EXHIBIT 2.10
SECURITIES PURCHASE AGREEMENT
between
CHARTWELL LEISURE INC.
and
BARON ASSET FUND
March 6, 1997
TABLE OF CONTENTS
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Page
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SECTION 1. AUTHORIZATION OF SECURITIES.............................. 1
SECTION 2. PURCHASE AND SALE OF SECURITIES.......................... 1
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY............ 2
3.1 Corporate Organization.............................. 2
3.2 Business............................................ 2
3.3 Financial Statements................................ 4
3.4 Capitalization...................................... 4
3.5 Corporate Proceedings, etc.......................... 5
3.6 Consents and Approvals.............................. 5
3.7 Absence of Defaults, Conflicts, etc................. 5
3.8 Compliance with Law................................. 5
3.9 Pending Actions..................................... 6
3.10 Private Offering.................................... 6
3.11 Brokerage........................................... 6
3.12 Material Facts...................................... 7
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR........... 7
SECTION 5. ADDITIONAL COVENANTS OF THE PARTIES...................... 8
5.1 Resale of Securities................................ 8
5.2 Covenants Pending Closing........................... 9
5.3 Further Assurance................................... 9
SECTION 6. INVESTOR'S CLOSING CONDITIONS............................ 9
6.1 No Material Adverse Change.......................... 9
6.2 Representations and Warranties...................... 9
6.3 Compliance with Agreement........................... 9
6.4 Officer's Certificate............................... 10
6.5 Approval of Proceedings............................. 10
6.6 Injunction.......................................... 10
6.7 Opinion............................................. 10
SECTION 7. COMPANY'S POST-CLOSING CONDITIONS........................ 10
7.1 Closing of Related Transactions..................... 10
7.2 Sale Right.......................................... 10
7.3 Officer's Certificate............................... 11
SECTION 8. COMPANY'S CLOSING CONDITIONS............................. 11
8.1 Representations and Warranties...................... 11
8.2 Compliance with Agreement........................... 11
8.3 Investor Certificate................................ 11
8.4 Injunction.......................................... 11
Page
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SECTION 9. COVENANTS................................................. 12
9.1 Financial and Business Information................... 12
SECTION 10. REGISTRATION RIGHTS.......... .......................... 13
10.1 Required Registration................................ 13
10.2 Registration Procedures.............................. 13
10.3 Further Information.................................. 15
SECTION 11. INDEMNIFICATION........................................... 16
11.1 Indemnification Generally............................ 16
11.2 Indemnification Relating to Registration Rights....... 16
11.3 Indemnification Procedures........................... 17
SECTION 12. INTERPRETATION OF THIS AGREEMENT.......................... 18
12.1 Terms Defined........................................ 18
12.2 Directly or Indirectly............................... 19
12.3 Governing Law........................................ 19
12.4 Paragraph and Section Headings....................... 19
SECTION 13. MISCELLANEOUS............................................. 19
13.1 Notices.............................................. 19
13.2 Expenses............................................. 20
13.3 Survival............................................. 20
13.4 Entire Agreement; Amendment and Waiver................ 20
13.5 Counterparts......................................... 20
13.6 Successors and Assigns............................... 20
SECURITIES PURCHASE AGREEMENT
Dear Sirs:
Chartwell Leisure Inc., a Delaware corporation (the "Company"), hereby
agrees with Baron Asset Fund (the "Investor") as follows:
SECTION 1. AUTHORIZATION OF SECURITIES
---------------------------
(a) The Company has authorized 100,000,000 shares of Common Stock,
$.01 par value (the "Common Stock"), of which 10,501,850 shares were issued and
outstanding as of the close of business on March 4, 1997 and 10,000,000 shares
of Preferred Stock, $1.00 par value the ("Preferred Stock"), of which no shares
were issued and outstanding as of March 4, 1997.
SECTION 2. PURCHASE AND SALE OF SECURITIES
-------------------------------
(a) Subject to the terms and conditions set forth in this Agreement
and in reliance upon the Company's and the Investor's representations set forth
below, on the Closing Date (as defined below) the Company shall sell to the
Investor, and the Investor shall purchase from the Company, 658,929 shares of
Common Stock (the "Shares") at $14.00 per share for an aggregate cash purchase
price of $9,225,006 (the "Purchase Price"). Such sale and purchase shall be
effected on the Closing Date by the Company executing and delivering to the
Investor, duly registered in the Investor's name, a duly executed stock
certificate evidencing the Shares being purchased by it, against delivery by the
Investor to the Company of the Purchase Price by wire transfer of immediately
available funds to such account as the Company shall designate on the Closing
Date. The Company shall maintain such funds in a segregated interest-bearing
account (the "Segregated Account") for the sole benefit of the Investor until
such time as the conditions set forth in Section 7 of this Agreement are met or
the Investor exercises its rights under Section 7.2, in which case the funds
shall immediately, but in no event more than one Business Day after exercise of
such right, be returned to the Investor against delivery of such Shares as
provided in Section 7.2.
(b) The closing (the "Closing") of such sale and purchase shall take
place at 10:00 A.M., New York City time, on March 6, 1997 or on such other date
as the Investor and the Company agree to in writing (the "Closing Date"), at the
offices of Battle Xxxxxx LLP, 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx,
00000, or at such other location as the Investor and the Company shall mutually
select and agree to.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
Except as otherwise disclosed in the written Schedules delivered
separately but concurrently herewith, the Company represents and warrants to the
Investor that:
3.1 Corporate Organization
----------------------
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware.
