
representations and warranties (without regard to materiality
qualifications therein contained) to be true and correct, or
the performance or compliance with such obligations,
agreements or covenants, would not, individually or in the
aggregate, have a Material Adverse Effect on the Company;
(iv) from the date of this Agreement until the Tender Offer
Purchase Time, this Agreement shall have been terminated in
accordance with its terms;
(v) from the date of this Agreement until the Tender Offer
Purchase Time, there shall have occurred (A) a breach by the
Company of any of its obligations under Section 5.4, (B) an
acceptance by the Company of a Superior Proposal, or (C) a
termination or a breach by any Class A Holder or Class B
Holder of the applicable Stockholder Agreement;
(vi) within 5 days after its receipt of an SAS 71 comfort
letter and the working papers associated therewith, Parent or
Acquisition has notified the Company that such letter or
working papers revealed a material misstatement in the
financial information set forth in the Company's report on
Form 10-Q filed with the SEC as of November 13, 1998;
(vii) from the date of this Agreement until the Tender Offer
Purchase Time, the Board shall have withdrawn or modified in a
manner adverse to Parent its approval or recommendation of the
Offer, shall have recommended to the Company's stockholders
another proposal or offer or shall have adopted any resolution
to effect any of the foregoing;
(viii) from the date of this Agreement until the Tender Offer
Purchase Time, any of the consents, approvals, authorizations,
orders or permits required to be obtained by the Company,
Acquisition, or their respective subsidiaries in connection
with the Merger from, or filings or registrations required to
be made by any of the same prior to the Tender Offer Purchase
Time with, any Governmental Entity in connection with the
execution, delivery and performance of this Agreement shall
not have been obtained or made or shall have been obtained or
made subject to conditions or requirements, except where the
failure to have obtained or made any such consent, approval,
authorization, order, permit, filing or registration or such
conditions or requirements could not reasonably be expected to
(A) have a Material Adverse Effect on the Company or the
Parent or
33
(B) impose material limitations on the ability of
Acquisition to acquire or hold or to exercise any rights of
ownership of the Shares, or effectively to manage or control
the Company and its business, assets and properties; or
(ix) from the date of this Agreement until the Tender Offer
Purchase Time, there shall have occurred (A) any general
suspension of trading in, or limitation on prices for,
securities on the NYSE, (B) the declaration of a banking
moratorium or any suspension of payments in respect of banks
in the United States (whether or not mandatory), (C) the
commencement of a war, armed hostilities or other
international or national calamity directly or indirectly
involving the United States and having a Material Adverse
Effect on the Company or materially adversely affecting (or
materially delaying) the consummation of the Offer, (D) any
limitation or proposed limitation (whether or not mandatory)
by any United States governmental authority or agency, or any
other event, that materially adversely affects generally the
extension of credit by banks or other financial institutions,
(E) from the date of this Agreement through the date of
termination or expiration of the Offer, a decline of at least
25% in the Standard & Poor's 500 Index or (F) in the case of
any of the situations described in clauses (A) through (E)
inclusive, existing at the date of the commencement of the
Offer, a material acceleration, escalation or worsening
thereof;
which, in the reasonable judgment of Acquisition, in any such
case, and regardless of the circumstances giving rise to any such condition,
makes it inadvisable to proceed with the Offer and/or with such acceptance for
payment or payments.
(b) The conditions set forth in Section 7.1(a) are for the
sole benefit of Acquisition and may be asserted by Acquisition regardless of any
circumstances giving rise to any condition and may be waived by Acquisition, in
whole or in part, at any time and from time to time, in the sole discretion of
Acquisition. The failure by Parent or Acquisition (or any affiliate of
Acquisition) at any time to exercise any of the foregoing rights will not be
deemed a waiver of any right and each right will be deemed an ongoing right
which may be asserted at any time and from time to time.
(c) Notwithstanding the foregoing, if within the "Cure Time"
(defined below) the Company has cured one or more conditions set forth in
subsections (a)(i), (ii), (iii), (vi), (viii) or (ix) of Section 7.1, and
following such cure, no condition enumerated in Section 7.1(a) continues to
exist, then this Article shall not relieve Acquisition of its obligations
hereunder with respect to the Offer. For purposes hereof, "Cure Time" means the
earlier of (A) prior to two full business days before the scheduled expiration
date of the Offer (as such period may be extended) or (B) within ten full
business days following notice to the Company of the existence of such
condition.
