EXHIBIT 2.1
FIRST AMENDMENT
TO AGREEMENT AND PLAN OF MERGER
This First Amendment to Agreement and Plan of Merger (the "First
Amendment") is dated as of August 16, 2001, and entered into by and among FELCOR
LODGING TRUST INCORPORATED, a Maryland corporation ("FelCor"), FELCOR LODGING
LIMITED PARTNERSHIP, a Delaware limited partnership ("FelCor OP" and, together
with FelCor, the "FelCor Parties"), MERISTAR HOSPITALITY CORPORATION, a Maryland
corporation ("MeriStar"), MERISTAR HOSPITALITY OPERATING PARTNERSHIP, L.P., a
Delaware limited partnership ("MeriStar OP" and, together with MeriStar, the
"MeriStar Parties"), and FELCOR MERGESUB, L.L.C., a Delaware limited liability
Company ("FelCor Mergesub").
R E C I T A L S:
- - - - - - - -
A. The FelCor Parties and the MeriStar Parties have previously
entered into that certain Agreement and Plan of Merger dated as of May 9, 2001
(the "Merger Agreement").
B. The FelCor Parties and the MeriStar Parties desire to amend
the Merger Agreement in the manner set forth herein.
C. FelCor Mergesub desires to enter into the Merger Agreement by
executing this First Amendment in order to provide for the merger of FelCor
Mergesub with and into MeriStar OP in lieu of the OP Merger currently
contemplated by the Merger Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, the parties hereto hereby agree to
amend the Merger Agreement as follows:
1The third sentence in Section 4.2(a) of the Merger Agreement
shall be amended to read in its entirety as follows:
"There are issued and outstanding (i) an aggregate of 47,349,101
MeriStar Common Units, (ii) an aggregate of 964,227 MeriStar Class C
Units, (iii) an aggregate of 392,157 MeriStar Class D Units, and (iv)
an aggregate of 802,292 MeriStar POP Units."
2. Section 5.22 of the Merger Agreement shall be amended to read
in its entirety as follows:
"5.22 VOTING REQUIREMENTS. The FelCor Stockholder Approvals,
which shall consist of the affirmative vote of holders of shares
entitled to cast a majority of all votes entitled to be cast on the
matter at the FelCor Stockholders Meeting, which shall be a duly
convened meeting at which a quorum is present and acting throughout, to
approve the Merger, are the only votes of the holders of any class
or series of FelCor's stock or FelCor OP's partnership interests
necessary to approve the Merger and the other transactions contemplated
by this Agreement."
3. The first sentence of Section 7.8(a) of the Merger Agreement
shall be amended to read in its entirety as follows:
"As of the Effective Time, each option to purchase shares of MeriStar
Common Stock (a "MeriStar Stock Option") which is outstanding as of the
Effective Time shall be assumed (or a substitute option granted) by the
Surviving Corporation and shall continue as an option ("Assumed
Option") to purchase the number of shares of FelCor Common Stock
(rounded up to the nearest whole share) equal to the number of shares
of MeriStar Common Stock subject to such option multiplied by the
Exchange Ratio, at an exercise price per share of FelCor Common Stock
(rounded down to the nearest xxxxx) equal to (A) the former exercise
price per share of MeriStar Common Stock under such MeriStar Stock
Option immediately prior to the Effective Time minus the Cash
Consideration, divided by (B) 0.784."
4. Section 7.16 of the Merger Agreement shall be amended to read
in its entirety of follows:
"7.16 TAX PROVISION. Except as otherwise required under
existing agreements with respect to the properties previously
contributed to MeriStar OP, MeriStar OP shall use the traditional
method contained in the Treasury Regulations promulgated under Section
704(c) of the Code with respect to all of the properties that it owns
immediately after the OP Merger."
5. In Section 7.18(a) of the Merger Agreement, the date "May 21,
2001" set forth in the last sentence shall be amended to read "July 12, 2001."
6. In Section 7.21 of the Merger Agreement, the phrase "within 30
days after the date of this Agreement" shall be deleted, and the phrase "on or
before July 12, 2001" shall be substituted in lieu thereof.