(b) The Company has all requisite power and authority and has all
necessary approvals, licenses, permits and authorization to own and lease its
properties and to carry on its business as now conducted, except where the
failure to have such approvals, licenses, permits or authorizations would not
have a material adverse effect on the business or financial position of the
Company and its subsidiaries, taken as a whole.
(c) The Company has filed all necessary documents to qualify to do
business as a foreign corporation in, and the Company is in good standing under
the laws of, each jurisdiction in which the conduct of the Company's business or
the nature of the property owned require such qualification, except where the
failure to so qualify would not have a material adverse affect on the business
or financial position of the Company and its subsidiaries taken as a whole.
3.2 Business
--------
The Company has caused to be delivered to the Investor copies of the
following, without exhibits thereto (collectively, including the exhibits
thereto the "SEC Reports and Filings"):
(i) The Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1995 (File No. 0-24794) filed with the Commission on
April 1, 1996, as amended by the Company's Annual Report on Form 10-K/A filed
with the Commission on May 24, 1996, as amended by the Company's Annual Report
on Form 10-K/A filed with the Commission on July 3, 1996;
(ii) The Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 1996 filed with the Commission on May 15, 1996;
(iii) The Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended June 30, 1996 filed with the
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Commission on August 8, 1996, as amended by the Company's Quarterly Report on
Form 10-Q/A filed with the Commission on August 9, 1996;
(iv) The Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended September 30, 1996 filed with the Commission on November 12, 1996;
(v) The Company's Current Report on Form 8-K, dated January 23,
1996, filed with the Commission on February 7, 1996, as amended by the Company's
Current Report on Form 8-K/A filed with the Commission on April 2, 1996, as
amended by the Company's Current Report on Form 8-K/A filed with the Commission
on July 3, 1996, as amended by the Company's Current Report on Form 8-K/A filed
with the Commission on July 9, 1996;
(vi) The Company's Current Report on Form 8-K, dated October 1,
1996, filed with the Commission on October 15, 1996, as amended by the Company's
Current Report on Form 8-K/A filed with the Commission on December 12, 1996, as
amended by the Company's Current Report on Form 8-K/A filed with the Commission
on February 7, 1997, as amended by the Company's Current Report on Form 8-K/A
filed with the Commission on February 26, 1997;
(vii) The Company's registration statement on Form S-8 (File
No. 333-15359) dated November 1, 1996;
(viii) The Company's registration statement on Form S-3 (File No.
333-16661) dated November 22, 1996, Amendments No. 1 and 2 thereto filed with
the Commission on February 10, 1997 and February 12, 1997, respectively, and the
final form of prospectus constituting Part I of such registration statement; and
(ix) The Company's registration statement (File No. 333-21777)
dated February 13, 1997.
The SEC Reports and Filings include all filings required to be made by
the Company since January 1, 1996 under the Securities Act of 1933, as amended
(the "Securities Act), and the Exchange Act of 1934, as amended (the "Exchange
Act"), and any rules and regulations promulgated thereunder. The SEC Reports
and Filings, when filed, complied in all material respects with all applicable
requirements of the Securities Act and the Exchange Act and the rules and
regulations promulgated thereunder. None of the SEC Reports and Filings, at the
time of filing contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein not misleading in light of the circumstances in
which they were made. The Company has taken all necessary actions to ensure its
continued inclusion in, and the continued eligibility of the Common Stock
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for trading on The NASDAQ Stock Market under all currently effective and, to the
Company's knowledge, currently proposed inclusion requirements. Each balance
sheet included in the SEC Reports and Filings (including any related notes and
schedules) fairly presents in all material respects the consolidated financial
position of the Company and its Subsidiaries as of its date, and each of the
other financial statements included in the SEC Reports and Filings (including
any related notes and schedules) fairly presents in all material respects the
consolidated results of operations or other information therein of Company and
its Subsidiaries for the periods or as of the dates therein set forth in
accordance with GAAP consistently applied during the periods involved (except
that the interim reports are subject to adjustments which might be required as a
result of year end audit and except as otherwise stated therein).
3.3 Financial Statements
--------------------
The audited consolidated balance sheet of the Company as at
December 31, 1995 and the unaudited consolidated balance sheet of the Company as
at September 30, 1996 fairly present in all material respects the consolidated
financial position of the Company as at the dates thereof, and the related
consolidated statements of operations, equity and cash flows for the year ended
December 31, 1995 and the nine months ended September 30, 1996 fairly present
the results of operations of the Company and its subsidiaries for the respective
periods indicated (except that the interim reports are subject to adjustments
which might be required as a result of year end audit and except as otherwise
stated therein). All such financial statements, including the schedules and
notes thereto, were prepared in accordance with generally accepted accounting
principles ("GAAP") applied consistently throughout the periods involved, except
as otherwise stated therein.
3.4 Capitalization
--------------
(a) As of the date hereof, the Company has authorized 100,000,000
shares of Common Stock, of which 10,501,850 shares were issued and outstanding
as of the close of business on March 4, 1997, and 10,000,000 shares of Preferred
Stock, of which no shares were issued and outstanding as of March 4, 1997.
(b) All the outstanding shares of capital stock of the Company have
been duly and validly issued and are fully paid and non-assessable. Upon
issuance, sale and delivery as contemplated by this Agreement, the Shares will
be duly authorized, validly issued, fully paid and non-assessable shares of the
Company, free of all preemptive or similar rights.
(c) Except pursuant to the Rights Offering (as defined herein),
there are no shares of Common Stock issuable upon exercise or conversion of any
security of the Company nor any rights, options or warrants outstanding or other
agreements to acquire shares of Common Stock nor is the Company contractually
obligated to purchase, redeem
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or otherwise acquire any of its outstanding shares of Common Stock. No
shareholder of the Company is entitled to any preemptive or similar rights to
subscribe for shares of capital stock of the Company. No shareholders have
registration rights with respect to their shares.