ARTICLE 8
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 8.1. Conditions to Each Party's Obligations to Effect
------------------------------------------------
the Merger. The respective obligations of each party hereto to effect the Merger
----------
are subject to the satisfaction at or prior to the Closing Time of the following
conditions:
(a) this Agreement, the Preferred Stock Issuance, the Merger
and the other transactions contemplated hereby shall have been approved by all
necessary
34
corporate action of the Company, including, if necessary, adoption by vote of
the stockholders of the Company;
(b) no Governmental Entity or court of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, executive order, decree, injunction or other order
(and if temporary or preliminary, not vacated within five business days of its
entry) which is in effect and which (1) makes the payment of the Class A Merger
Consideration, the Class B Merger Consideration or Cash Merger Consideration
illegal or otherwise prohibits or restricts consummation of the Merger or any of
the other applicable transactions contemplated hereby, (2) imposes material
limitations on the ability of Parent to acquire or hold or to exercise any
rights of ownership of the Surviving Corporation, or effectively to manage or
control the Surviving Corporation and its business, assets and properties or (3)
has a Material Adverse Effect on the Company;
(c) any waiting period applicable to the Merger under the
HSR Act shall have terminated or expired and any other governmental or
regulatory notices or approvals required with respect to the transactions
contemplated hereby shall have been either filed or received;
(d) Acquisition shall have purchased Shares pursuant to the
Offer; and
(e) this Agreement and each of the Stockholder Agreements
shall remain in effect; and, unless consented to by Parent or Acquisition, no
Class A Holder or Class B Holder shall have defaulted under any of the
provisions of the applicable Stockholder Agreement.
ARTICLE 9
TERMINATION; AMENDMENT; WAIVER
SECTION 9.1. Termination. This Agreement may be terminated
-----------
and the Merger may be abandoned at any time prior to the Closing Time whether
before or after approval and adoption of this Agreement by the Company's
stockholders:
(a) by mutual written consent of Parent, Acquisition and
the Company;
(b) by Parent and Acquisition if (i) due to an occurrence or
circumstance which would result in a failure to satisfy any of the conditions
set forth in (A) Article 7, Parent or Acquisition shall have terminated the
Offer, or (B) Article 8, Parent or Acquisition shall have declined to complete
the Merger; (ii) there shall have been a breach of any covenant or agreement on
the part of the Company resulting in a Material Adverse Effect on the Company or
materially adversely affecting (or materially delaying) the consummation of the
Merger, which shall not have been cured prior to ten full business days
following notice of such breach;
(c) by the Company prior to the Tender Offer Purchase Time
if (i) there shall not have been a material breach of any representation,
warranty, covenant or agreement on the part of the Company and Acquisition shall
have terminated the Offer without purchasing Shares therefrom; (ii) the Company
shall have received a Superior Proposal, shall have furnished Parent a Notice of
Superior Proposal as contemplated by Section 5.4(b) and Parent shall not, within
three business days of Parent's receipt of the Notice of Superior Proposal, have
made an offer which the Company Board, by a majority vote, determines in its
good faith judgment (consistent with the advice of a financial
35
advisor of nationally recognized reputation) to be as favorable to the Company's
stockholders as such Superior Proposal, provided, however, that such termination
under this clause (ii) shall not be effective until payment of the fee required
by Section 9.3(b) or waiver thereof pursuant to Section 9.3(c); (iii) there
shall have been a breach of any representation or warranty on the part of Parent
or Acquisition which materially adversely affects (or materially delays) the
consummation of the Offer or (iv) there shall have been a material breach of any
covenant or agreement on the part of Parent or Acquisition and which materially
adversely affects (or materially delays) the consummation of the Offer which
shall not have been cured prior to the earliest of (A) 10 days following notice
of such breach and (B) two business days prior to the date on which the Offer
expires.
SECTION 9.2. Effect of Termination. In the event of the
---------------------
termination and abandonment of this Agreement pursuant to Section 9.1, this
Agreement shall forthwith become void and have no effect without any liability
on the part of any party hereto or its affiliates, directors, officers or
stockholders other than the provisions of this Section 9.2 and Sections 5.5,
9.3, and 10.1 through 10.11 hereof. Nothing contained in this Section 9.2 shall
relieve any party from liability for any breach of this Agreement.