7. Recital D on page 1 of the Merger Agreement shall be amended
to read in its entirety as follows:
"D. Immediately following the Merger, MeriStar OP and the
FelCor Parties will effect a merger of FelCor Mergesub with and into
MeriStar OP, with MeriStar OP as the survivor (the "OP Merger"), and
FelCor will contribute to FelCor OP its interests in MeriStar OP in
several transactions, as contemplated by Article 3 of this Agreement
(the Merger, together with the other transactions, including without
limitation the OP Merger, contemplated by this Agreement, being
referred to collectively herein as the "Transactions")."
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8. Article 3 of the Merger Agreement shall be amended to read in
its entirety as follows:
"ARTICLE 3
CERTAIN TRANSACTIONS RELATING TO THE MERISTAR OP
3.1 INITIAL CONTRIBUTION BY FELCOR OF COMMON UNITS.
Immediately after the Effective Time and prior to the OP Merger
effectiveness, FelCor shall transfer, as a capital contribution, to
FelCor OP each of the units of partnership interest in MeriStar OP
known as "OP Units" (herein called "MeriStar Common Units") that it
owns as successor limited partner to MeriStar by virtue of the Merger,
other than the units of partnership interest owned by FelCor as
successor general partner in MeriStar OP (the "MeriStar GP Interest")
by virtue of succeeding MeriStar as general partner, in exchange for,
in respect of each such unit, (i) the number of units of partnership
interest in FelCor OP known as "Partnership Units" or "Common Units"
(herein called "FelCor Common Units") equal to the Exchange Ratio, and
(ii) the right to receive from FelCor OP cash in an amount equal to the
Cash Consideration, without interest. The transaction described in this
Section 3.1 shall be herein called the "Initial Contribution."
3.2 MERGER OF MERISTAR OP AND FELCOR MERGESUB. Immediately
following the Initial Contribution, FelCor shall cause FelCor Mergesub
to merge with and into MeriStar OP in accordance with the Delaware
Revised Uniform Limited Partnership Act ("DRULPA"), the Delaware
Limited Liability Company Act ("DLLCA"), the partnership agreement of
MeriStar OP and the limited liability company agreement of FelCor
Mergesub, with MeriStar OP as the surviving entity. The effects and
consequences of the OP Merger are set forth in this Article 3, the
DRULPA and the DLLCA. MeriStar OP, after the effectiveness of the OP
Merger, is sometimes referred to herein as the "Surviving Partnership."
3.3 SUBSEQUENT CONTRIBUTIONS BY FELCOR OF GENERAL PARTNER UNITS.
(a) FelCor will become the sole general partner
of MeriStar OP by virtue of the Merger as successor to MeriStar.
Immediately following the effectiveness of the OP Merger, FelCor shall
transfer, as capital contributions, (i) 1% of the MeriStar GP Interest
to a newly formed taxable REIT subsidiary ("TRS") of FelCor and (ii)
99% of the MeriStar GP Interest to a newly formed limited partnership
(the "Successor MeriStar OP General Partner"), the sole partners in
which will be TRS as the 1% general partner and FelCor as the 99%
limited partner. In forming Successor MeriStar OP General Partner, the
FelCor Parties shall cause TRS to transfer, as a capital contribution,
its MeriStar GP Interest to the Successor MeriStar OP General Partner.
Successor MeriStar OP General Partner will be admitted as the successor
general partner of MeriStar OP, and FelCor shall withdraw as general
partner of MeriStar OP.
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(b) Immediately following effectiveness of the
contributions required by (a) above, FelCor will transfer, as a capital
contribution, all of the equity interests in TRS and Successor MeriStar
OP General Partner to FelCor OP in exchange for (i) the number of
FelCor Common Units equal to (x) the Exchange Ratio times (y) the total
number of units of partnership interest comprising the MeriStar GP
Interest, and (ii) the right to receive cash in an amount equal to (s)
the Cash Consideration, without interest, times (t) the total number of
units of partnership interest comprising the MeriStar GP Interest. The
transactions described in Section 3.3(a) and this Section 3.3(b) shall
be herein called the "Subsequent Contributions."