3.5 Corporate Proceedings, etc.
--------------------------
The Company has authorized the execution, delivery, and performance
of this Agreement and each of the transactions and agreements contemplated
hereby (the "Related Transactions"). No other corporate action (including
shareholder approval) is necessary to authorize such execution, delivery and
performance of this Agreement or the transactions contemplated hereby (other
than various actions to be taken in connection with the Rights Offering (as
defined herein) and the transactions contemplated by Section 10 hereof), and
upon such execution and delivery, this Agreement shall constitute the valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, except that such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights and general principles of equity.
3.6 Consents and Approvals
----------------------
The execution and delivery by the Company of this Agreement, the
performance by the Company of its obligations hereunder and the consummation by
the Company of the transactions contemplated hereby (other than the Rights
Offering (as defined herein) and the matters contemplated by Section 10 hereof)
do not require the Company to obtain any consent, approval or action of, or make
any filing with or give any notice to, any corporation, person or firm or any
public, governmental or judicial authority.
3.7 Absence of Defaults, Conflicts, etc.
-----------------------------------
The execution and delivery of this Agreement do not, and the
fulfillment of the terms hereof by the Company, and the issuance of the Shares
will not, result in a breach of any of the terms, conditions or provisions of,
or constitute a default under, or permit the acceleration of rights under or
termination of, any indenture, mortgage, deed of trust, credit agreement, note
or other evidence of indebtedness, or other material agreement of the Company
(collectively the "Key Agreements and Instruments"), or the Restated Certificate
of Incorporation or the Amended and Restated By-Laws of the Company, or any rule
or regulation of any court or federal or state regulatory board or body or
administrative agency having jurisdiction over the Company or over its
properties or businesses. No event has occurred and no condition exists which,
upon notice or the passage of time, would constitute a default under any such
Key Agreements and Instruments or in any material license, permit or
authorization to which the Company is a party or by which it may be bound.
3.8 Compliance with Law
-------------------
(a) The Company is not in violation of any laws, ordinances,
governmental rules or regulations to which it is subject,
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including without limitation, laws or regulations relating to the environment or
to occupational health and safety which violation would or might materially
adversely affect the properties, business, prospects, profits or condition
(financial or otherwise) of the Company.
(b) The Company has all licenses, permits, franchises or other
governmental authorizations necessary to the ownership of its property or to the
conduct of its business, which if violated or not obtained would or be
reasonably likely to materially adversely affect the properties, business,
prospects, profits or condition (financial or otherwise) of the Company and its
subsidiaries, taken as a whole. The Company has not finally been denied any
application for any such licenses, permits, franchises or other governmental
authorizations necessary to its business.
3.9 Pending Actions
---------------
There is no action, suit, investigation or proceeding pending or, to
the Company's knowledge, threatened against the Company or any of its properties
or assets by or before any court, arbitrator or governmental body, department,
commission, board, bureau, agency or instrumentality, which questions the
validity of this Agreement, the Related Transactions, the issuance or validity
of the Shares or any action taken or to be taken pursuant hereto or thereto, or
which is reasonably likely to result in any material adverse change in the
business or financial condition of the Company and its subsidiaries, taken as a
whole, nor has the Company been notified that either it or any of its officers,
directors or affiliates is the subject of any investigation or inquiry, informal
or otherwise, conducted by the SEC or NASDAQ and the Company is not in default
with respect to any judgment, order, writ, injunction, decree, or award having
applicability to it or its business or properties, other than any such defaults
which would not have a material adverse effect on the business or financial
position of the Company and its subsidiaries, taken as a whole.
3.10 Private Offering
----------------
Neither the Company nor anyone acting on its behalf has sold or has
offered any of the Shares for sale to, or solicited offers to buy from, or
otherwise approached or negotiated with respect thereto with, any prospective
purchaser, other than the Investor. Neither the Company nor anyone acting on
its behalf shall offer the Shares for issue or sale to, or solicit any offer to
acquire any of the same from, anyone so as to bring the issuance and sale of
such Shares, or any part thereof, within the provisions of Section 5 of the
Securities Act. Based upon the representations of the Investor set forth in
Section 4, the offer, issuance and sale of the Shares are and will be exempt
from the registration and prospectus delivery requirements of the Securities
Act, and have been registered or qualified (or are exempt from registration and
qualification) under the registration, permit or qualification requirements of
all applicable state securities laws.
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3.11 Brokerage
---------
There are no claims for brokerage commissions or finder's fees or
similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement made by or on behalf of the Company.
3.12 Material Facts
--------------
This Agreement, the schedules furnished contemporaneously herewith,
and the other agreements, documents, certificates or written statements
furnished or to be furnished to the Investor, including the SEC Reports and
Filings, through the Closing Date by or on behalf of the Company in connection
with the transactions contemplated hereby, do not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements contained therein or herein, in light of the circumstances in which
they were made, not misleading.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
----------------------------------------------
The Investor represents and warrants to the Company as follows:
(a) It is acquiring the Shares for its own account for investment
and not with a view towards the resale, transfer or distribution thereof, nor
with any present intention of distributing the Shares, but subject,
nevertheless, to any requirement of law that the disposition of the Investor's
property shall at all times be within the Investor's control, and without
prejudice to the Investor's right at all times to sell or otherwise dispose of
all or any part of such securities under a registration under the Securities Act
or under an exemption from said registration available under the Securities Act.
(b) It has full power and legal right to execute and deliver this
Agreement and to perform its obligations hereunder.