SECTION 9.3. Fees and Expenses. (a) In the event this
-----------------
Agreement is terminated pursuant to certain provisions, as set forth in Section
9.3(b) below, Parent and Acquisition would suffer direct and substantial
damages, which damages cannot be determined with reasonable certainty. Subject
to the provisions of Section 9.3(c), to compensate Parent and Acquisition for
such damages, the Company shall pay to Acquisition the amount of $4 million as
liquidated damages (the "Liquidated Damages Amount") immediately upon such a
termination. It is specifically agreed that the amount to be paid pursuant to
this Section 9.3(a) represents liquidated damages and not a penalty.
(b) Subject to the provisions of Section 9.3(c), the Liquidated
Damages Amount shall be payable (i) if the Offer is terminated pursuant to
Section 7.1(a)(v); and (ii) if there shall be a proposal by a Third Party for a
Third Party Acquisition, and (A) Parent and Acquisition shall have terminated
this Agreement pursuant to Section 9.1(b); or (B) the Company shall have
terminated this Agreement pursuant to Section 9.1(c)(ii).
(c) Notwithstanding the provisions of subsections (a) and (b) above,
Acquisition may, at its sole option, waive payment of the Liquidated Damages
Amount in order to exercise its options to purchase certain Shares pursuant to
Section 12 of each Stockholder Agreement. In the event of such exercise, the
Liquidated Damages Amount shall no longer be payable.
(d) Except as specifically provided in this Section 9.3 and in
Section 5.9 each party shall bear its own expenses in connection with this
Agreement and the transactions contemplated hereby.
SECTION 9.4. Amendment. This Agreement may be amended by
---------
action taken by the Board, and by Parent and Acquisition at any time before or
after approval, if necessary, of the Merger by the stockholders of the Company
but, after any such approval, no amendment shall be made which requires the
approval of such stockholders under applicable law without such approval. This
Agreement may not be amended except by an instrument in writing signed on behalf
of the parties hereto.
SECTION 9.5. Extension; Waiver. At any time prior to the
-----------------
Closing Time, each party hereto may (i) extend the time for the performance of
any of the obligations or other acts of the other party, (ii) waive any
inaccuracies in the representations and
36
warranties of the other party contained herein or in any document certificate or
writing delivered pursuant hereto or (iii) waive compliance by the other party
with any of the agreements or conditions contained herein. Any agreement on the
part of any party hereto to any such extension or waiver shall be valid only if
set forth in an instrument, in writing, signed on behalf of such party. The
failure of any party hereto to assert any of its rights hereunder shall not
constitute a waiver of such rights.
ARTICLE 10
MISCELLANEOUS
SECTION 10.1. Nonsurvival of Representations and Warranties.
---------------------------------------------
The representations and warranties made herein shall not survive beyond the
Tender Offer Purchase Time or a termination of this Agreement; provided,
however, that this Section 10.1 shall not limit any covenant or agreement of the
parties hereto which by its terms requires performance after the Tender Offer
Purchase Time including, without limitation, the covenants and agreements set
forth in Article 5.
SECTION 10.2. Entire Agreement; Assignment. This Agreement (a)
----------------------------
constitutes the entire agreement between the parties hereto with respect to the
subject matter hereof and supersedes all other prior agreements and
understandings both written and oral between the parties with respect to the
subject matter hereof and (b) shall not be assigned by operation of law or
otherwise; provided, however, that Acquisition may assign any or all of its
rights and obligations under this Agreement to any subsidiary of Parent, but no
such assignment shall relieve Acquisition of its obligations hereunder if such
assignee does not perform such obligations.
SECTION 10.3. Validity. If any provision of this Agreement or
--------
the application thereof to any person or circumstance is held invalid or
unenforceable the remainder of this Agreement and the application of such
provision to other persons or circumstances shall not be affected thereby and to
such end the provisions of this Agreement are agreed to be severable.
SECTION 10.4. Notices. All notices, requests, claims, demands
-------
and other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in person, by
facsimile or by registered or certified mail (postage prepaid, return receipt
requested) to each other party as follows:
if to Parent or Acquisition: MARRIOTT INTERNATIONAL, INC.