(c) Promptly following the effectiveness of the
OP Merger and the Subsequent Contributions, FelCor OP shall, or shall
cause one of its wholly-owned subsidiaries that is disregarded for
federal income tax purposes to, incur or increase a borrowing that is a
recourse liability within the meaning of Treasury Regulations section
1.752-1(a)(1) (the "Recourse Borrowing") and shall use the proceeds of
the Recourse Borrowing to pay (i) all of the Cash Consideration due to
holders of MeriStar OP Units other than FelCor or FelCor OP (the
"MeriStar LP Cash Amount") and (ii) the cash due to FelCor in
connection with the Initial Contribution and the Subsequent
Contributions (the "FelCor Cash Amount" and, together with the MeriStar
LP Cash Amount, the "Cash Amounts"). Subject to and in accordance with
Sections 3.3(b), 3.4, 3.7 and 3.8, FelCor OP shall pay the Cash Amounts
to the respective recipients within 90 days of incurring the Recourse
Borrowing and shall segregate the proceeds of the Recourse Borrowing
that are used to pay the Cash Amounts so that such proceeds are
allocable to the Cash Amounts under Treasury Regulations section
1.163-8T.
(d) In connection with the incurrence of the
Recourse Borrowing, FelCor shall provide to each MeriStar OP Unit
Holder who is entitled to receive Cash Consideration the opportunity to
agree to reimburse FelCor with respect to a portion of the Recourse
Borrowing up to the amount of Cash Consideration to which such MeriStar
OP Unit Holder is entitled as a result of the OP Merger by executing a
reimbursement agreement in the form set forth as Exhibit A hereto (a
"Reimbursement Agreement"). A MeriStar OP Unit Holder must make its
election to agree to reimburse FelCor by delivering written notice of
its election to FelCor OP before the effective date of the OP Merger
and by delivering an executed signature page of the Reimbursement
Agreement with such notice. Pursuant to the Reimbursement Agreement, a
MeriStar OP Unit Holder will agree to reimburse FelCor for the amount
that FelCor must pay with respect to the Recourse Borrowing (or bear
the economic risk of loss for); provided, however, that (i) the amount
that the MeriStar OP Unit Holder is required to pay shall in no event
exceed the Cash Consideration received by the MeriStar OP Unit Holder
in the OP Merger and (ii) the MeriStar OP Unit Holder shall be required
to reimburse FelCor only to the extent that FelCor does not otherwise
recover (or is relieved of paying as a result of recoveries by the
lender or lenders with respect to the Recourse Borrowing) an amount at
least equal to the
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amount agreed to be reimbursed by the MeriStar OP Unit Holder after (A)
the lender or lenders of the Recourse Borrowing have exhausted their
remedies against FelCor OP's assets and the assets of any other
obligors or guarantors of the Recourse Borrowing other than FelCor
(excluding persons who previously have executed bottom dollar
guarantees with respect to the Recourse Borrowing), and (B) FelCor has
demanded payment from other persons who have agreed to reimburse FelCor
with respect to the Recourse Borrowing (excluding persons who
previously have executed bottom dollar reimbursement agreements with
respect to the Recourse Borrowing). As soon as practicable following
the closing of the OP Merger, FelCor will notify The Chase Manhattan
Bank, as administrative agent for the lenders with respect to the
Recourse Borrowing (the "Administrative Agent"), of the lenders' rights
under the reimbursement agreement that is executed by FelCor and the
electing MeriStar OP Unit Holders (the "Reimbursement Agreement"), send
a copy of the Reimbursement Agreement to the Administrative Agent, and
use its good faith efforts to obtain the Administrative Agent's
acknowledgement of its receipt of the Reimbursement Agreement and
acceptance, on behalf of the lenders, of the lenders' rights (but not
obligations) under the Reimbursement Agreement, provided that good
faith efforts shall not be construed to include payment of any fee or
the granting of any monetary or other concessions by FelCor to the
Administrative Agent or the lenders.