(c) The Investor is a business trust, validly formed and existing
under the laws of the State of Massachusetts.
(d) It has taken all action necessary for the authorization,
execution, delivery, and performance of this Agreement and its obligations
hereunder, and, upon execution and delivery by the Company, this Agreement shall
constitute the valid and binding obligations of the Investor, enforceable
against the Investor in accordance with its terms, except that such enforcement
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights and
general principles of equity.
(e) There are no claims for brokerage commissions or finder's fees
or similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement made by or on behalf of the Investor.
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(f) It has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of its investment
in the Company as contemplated by this Agreement, and is able to bear the
economic risk of such investment for an indefinite period of time. It has been
furnished access to such information and documents as it has requested and has
been afforded an opportunity to ask questions of and receive answers from
representatives of the Company concerning the terms and conditions of this
Agreement and the purchase of the Shares contemplated hereby and the business
and financial condition of the Company.
(g) It is an "accredited investor" as such term is defined in Rule
501 under the Securities Act and is a Qualified Institutional Buyer as defined
under Rule 144A of the Securities Act.
(h) The Investor (a) acknowledges that the Shares are not registered
under the Securities Act or under any state securities laws and that the Shares
to be acquired by it must be held indefinitely by it unless they are
subsequently registered under the Securities Act and under any applicable state
securities laws or an exemption from registration is available, (b) is aware
that any routine sales pursuant to Rule 144 promulgated under the Securities Act
of the Shares may be made only in limited amounts and in accordance with the
terms and conditions of that Rule and that in such cases where the Rule is not
applicable, compliance with some other registration exemption will be required,
(c) is aware that Rule 144 is not presently available for use by the Investor
for resale of the Shares and (d) is aware that, except as provided in Section 10
of this Agreement, the Company is not obligated to register under the Securities
Act any sale, transfer or other disposition of the Shares.
SECTION 5. ADDITIONAL COVENANTS OF THE PARTIES
-----------------------------------
5.1 Resale of Securities
--------------------
(a) The Investor covenants that it will not sell or otherwise
transfer the Shares except pursuant to an effective registration under the
Securities Act or unless it delivers to the Company an opinion of counsel, in
form and substance reasonably acceptable to the Company, to the effect that the
sale or transfer qualifies as an exempt transaction under the Securities Act and
the rules and regulations promulgated thereunder.
(b) The certificates evidencing the Shares will bear the following
legend reflecting the foregoing restrictions on the transfer of such securities:
"The securities evidenced hereby have not been registered under the
Securities Act of 1933, as amended (the "Act"), and may not be
transferred except pursuant to an effective registration under the
Act or in a transaction which, in the opinion of counsel reasonably
satisfactory to the Company, qualifies as an
8
exempt transaction under the Act and the rules and regulations
promulgated thereunder.
5.2 Covenants Pending Closing
-------------------------
Until the Closing, the Company will not, without the Investor's prior
written consent, take any action which would result in any of the covenants
contained in this Agreement becoming incapable of performance. The Company will
promptly advise the Investor of any action or event of which it becomes aware
which has the effect of rendering any of such covenants incapable of
performance.
5.3 Further Assurance
-----------------
Each of the parties shall execute such documents and other papers and
take such further actions as may be reasonably required or desirable to carry
out the provisions hereof and the transactions contemplated hereby. Each such
party shall use its reasonable efforts to fulfill or obtain the fulfillment of
the conditions to the Closing and the Post-Closing Conditions as promptly as
practicable.
SECTION 6. INVESTOR'S CLOSING CONDITIONS
-----------------------------
The obligation of the Investor to purchase and pay for the Shares on
the Closing Date, as provided in Section 2 hereof, shall be subject to the
performance by the Company of its agreements theretofore to be performed
hereunder and to the satisfaction, prior thereto or concurrently therewith, of
the following further conditions:
6.1 No Material Adverse Change
--------------------------
There shall not have occurred any event which has resulted in or is
likely to result in a material adverse change in the condition (financial or
otherwise), business, operations, assets, properties, financial results or
prospects of the Company.
6.2 Representations and Warranties
------------------------------
The representations and warranties of the Company contained in this
Agreement shall be true in all material respects on and as of the Closing Date
as though such representations and warranties were made at and as of such date,
except (i) as otherwise affected by the transactions contemplated hereby or (ii)
the Rights Offering.
6.3 Compliance with Agreement
-------------------------
The Company shall have performed and complied with all agreements,
covenants and conditions contained in this Agreement which are required to be
performed or complied with by the Company prior to or on the Closing Date.
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6.4 Officer's Certificate
---------------------
The Investor shall have received a certificate, dated the Closing
Date, signed by the Chief Financial Officer of the Company, certifying that the
conditions specified in the foregoing Sections 6.1, 6.2 and 6.3 hereof have been
fulfilled.
6.5 Approval of Proceedings
-----------------------
All proceedings to be taken in connection with the transactions
contemplated by this Agreement, and all documents incident thereto, shall be
satisfactory in form and substance to the Investor and its counsel; and the
Investor shall have received copies of all documents or other evidence which
they and such counsel may request in connection with such transactions and of
all records of corporate proceedings in connection therewith in form and
substance satisfactory to the Investor and its counsel.
6.6 Injunction
----------
There shall be no effective injunction, writ, preliminary restraining
order or any order of any nature issued by a court of competent jurisdiction
directing that the transactions provided for herein or any of them not be
consummated as herein provided.
6.7 Opinion
-------
The Investor shall receive an opinion of counsel to the Company,
Battle Xxxxxx LLP, substantially in the form of Exhibit 6.7 hereto.