00000 Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Telecopier: (000) 000-0000
Attention: General Counsel, Dept. 52/923
with a copy to: Xxxxxx Xxxx & Xxxxxxxx LLP
0000 Xxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Telecopier: (000) 000-0000
Attention: Xxxx X. Xxxxx, Esq.
37
if to the Company to: XXXXXXXXX CORPORATION
0000 Xxxxxxxxxxxx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxxxx X. Xxxxx and
Xxxx X. Xxxxxxxx
with a copy to: Xxxxxx & Whitney LLP
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000-0000
Telecopier: (000) 000-0000
Attention: Xxxx Xxxxxx
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
SECTION 10.5. Governing Law. This Agreement shall be governed
-------------
by and construed in accordance with the laws of the State of New York without
regard to the principles of conflicts of law thereof.
SECTION 10.6. Descriptive Headings. The descriptive headings
--------------------
herein are inserted for convenience of reference only and are not intended to be
part of or to affect the meaning or interpretation of this Agreement.
SECTION 10.7. Parties in Interest. This Agreement shall be
-------------------
binding upon and inure solely to the benefit of each party hereto and its
successors and permitted assigns and nothing in this Agreement express or
implied is intended to or shall confer upon any other person any rights,
benefits or remedies of any nature whatsoever under or by reason of this
Agreement.
SECTION 10.8. Certain Definitions. For the purposes of this
-------------------
Agreement the term:
(a) "affiliate" means a person that, directly or
indirectly, through one or more intermediaries controls, is controlled by or is
under common control with the first-mentioned person;
(b) "business day" means any day other than a day on which
the NYSE is closed;
(c) "stock" means common stock, preferred stock,
partnership interests, limited liability company interests or other ownership
interests entitling the holder thereof to vote with respect to matters involving
the issuer thereof;
(d) "person" means an individual, corporation, partnership,
limited liability company, association, trust, unincorporated organization or
other legal entity; and
(e) "subsidiary" or "subsidiaries" of the Company, Parent,
the Surviving Corporation or any other person means any corporation,
partnership, limited liability company, association, trust, unincorporated
association or other legal entity of which the Company, Parent, the Surviving
Corporation or any such other person, as the case may be, (either alone or
through or together with any other subsidiary) owns, directly or indirectly, 50%
or more of the capital stock the holders of which are generally entitled
38
to vote for the election of the board of directors or other governing body of
such corporation or other legal entity.
SECTION 10.9. Personal Liability. This Agreement shall not
------------------
create or be deemed to create or permit any personal liability or obligation on
the part of any direct or indirect stockholder of the Company or Parent or any
officer, director, employee, agent, representative or investor of any party
hereto.
SECTION 10.10. Specific Performance. The parties hereby
--------------------
acknowledge and agree that the failure of any party to perform its agreements
and covenants hereunder, including its failure to take all actions as are
necessary on its part to the consummation of the Merger, will cause irreparable
injury to the other parties, for which damages, even if available, will not be
an adequate remedy. Accordingly, each party hereby consents to the issuance of
injunctive relief by any court of competent jurisdiction to compel performance
of such party's obligations and to the granting by any court of the remedy of
specific performance of its obligations hereunder; provided, however, that if a
party hereto is entitled to receive the Liquidated Damages Amount pursuant to
Section 9.3 it shall not also be entitled to specific performance to compel the
consummation of the Merger.
SECTION 10.11. Counterparts. This Agreement may be executed
------------
in one or more counterparts, each of which shall be deemed to be an original but
all of which shall constitute one and the same agreement.
39
IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be duly executed on its behalf as of the day and year first above
written.
MARRIOTT INTERNATIONAL, INC.
By: /s/ Xxxxxx Xxxx
---------------------------
Name: Xxxxxx Xxxx
---------------------------
Title: Executive Vice President
--------------------------
XXXXXXXXX CORPORATION
By: /s/ Xxxx X. Xxxxxxxx
---------------------------
Name: Xxxx X. Xxxxxxxx
---------------------------
Title: Chairman of the Board and
Chief Executive Officer
---------------------------
MI SUBSIDIARY I, INC.
By: /s/ Xxxxxx Xxxx
---------------------------
Name: Xxxxxx Xxxx
---------------------------
Title: Vice President
---------------------------
40