If a MeriStar OP Unit Holder agrees to reimburse
FelCor with respect to a portion of the Recourse Borrowing (such
MeriStar OP Unit Holder, a "Guaranteeing MeriStar OP Unit Holder"),
FelCor OP shall maintain outstanding at least such portion of the
Recourse Borrowing (above and beyond any amount of the Recourse
Borrowing that previously has been guaranteed or agreed to be
reimbursed by other parties), or such amount of any replacement or
additional recourse borrowing, until the earlier of (i) five years
following the closing of the OP Merger or (ii) the date on which the
Guaranteeing MeriStar OP Unit Holder has, cumulatively over time,
redeemed or otherwise disposed of all of his FelCor OP Units received
in the OP Merger. The aggregate amount of indebtedness that FelCor OP
must maintain pursuant to this Section 3.3(d) (the "Required
Indebtedness") shall be equal to the aggregate amount of the Recourse
Borrowing that the Guaranteeing MeriStar OP Unit Holders agree to
reimburse FelCor.
The Required Indebtedness shall be reduced to the
extent that Guaranteeing MeriStar OP Unit Holders redeem any of the
FelCor OP Units that they received in the OP Merger in exchange for
FelCor Common Stock or for cash, or otherwise dispose of any of such
FelCor OP Units (the FelCor OP Units that are so redeemed or disposed
of are referred to herein as "Stepped-Up Basis Units"). In such a case,
the Required
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Indebtedness shall be reduced by an amount equal to the original
Required Indebtedness prior to any reduction multiplied by a fraction
equal to (i) the portion of the Cash Consideration received by the
Guaranteeing MeriStar OP Unit Holders that is allocable to the
Stepped-Up Basis Units redeemed or transferred immediately prior to the
reduction of the Required Indebtedness, divided by (ii) the Cash
Consideration received by the Guaranteeing MeriStar OP Unit Holders.
FelCor OP shall indemnify the Guaranteeing MeriStar
OP Unit Holders against any and all federal and state income tax
liability (including interest and penalties), plus reasonable
attorney's fees (if any), of the Guaranteeing MeriStar OP Unit Holders
that are directly related to the recognition of gain by such
Guaranteeing MeriStar OP Unit Holders due to FelCor OP's breach of its
obligation to maintain debt pursuant to this Section 3.3(d); provided,
however, that FelCor OP shall not indemnify the Guaranteeing MeriStar
OP Unit Holders against any federal and state income tax liability
associated with the receipt of an indemnification payment pursuant to
this Section 3.3(d).
(e) With respect to each Guaranteeing MeriStar
OP Unit Holder, FelCor OP covenants and agrees that, until the earlier
of (i) five years after the closing of the OP Merger and (ii) the date
on such Guaranteeing MeriStar OP Unit Holder no longer owns at least
50% of the FelCor OP Units issued to him in the OP Merger, FelCor OP
will not sell, assign, transfer, distribute, or otherwise dispose of
the MeriStar OP Units formerly owned by such Guaranteeing MeriStar OP
Unit Holder (the "Contributed Assets"), or any successor asset or
assets acquired by FelCor OP in exchange for such MeriStar OP Units in
a non-taxable transaction ("Successor Assets"), in a transaction that
would result in the allocation of taxable income or gain by FelCor OP
to the Guaranteeing MeriStar OP Unit Holder under Code section 704(c).
Nothing in this Section 3.3(e) shall prevent FelCor OP or one or more
of its affiliates from (i) pledging or encumbering any of the
Contributed Assets or Successor Assets, as applicable, (ii) assigning,
transferring, or otherwise disposing of the Contributed Assets or
Successor Assets, as applicable, to a subsidiary, or (iii) engaging in
a merger, consolidation, other reorganization or liquidation, as long
as such action or transaction does not result in the allocation of
taxable income or gain to the Guaranteeing MeriStar OP Unit Holders
under Code section 704(c). FelCor OP shall indemnify the Guaranteeing
MeriStar OP Unit Holders against any and all federal and state income
tax liability (including interest and penalties), plus reasonable
attorney's fees (if any), of the Guaranteeing MeriStar OP Unit Holders
that are directly related to the recognition of gain by such
Guaranteeing MeriStar OP Unit Holders due to FelCor OP's breach of its
obligation not to dispose of the Contributed Assets or Successor
Assets, as applicable, pursuant to this Section 3.3(e); provided,
however, that FelCor OP shall not indemnify the Guaranteeing MeriStar
OP Unit Holders against any federal and state income tax liability
associated with the receipt of an indemnification payment pursuant to
this Section 3.3(e).