SECTION 7. COMPANY'S POST-CLOSING CONDITIONS
---------------------------------
7.1 Closing of Related Transactions
-------------------------------
The Company shall have: (i) on or before March 15, 1997 commenced the
currently contemplated rights offering at a price of $14.00 per share (the
"Rights Offering"); and (ii) on or before April 15, 1997 consummated the sale of
an aggregate of no less than 1,071,428 shares of Common Stock to Chartwell
Leisure Associates X.X. XX and FSNL LLC at a price of no less than $14.00 per
share (collectively, the "Post-Closing Conditions").
7.2 Sale Right
----------
In the event that each of the Post-Closing Conditions are not met on
or before April 15, 1997 (the "Section 7.2 Exercise Date"), the Investor will
have the right to sell the Shares purchased herein to the Company by notifying
the Company in writing (the "Notice") of its intention to sell Shares back to
the Company and the Company shall be required to repurchase such Shares at a
price of $14.00 per share plus interest accrued in the Segregated Account from
the Investor within two (2) Business Days of receipt of such Notice. The
Investor may elect to exercise such right by notifying the Company in writing of
its intention to sell such Shares to the Company. The Closing of
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such sale and purchase shall take place at 10:00 a.m. at the offices of Battle
Xxxxxx LLP, 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, within two (2)
Business Days of receipt of such Notice. The Company shall pay the purchase
price in immediately available funds against delivery of such Shares and such
certificates representing the Shares shall be duly endorsed to the Company or
accompanied by duly executed stock power naming the Company as transferee. The
Investor's right to sell the Shares back to the Company pursuant to this Section
7.2 shall expire on May 30, 1997, after which date the Company shall no longer
be obligated to repurchase the Shares.
7.3 Officer's Certificate
---------------------
The Investor shall have received a certificate signed by the Chief
Financial Officer of the Company, certifying that the conditions specified in
Section 7.1 hereof have been fulfilled.
SECTION 8. COMPANY'S CLOSING CONDITIONS
----------------------------
The obligation of the Company to issue and deliver the Shares on the
Closing Date, as provided in Section 2 hereof, shall be subject to the
performance by the Investor of its agreements theretofore to be performed
hereunder and to the satisfaction, prior thereto or concurrently therewith, of
the following further conditions:
8.1 Representations and Warranties
------------------------------
The representations and warranties of the Investor contained in this
Agreement shall be true on and as of the Closing Date as though such warranties
and representations were made at and as of such date, except as otherwise
affected by the transactions contemplated hereby.
8.2 Compliance with Agreement
-------------------------
The Investor shall have performed and complied with all agreements,
covenants and conditions contained in this Agreement which are required to be
performed or complied with by it prior to or on the Closing Date.
8.3 Investor Certificate
--------------------
The Company shall have received a certificate from the Investor,
dated the Closing Date, signed by a duly authorized representative of the
Investor, certifying that the conditions specified in the foregoing Sections 8.1
and 8.2 hereof have been fulfilled.
8.4 Injunction
----------
There shall be no effective injunction, writ, preliminary restraining
order or any order of any nature issued by a court of competent jurisdiction
directing that the transactions provided for herein or any of them not be
consummated as herein provided.
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SECTION 9. COVENANTS
---------
9.1 Financial and Business Information
----------------------------------
From and after the date hereof, the Company shall deliver to the
Investor so long as the Investor collectively holds beneficially (within the
meaning of Rule 13d-3 under the Exchange Act) at least 50% of the Shares being
purchased by the Investor on the date hereof:
(a) Quarterly Statements - as soon as practical, and in any event
--------------------
within 50 days after the close of each of the first three fiscal quarters of
each fiscal year of the Company, a copy of the Company's Quarterly Report on
Form 10-Q for such quarter or, if the Company is not required to file such a
report with the SEC, an unaudited consolidated balance sheet and statements of
operations, stockholders' equity and cash flows of the Company and any
subsidiaries as at the close of such quarter and covering operations for such
quarter, and the portion of the Company's fiscal year ending on the last day of
such quarter, all in reasonable detail and prepared in accordance with GAAP
consistently applied, subject to audit and year-end adjustments, setting forth
in each case in comparative form the figures for the comparable period of the
previous fiscal year.
(b) Annual Statements - as soon as practical after the end of each
-----------------
fiscal year of the Company, and in any event within 105 days thereafter, a copy
of the Company's Annual Report on Form 10-K for such year or, if the Company is
not required to file such a report with the SEC duplicate copies of:
(i) consolidated balance sheets of the Company and any
subsidiaries at the end of such year; and
(ii) consolidated statements of operations, stockholders, equity
and cash flows of the Company and any subsidiaries for such year, setting forth
in each case in comparative form the figures for the previous fiscal year, all
in reasonable detail and accompanied by an opinion thereon of Deloitte & Touche
LLP or such other independent certified public accountants of recognized
national standing selected by the Company, which opinion shall state that such
financial statements fairly present the financial position of the Company and
any subsidiaries on a consolidated basis and have been prepared in accordance
with GAAP consistently applied (except for changes in application in which such
accountants concur) and that the examination of such accountants in connection
with such financial statements has been made in accordance with generally
accepted auditing standards, and accordingly included such tests of the
accounting records and such other auditing procedures as were considered
necessary in the circumstances.
(c) Other Reports - promptly upon their becoming available, one
-------------
copy of each financial statement, report, notice or proxy statement sent by the
Company to stockholders generally;
12
(d) Requested Information - with reasonable promptness, the Company
---------------------
shall furnish the Investor with such other data and information as from time to
time may be reasonably requested.