3.4 CLOSING AND EFFECTIVENESS. The closing (the "OP Transactions
Closing") of the Initial Contribution, the OP Merger and the Subsequent
Contributions (collectively, the "OP Transactions") shall take place at the same
time and place as the Closing. All of the documents and transactions relating to
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the OP Transactions Closing shall be deemed to be part of the Closing. The OP
Transactions shall be conditioned upon prior effectiveness of the Merger and
shall be effective immediately following the Effective Time of the Merger. At
the OP Transactions Closing, MeriStar OP and FelCor Mergesub shall execute the
Certificate of Merger (the "OP Merger Articles") in the form attached hereto as
Exhibit "B", which certificate shall then be filed with the Delaware Secretary
of State.
3.5 EFFECTS OF OP MERGER. The OP Merger shall have the effects set
forth in the DRULPA and DLLCA.
3.6 CERTIFICATE OF LIMITED PARTNERSHIP AND PARTNERSHIP AGREEMENT.
The certificate of limited partnership of MeriStar OP as in effect immediately
prior to the Effective Time (the "MeriStar OP Certificate") shall be the
certificate of limited partnership of the Surviving Partnership. The limited
partnership agreement of MeriStar OP as amended and restated in a form
reasonably satisfactory to the parties (the "Restated MeriStar OP Partnership
Agreement") shall be the limited partnership agreement of the Surviving
Partnership after completion of the transactions contemplated by this Article 3,
until thereafter amended as provided by applicable law or therein. The Restated
MeriStar OP Partnership Agreement and the MeriStar OP Certificate shall be
amended in connection with the Subsequent Contributions to reflect the change in
general partner from MeriStar to Successor MeriStar OP General Partner. The
limited partnership agreement of FelCor OP as amended and restated in a form
reasonably satisfactory to the parties (the "Restated Partnership Agreement")
shall be the limited partnership agreement of FelCor OP after completion of the
transactions contemplated by this Article 3, until thereafter amended as
provided by applicable law or therein.
3.7 EFFECT OF THE OP MERGER ON PARTNERSHIP INTERESTS.
(a) COMMON UNITS OF MERISTAR OP. As of the effectiveness
of the OP Merger, by virtue of the OP Merger and without any action on the part
of any holder of MeriStar Common Units, each outstanding MeriStar Common Unit,
other than those held by FelCor or FelCor OP, shall be converted into the right
to receive (i) the number of FelCor Common Units equal to the Exchange Ratio,
and (ii) cash in an amount equal to the Cash Consideration, without interest.
(b) CLASS B UNITS OF MERISTAR OP. As of the effectiveness
of the OP Merger, there shall be no holders of the partnership interests in
MeriStar OP known as "Class B Units" (herein called "MeriStar Class B Units").
(c) CLASS C UNITS OF MERISTAR OP. As of the effectiveness
of the OP Merger, by virtue of the OP Merger and without any action on the part
of any holder of the partnership interests in MeriStar OP known as "Class C
Units" (herein called "MeriStar Class C Units"), each outstanding MeriStar Class
C Unit
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shall be converted into the right to receive (i) the number of units of
partnership interest in FelCor OP known as "Series C Preferred Units" (herein
called "FelCor Series C Units") equal to the Exchange Ratio, and (ii) cash in an
amount equal to the Cash Consideration, without interest.
(d) CLASS D UNITS OF MERISTAR OP. As of the effectiveness
of the OP Merger, by virtue of the OP Merger and without any action on the part
of any holder of the partnership interests in MeriStar OP known as "Class D
Units" (herein called "MeriStar Class D Units"), each outstanding MeriStar Class
D Unit shall be converted into the right to receive one unit of partnership
interest in FelCor OP known as "Series D Preferred Units" (herein called "FelCor
Series D Units").
(e) POP UNITS OF MERISTAR OP. As of the effectiveness of
the OP Merger, by virtue of the OP Merger and without any action on the part of
any holder of the partnership interests in MeriStar OP known as "Profits-Only
Partnership Units" (herein called "MeriStar POP Units"), each outstanding
MeriStar POP Unit that is Vested (as defined below) shall be converted into the
right to receive (i) the number of FelCor Common Units equal to the Exchange
Ratio and (ii) cash in an amount equal to the Cash Consideration, without
interest. The term "Vested" means those MeriStar POP Units that are fully vested
and not subject to forfeiture as of the Effective Time, assuming the Merger was
completed, under the respective Restricted Unit Agreements (as defined in the
MeriStar Profits-Only Operating Partnership Units Plan (the "POP Unit Plan"))
dated effective as of March 29, 2000 and April 16, 2001 between MeriStar,
MeriStar OP and each of the respective holders of such MeriStar POP Units. As of
the effectiveness of the OP Merger, by virtue of the OP Merger and without any
action on the part of any holder of the POP Units, each outstanding MeriStar POP
Unit that is not Vested shall be cancelled and cease to exist, and no
consideration shall be issued or delivered in exchange therefor.
(f) INTERESTS OF FELCOR IN MERISTAR OP. As of the
effectiveness of the OP Merger, by virtue of the OP Merger and without any
action on the part of FelCor and FelCor OP, all MeriStar Common Units and the
MeriStar GP Interest owned by FelCor or FelCor OP in MeriStar OP as a result of
the Merger or the Initial Contribution shall remain outstanding and shall not be
otherwise cancelled or converted.
(g) EFFECT ON MERISTAR OP UNITS. All MeriStar Common
Units (other than those held by FelCor or FelCor OP), MeriStar Class B Units,
MeriStar Class C Units, MeriStar Class D Units, and MeriStar POP Units
(collectively, the "MeriStar OP Units") shall automatically be canceled and
reissued to FelCor OP. The pre-OP Merger holders of record of each such MeriStar
OP Unit shall thereafter have only the right to receive, upon making the
deliveries required by Section 3.8(a), such number of whole FelCor Common Units,
FelCor Series C Units, and FelCor Series D Units (collectively the "New FelCor
OP Units"), and
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certificates representing such FelCor OP Units, into which such MeriStar OP
Units were converted in accordance with Section 3.7(a)-(e) plus any applicable
Cash Consideration, without interest. The holders of such MeriStar OP Units
outstanding immediately prior to the Effective Time shall cease to have any
rights with respect to such MeriStar OP Units except as otherwise provided
herein or by law. No fractional New FelCor OP Units shall be issued, and, in
lieu thereof, a cash payment, without interest, shall be made pursuant to
Section 3.8(c).
3.8 ISSUANCE OF NEW CERTIFICATES FOR FELCOR OP UNITS.
(a) DELIVERY PROCEDURES. As soon as practicable after the
effectiveness of the OP Merger, FelCor OP shall mail to each holder of record of
a MeriStar OP Unit (a "MeriStar OP Unit Holder"), other than FelCor or FelCor
OP, a ratification and joinder agreement (a "Ratification Agreement") by which
the MeriStar OP Unit Holder ratifies and agrees to be bound by the Restated
Partnership Agreement, waives any rights they have under their exchange rights
agreements with MeriStar and MeriStar OP, and is admitted as a limited partner
in FelCor OP as a holder of the respective New FelCor OP Units which the
MeriStar OP Unit Holder is entitled to receive by virtue of the OP Merger. The
Ratification Agreement to be executed by holders of MeriStar POP Units will also
contain a waiver of any rights they have under the agreements by which their POP
Units were granted or under the POP Unit Plan. Without limitation to the rights
under Section 3.8(b), upon delivery to FelCor OP of a duly executed Ratification
Agreement, together with such other customary documents as FelCor OP may
require, the MeriStar OP Unit Holder shall be entitled to receive, with respect
to such MeriStar OP Units (i) a certificate or certificates representing that
number of whole New FelCor OP Units which such MeriStar OP Unit Holder has the
right to receive pursuant to Section 3.7, (ii) a check in payment of the Cash
Consideration, if any, without interest, which such MeriStar OP Unit Holder has
the right to receive pursuant to Section 3.7, and (iii) a check in payment of
the cash in lieu of fractional New FelCor OP Units, without interest, which such
holder is entitled to receive pursuant to Section 3.8(c). FelCor OP shall cause
all FelCor OP Units issued pursuant to the OP Merger to be duly authorized,
validly issued, fully paid and non-assessable and not subject to preemptive
rights.