(e) Access to Data - The Investor shall be allowed reasonable
--------------
access to the Company's records, financial data and facilities and it shall have
the opportunity to discuss the Company's business, management and financial
affairs with the Company's Chief Executive Officer, its Chief Financial Officer
and its Treasurer/Controller on a reasonable basis. The Investor shall also have
the right to ask questions of the Company's officers on a reasonable basis and
the Investor shall have the right to receive answers to its satisfaction. As to
so much of the information and other material furnished pursuant to this
subsection as constitutes or contains confidential business, financial or other
information of the Company or any subsidiary and which is marked "Confidential"
or which the Investor is notified is confidential, the Investor, covenants for
itself and its directors, officers and partners that it will use due care to
prevent its officers, directors, partners, employees, counsel, accountants and
other representatives from disclosing such information to persons other than
their respective authorized employees, counsel, accountants, shareholders,
partners, limited partners and other authorized representatives; provided,
however, that the Investor may disclose or deliver any information or other
material disclosed to or received by it should the Investor be advised by its
counsel that such disclosure or delivery is required by law, regulation or
judicial or administrative order. For purposes of this Section 9.1(e), "due
care" means at least the same level of care that the Investor would use to
protect the confidentiality of its own sensitive or proprietary information, and
this obligation shall survive termination of this Agreement.
SECTION 10. REGISTRATION RIGHTS
-------------------
The Investor shall have the following registration rights with
respect to the Shares purchased by it pursuant to this Agreement:
10.1 Required Registration
---------------------
The Company agrees to register the Shares purchased hereunder
pursuant to a registration statement on Form S-3. The Company undertakes to file
a registration statement on Form S-3 covering resale of the Shares (the "Shelf
Registration") and to use its best efforts to cause such registration statement
to become effective within ninety (90) days of Closing. The Company shall
maintain the effectiveness of the Shelf Registration until such time as the
Investor has sold all of its Shares or is able to sell its Shares under Rule 144
of the Securities Act without limitation.
10.2 Registration Procedures
-----------------------
(a) With respect to the registration, qualification or compliance
effected by the Company subject to this Section 10, the Company shall keep the
Investor advised in writing as to the initiation of such registration,
qualification and compliance and as
13
to the completion thereof. In addition, the Company shall at its own expense:
(i) prepare and file with the SEC such amendments and
supplements to such registration statement as may be necessary to keep such
registration, qualification or compliance effective and comply with provisions
of the Securities Act with respect to the disposition of all securities covered
thereby during such period;
(ii) update, correct, amend and supplement such registration,
qualification or compliance as necessary;
(iii) if such offering is to be underwritten, in whole or in part,
enter into a written agreement which is customary in form and substance and
reasonably satisfactory to the managing underwriter and the registering
Investor;
(iv) furnish such number of prospectuses, including preliminary
prospectuses, and other documents incident thereto as Investor may reasonably
request from time to time;
(v) register or qualify such Shares under such other securities
or blue sky laws of such jurisdictions of the United States as the Investor may
reasonably request to enable it to consummate the disposition in such
jurisdiction of the Shares (provided that Company will not be required to (i)
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this provision, or (ii) consent to
general service of process in any such jurisdiction) or otherwise take action
that would subject it to general jurisdiction of the courts of any jurisdiction
in which it is not so subject or (iii) subject itself to taxation in any
jurisdiction where it is not subject.
(vi) notify the Investor at any time when a prospectus relating
to the Shares is required to be delivered under the Securities Act, of the
happening of any event as a result of which the prospectus included in such
registration statement contains an untrue statement of a material fact or omits
any fact necessary to make the statement therein not misleading, and at the
request of the Investor, the Company will prepare a supplement or amendment to
such prospectus, so that, as thereafter delivered to purchasers of such shares,
such prospectus will not contain any untrue statements of a material fact or
omit to state any fact necessary to make the statements therein not misleading;
(vii) cause all such Shares to be listed on each securities
exchange on which similar securities issued by the Company are then listed and
obtain all necessary approvals from The NASDAQ Stock Market for trading thereon;
(viii) provide a transfer agent and registrar for all such Shares
not later than the effective date of such registration statement;
14
(ix) upon the sale of any Shares pursuant to such registration
statement, remove all restrictive legends from all certificates or other
instruments evidencing the Shares; and
(x) At any time when the registration statement effected
pursuant to this Section 10 is effective, upon written notice from the Company
to the Investor that the Company determines in the good faith judgment of the
Board of Directors or a committee of the Board of Directors of the Company, with
the advice of counsel, that the Investor's sale of the Shares pursuant to the
registration statement would require disclosure of non-public material
information the disclosure of which would have a material adverse effect on the
Company (an "Information Blackout"), the Investor shall suspend sales of the
Shares pursuant to such registration statement until the earlier of: (X) the
date upon which such material information is disclosed to the public or ceases
to be material, or (Y) such time as the Company notifies the Investor that sales
pursuant to such registration statement may be resumed, but in no event, in
either case, later than 5 days after the date of such notice.
(b) Notwithstanding anything herein to the contrary, except as
required by law, all expenses incurred by the Company in complying with this
Section 10, including but not limited to, all registration, qualification and
filing fees, printing expenses, fees and disbursements of counsel and
accountants for the Company, blue sky fees and expenses (including fees and
disbursements of counsel related to all blue sky matters and the fees and
expenses of legal counsel to the Investor) ("Registration Expenses") incurred in
connection with any registration, qualification or compliance pursuant to this
Section 10 shall be borne by the Company. All underwriting discounts and
selling commissions applicable to a sale or disposition of the Shares incurred
in connection with any registration of the Shares and all transfer taxes, if
any, relating to the sale or disposition of the Shares by the Investor shall be
borne by the Investor.