(b) DISTRIBUTIONS AFTER EFFECTIVE TIME. No distributions
declared or made after the Effective Time with respect to New FelCor OP Units
with a record date after the Effective Time shall be paid to any MeriStar OP
Unit Holder with respect to New FelCor OP Units until such MeriStar OP Unit
Holder executes and delivers to FelCor OP a Ratification Agreement. Subject to
the effect of unclaimed property, escheat and other applicable laws, following
delivery to FelCor OP of any such Ratification Agreement, in addition to the
consideration required by Section 3.7, there shall be paid to the holder of the
certificates representing whole New FelCor OP Units issued in consideration
therefor, without interest, (i) at the time of such delivery, the amount of
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distributions with a record date after the Effective Time theretofore paid with
respect to such whole New FelCor OP Units and (ii) at the appropriate payment
date, the amount of distributions with a record date after the Effective Time
but prior to delivery and a payment date subsequent to delivery payable with
respect to such whole New FelCor OP Units.
(c) NO FRACTIONAL FELCOR OP UNITS. Notwithstanding any
other provision hereof, no fractional New FelCor OP Units will be issued in
connection with the OP Merger. In lieu of issuance of a fractional New FelCor OP
Unit, FelCor OP shall pay each MeriStar OP Unit Holder who would otherwise be
entitled to receive a fraction of a New FelCor OP Unit, an amount in cash,
without interest, equal to the Market Price determined as of the Closing Date
multiplied by the fraction of a New FelCor OP Unit to which such holder would
otherwise be entitled.
(d) WITHHOLDING RIGHTS. FelCor OP shall be entitled to
deduct and withhold from the consideration otherwise payable under Section 3.7
to any holder of MeriStar OP Units, such amounts as FelCor OP is required to
deduct and withhold with respect to the making of such payment under the Code,
or any provision of state, local or foreign tax law. To the extent that amounts
are so withheld by FelCor OP, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the MeriStar OP
Units, in respect of which such deduction and withholding was made by FelCor
OP."
9. Section 7.6(b) of the Merger Agreement shall be amended to
read in its entirety as follows:
(b) Promptly after the Effective Time, FelCor shall comply
with and pay the severance and bonus arrangements of former MeriStar
and MeriStar OP employees, as described on Schedule 7.6(b) to the
MeriStar Disclosure Letter, except with respect to (i) employees who do
not continue in good faith to perform their duties as employees through
the Closing Date and (ii) employees who are employed with the Surviving
Corporation or MeriStar Hotels & Resorts or their Subsidiaries with
substantially the same compensation and duties applicable to such
employees as of May 9, 2001; provided that FelCor shall pay prorated
bonuses for the 2001 year to employees described in clause (ii) above.
10. The parties agree to amend Section 9.5 of the Merger Agreement
to add at the end thereof the following sentence: "The parties agree that the
conditions set forth in Section 8.1 (f), (g) and (h) may not be waived."
11. Schedule 1.6(a) to the Merger Agreement is amended to read in
its entirety as set forth in the Schedule 1.6(a) attached hereto.
12. The FelCor Parties, jointly and severally, represent and
warrant to the MeriStar Parties with respect to FelCor Mergesub as follows:
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(a) FelCor Mergesub is a limited liability company duly
organized and validly existing under the laws of the State of Delaware and has
conducted no business and will conduct no business prior to the Closing. FelCor
OP is the record and beneficial owner of all of the issued and outstanding
membership interests of FelCor Mergesub, free and clear of all Liens. Copies of
the organizational documents and operating agreement for FelCor Mergesub have
been previously delivered to the MeriStar Parties.
(b) FelCor Mergesub is not a party to any other
agreement, document or contract.
(c) There are no outstanding securities, options,
warrants, calls, rights, commitments, agreements, arrangements or undertakings
of any kind to which FelCor Mergesub is a party or by which it is bound
obligating it to issue, deliver or sell, or cause to be issued, delivered or
sold, any ownership interests in FelCor Mergesub or obligating it to issue,
grant, extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. There is no outstanding
obligation of FelCor Mergesub to repurchase, redeem or otherwise acquire any
ownership interest in it.
(d) All membership interests in FelCor Mergesub have been
duly authorized, validly issued, fully paid and nonassessable and are not
subject to any preemptive rights.
(e) FelCor Mergesub has no debts or other obligations.
(f) FelCor Mergesub has the requisite power to enter into
this First Amendment and to consummate the OP Merger. The execution and delivery
of this First Amendment and the consummation of the Merger have been duly
authorized by all necessary action on the part of FelCor Mergesub. This First
Amendment has been duly executed and delivered by FelCor Mergesub and
constitutes a valid and binding obligation of FelCor Mergesub, enforceable
against FelCor Mergesub in accordance with and subject to its terms, subject to
applicable bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights and general principles of equity.
(g) FelCor Mergesub has not elected, and will not elect,
to be taxed as a corporation for federal income tax purposes under Treasury
Regulations Section 301.7701-3(c).
13. Any capitalized terms not defined in this First Amendment
shall have the meaning assigned to them in the Merger Agreement.
14. The Merger Agreement, as amended hereby, shall continue in
full force and effect.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
11
IN WITNESS WHEREOF, the FelCor Parties, the MeriStar Parties and FelCor
Mergesub have caused this First Amendment to be signed by their respective
officers thereunto duly authorized all as of the date first written above.
ATTEST: FELCOR LODGING TRUST INCORPORATED,
a Maryland corporation
By: /s/ Xxxxxxxx Xxx By: /s/ Xxxxxxxx X. Xxxxxxxx
------------------------ ---------------------------------------
Name: Xxxxxxxx X. Xxxxxxxx
Title: Executive Vice President and
General Counsel
FELCOR LODGING LIMITED PARTNERSHIP
a Delaware limited partnership
By: FelCor Lodging Trust Incorporated,
its general partner
By: /s/ Xxxxxxxx Xxx By: /s/ Xxxxxxxx X. Xxxxxxxx
------------------------ ---------------------------------------
Name: Xxxxxxxx X. Xxxxxxxx
Title: Executive Vice President and
General Counsel
ATTEST: MERISTAR HOSPITALITY CORPORATION,
a Maryland corporation
By: /s/ Xxxxxxx X. Xxxxxxxx By: /s/ Xxxxxxxxxxx X. Xxxxxxx
------------------------ ---------------------------------------
Name: Xxxxxxxxxxx X. Xxxxxxx
Title: Vice President, Legal and
Secretary
MERISTAR HOSPITALITY OPERATING
PARTNERSHIP, L.P., a Delaware limited
partnership
By: MeriStar Hospitality Corporation,
its general partner
By: /s/ Xxxxxxx X. Xxxxxxxx By: /s/ Xxxxxxxxxxx X. Xxxxxxx
------------------------ ---------------------------------------
Name: Xxxxxxxxxxx X. Xxxxxxx
Title: Vice President, Legal and
Secretary
12
ATTEST: FELCOR MERGESUB, L.L.C.
By: /s/ Xxxxxxxx Xxx By: /s/ Xxxxxxxx X. Xxxxxxxx
------------------------ ---------------------------------------
Name: Xxxxxxxx X. Xxxxxxxx
Title: Executive Vice President and
General Counsel
13
SCHEDULE 1.6(A)
---------------
DIRECTORS OF SURVIVING CORPORATION
CLASS I (TERMS EXPIRING IN 2004)
- Xxxxxxx X. Xxxx
- Xxxxxxx X. Xxxxxxxxx, Xx.
- Xxxxxx X. Xxxx, Xx.
- Xxxxxxx X. Xxxx
- Xxxx X. Xxxxxxxx
CLASS II (TERMS EXPIRING IN 2002)
- Xxxxxx X. Xxxxxxxx, Xx.
- Xxxxxx X. XxXxxxxxx
- Xxxxxx X. XxXxxxxx
- Xxxxxxx X. North
CLASS III (TERMS EXPIRING IN 2003)
- Xxxxxxx X. Xxxxxxx
- Xxxxxxx X. Xxxxxxxx
- Xxxxxxx X. Xxxxxxxxx
- Xxxxxx X. Xxxxx