10.3 Further Information
-------------------
If the Shares owned by the Investor are included in the
registration, the Investor shall furnish the Company such information regarding
itself as the Company may reasonably request and as shall be required in
connection with any registration, qualification or compliance referred to in
this Agreement and the Investor shall indemnify the Company with respect thereto
in accordance with Section 10 hereof. The Investor hereby represents and
warrants to the Company that it has accurately and completely provided the
requested information, and the Investor agrees and acknowledges that the Company
may rely on such information as being true and correct for purposes of preparing
and filing the Shelf Registration at the time of filing thereof and at the time
it is declared effective, unless the Investor has notified the Company in
writing to the contrary prior to such time.
15
SECTION 11. INDEMNIFICATION
---------------
11.1 Indemnification Generally
-------------------------
The Company, on the one hand, and the Investor, on the other hand
(each an "Indemnifying Party"), shall indemnify the other from and against any
and all losses, damages, liabilities, claims, charges, actions, proceedings,
demands, judgments, settlement costs and expenses of any nature whatsoever
(including, without limitation, attorneys' fees and expenses) or deficiencies
resulting from any breach of a representation, warranty or covenant by the
Indemnifying Party and all claims, charges, actions or proceedings incident to
or arising out of the foregoing.
11.2 Indemnification Relating to Registration Rights
-----------------------------------------------
(a) With respect to any registration, qualification or compliance
effected or to be effected pursuant to Section 10 of this Agreement, the Company
shall indemnify the Investor, each of the Investor's directors and officers,
each underwriter (as defined in the Securities Act) of the securities sold by
the Investor (if any), and each Person who controls (within the meaning of the
Securities Act) the Investor or underwriter (a "Controlling Person") from and
against all losses, damages, liabilities, claims, charges, actions, proceedings,
demands, judgments, settlement costs and expenses of any nature whatsoever
(including, without limitation, reasonable attorneys' fees and expenses) or
deficiencies of any the Investor or any such underwriter or Controlling Person
concerning:
(i) any untrue statement (or alleged untrue statement) of a
material fact contained in any prospectus, offering circular or other document
(including any related registration statement, notification or the like)
incident to any such registration, qualification or compliance;
(ii) any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statement
therein, in the light of the circumstances under which it was made, not
misleading; or
(iii) any violation by the Company of the Securities Act or any
rule or regulation promulgated thereunder applicable to the Company, or of any
blue sky or other state securities laws or any rule or regulation promulgated
thereunder applicable to the Company,
in each case, relating to any action or inaction required of the Company in
connection with any such registration, qualification or compliance, and subject
to Section 11 below will reimburse each such Person entitled to indemnity under
this Section 11 for all legal and other expenses reasonably incurred in
connection with investigating or defending any such loss, damage, liability,
claim, charge, action, proceeding, demand, judgment, settlement or deficiency;
provided, however, that, the foregoing indemnity and reimbursement obligation
-------- -------
shall not be applicable to the extent that any such matter arises out of or is
based on any untrue statement (or alleged untrue statement) or omission (or
alleged omission) made in reliance upon and in
16
conformity with written information furnished to the Company by or on behalf of
the Investor or by or on behalf of such an underwriter specifically for use in
such prospectus, offering circular or other document.
(b) With respect to any registration, qualification or compliance
effected or to be effected pursuant to this Agreement, the Investor shall
indemnify the Issuer from and against all losses, damages, liabilities, claims,
charges, actions, proceedings, demands, judgments, settlement costs and expenses
of any nature whatsoever (including, without limitation, reasonable attorneys'
fees and expenses) or deficiencies of the Company concerning:
(i) any untrue statement (or alleged untrue statement) of a
material fact contained in any prospectus, offering, circular or other document
(including any related registration statement, notification or the like)
incident to any such registration, qualification or compliance;
(ii) any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statement
therein, in the light of the circumstances under which it was made, not
misleading; or
(iii) any violation by the Investor of the Securities Act or any
rule or regulation promulgated thereunder applicable to the Company or the
Investor or of any blue sky or other state securities laws or any rule or
regulation promulgated thereunder applicable to the Company or the Investor,
in each case, relating to any action or inaction required of the Investor in
connection with any such registration, qualification or compliance, and subject
to Section 11 below will reimburse the Company for all legal and other expenses
reasonably incurred in connection with investigating or defending any such loss,
damage, liability, claim, charge, action, proceeding, demand, judgment,
settlement or deficiency; provided, however, that, the foregoing indemnity and
-------- ------- ----
reimbursement obligation of the Investor shall only be applicable to the extent
that any such matter solely arises out of or is based on any untrue statement
(or alleged untrue statement) or omission (or alleged omission) made in reliance
upon and in conformity with written information furnished to the Company by the
Investor specifically for use in such prospectus, offering circular or other
document; and provided, further, however, that, the obligation of the Investor
-------- ------- ------- ----
hereunder shall be limited to an amount equal to the proceeds to the Investor
for the Shares sold as contemplated hereunder.
11.3 Indemnification Procedures
--------------------------
Each Person entitled to indemnification under this Section (an
"Indemnified Party") shall give notice as promptly as reasonably practicable to
each party required to provide indemnification under this Section (an
"Indemnifying Party") of any action commenced against or by it in respect of
which indemnity may be sought hereunder, but failure to so notify an
Indemnifying Party shall not relieve such Indemnifying Party from any liability
that it may have otherwise than
17
on account of this indemnity agreement so long as such failure shall not have
materially prejudiced the position of the Indemnifying Party. Upon such
notification, the Indemnifying Party shall assume the defense of such action if
it is a claim brought by a third party, and after such assumption the
Indemnifying Party shall not be entitled to reimbursement of any expenses
incurred by it in connection with such action except as described below. In any
such action, any Indemnified Party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the contrary or (ii) the named parties in
any such action (including any impleaded parties) include both the Indemnifying
Party and the Indemnified Party and representation of both parties by the same
counsel would be inappropriate due to actual or potential differing or
conflicting interests between them. The Indemnifying Party shall not be liable
for any settlement of any proceeding effected without its written consent (which
shall not be unreasonably withheld or delayed by such Indemnifying Party), but
if settled with such consent or if there be final judgment for the plaintiff,
the Indemnifying Party shall indemnify the Indemnified Party from and against
any loss, damage or liability by reason of such settlement or judgment.
SECTION 12. INTERPRETATION OF THIS AGREEMENT
--------------------------------
12.1 Terms Defined
-------------
As used in this Agreement, the following terms have the respective
meanings set forth below or set forth in the Section hereof following such term:
Business Day: shall mean a day other than a Saturday, Sunday or
------------
other day on which banks in the State of New York are not required or authorized
to close.
Closing: shall mean the consummation of the purchase and sale of
-------
the Shares described in Section 2(a).
Common Stock: shall have the meaning set forth in Section 1.
------------
Exchange Act: shall mean the Securities Exchange Act of 1934.
------------
GAAP: shall have the meaning set forth in Section 3.3.
----
Governmental Authority: any nation or government, any state or
----------------------
other political subdivision thereof, and any entity or official exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
Person: shall mean an individual, partnership, corporation, trust
------
or unincorporated organization, and a government or agency or political
subdivision thereof.
18
Requirements of Law: means as to any Person, the articles of
-------------------
incorporation, bylaws or other organizational or governing documents of such
person, and any domestic or foreign and federal, state or local law, rule,
regulation, statute or ordinance or determination of any arbitrator or a court
or other Governmental Authority, in each case applicable to or binding upon such
Person or any of its properties or to which such Person or any of its property
is subject.
SEC: shall mean the Securities and Exchange Commission.
---
Securities Act: shall mean the Securities Act of 1933, as amended.
--------------
Subsidiary: shall mean a corporation of which a Person owns,
----------
directly or indirectly, more than 50% of the Voting Stock.
Voting Stock: shall mean securities of any class or classes of a
------------
corporation the holders of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the corporate directors (or
Persons performing similar functions).
12.2 Directly or Indirectly
----------------------
Where any provision in this Agreement refers to action to be taken
by any Person, or which such Person is prohibited from taking, such provision
shall be applicable whether such action is taken directly or indirectly by such
Person.
12.3 Governing Law
-------------
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
12.4 Paragraph and Section Headings
------------------------------
The headings of the sections and subsections of this Agreement are
inserted for convenience only and shall not be deemed to constitute a part
thereof.
SECTION 13. MISCELLANEOUS
-------------
13.1 Notices
-------
(a) All communications under this Agreement shall be in writing and
shall be mailed by first class mail, postage prepaid, or by overnight courier:
(i) if to the Investor, at 000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attn: Xxxxx X. Xxxxxxxxx, Esq., or at such other address
as the Investor may have furnished the Company in writing, with a copy to Xxxxx
Xxxxxxxxx, 000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 or
19
(ii) if to the Company, at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, marked for the attention of the Chairman of the Board, or at such other
address as it may have furnished in writing to the Investor with a copy to
Battle Xxxxxx LLP, 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attn: Xxxx X. Xxxxxxxx, Esq.
(b) Any notice so addressed and mailed (i) by registered or
certified mail shall be deemed to be given on the third Business Day after the
date the same is so mailed or (ii) by courier shall be deemed to be given on the
date on which such notice is received.
13.2 Expenses
--------
The Company shall pay the fees and expenses of the Investor,
including the Investor's legal fees and expenses incurred in connection with the
preparation, execution and delivery of this Agreement and the transactions
contemplated hereby and the enforcement of any of the Investor's rights
hereunder.
13.3 Survival
--------
All warranties, representations, and covenants made by the Investor
and the Company herein or in any certificate or other instrument delivered by
the Investor or the Company under this Agreement shall be considered to have
been relied upon by the Company or the Investor, as the case may be, and shall
survive all deliveries to the Investor of the Shares, or payment to the Company
for such Shares, regardless of any investigation made by the Company or the
Investor, as the case may be, or on the Company's or the Investor's behalf.
All statements in any such certificate or other instrument shall constitute
warranties and representation by the Company or the Investor, as the case may
be, hereunder.
13.4 Entire Agreement; Amendment and Waiver
--------------------------------------
This Agreement shall inure to the benefit of and shall be binding
upon the successors and assigns of each of the parties. This Agreement and the
agreements attached as Exhibits hereto constitute the entire understandings of
the parties hereto and supersede all prior agreements or understandings with
respect to the subject matter hereof between such parties. This Agreement may be
amended, and the observance of any term of this Agreement may be waived, with
(and only with) the written consent of the Company and the Investor.
13.5 Counterparts
------------
This Agreement may be executed in one or more counterparts with the
same effect as if the parties executing the counterparts had each executed one
instrument as of the day and year first above written.
13.6 Successors and Assigns
----------------------
This Agreement and all of the provisions hereof, including all of
rights of the Investor hereunder, shall inure to the benefit of the parties
hereto and their respective successors and assigns.
20
Very truly yours,
CHARTWELL LEISURE INC.
By:
-----------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President
BARON ASSET FUND
By:
------------------------------
Name:
Title:
