AGREEMENT AND PLAN OF MERGER BY AND AMONG MS RESORT HOLDINGS LLC, MS RESORT ACQUISITION LLC, MS RESORT PURCHASER LLC, ASHFORD SAPPHIRE ACQUISITION LLC AND CNL HOTELS & RESORTS, INC. DATED AS OF JANUARY 18, 2007
Exhibit 10.33.1
EXECUTION COPY
BY AND AMONG
MS RESORT HOLDINGS LLC,
MS RESORT ACQUISITION LLC,
MS RESORT PURCHASER LLC,
ASHFORD SAPPHIRE ACQUISITION LLC
AND
CNL HOTELS & RESORTS, INC.
DATED AS OF JANUARY 18, 2007
TABLE OF CONTENTS
Page | ||||
ARTICLE I |
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DEFINITIONS; INTERPRETATION |
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Section 1.1 Definitions |
2 | |||
Section 1.2 Interpretation |
11 | |||
ARTICLE II |
||||
THE MERGER |
||||
Section 2.1 The Merger |
11 | |||
Section 2.2 Closing |
11 | |||
Section 2.3 Effective Time |
12 | |||
Section 2.4 Effects of the Merger |
12 | |||
Section 2.5 Charter and Bylaws; Officers and Directors |
12 | |||
Section 2.6 Tax Treatment |
12 | |||
ARTICLE III |
||||
EFFECT OF THE MERGER |
||||
Section 3.1 Effect on Stock |
13 | |||
Section 3.2 Paying Agent; Exchange Procedures |
14 | |||
ARTICLE IV |
||||
REPRESENTATIONS AND WARRANTIES OF THE COMPANY |
||||
Section 4.1 Organization; Minute Books |
16 | |||
Section 4.2 Subsidiaries |
17 | |||
Section 4.3 Capital Structure |
17 | |||
Section 4.4 Authority |
18 | |||
Section 4.5 Consents and Approvals; No Violations |
18 | |||
Section 4.6 SEC Documents and Other Reports |
19 | |||
Section 4.7 Absence of Material Adverse Effect |
20 | |||
Section 4.8 Information Supplied |
21 | |||
Section 4.9 Compliance with Laws |
21 | |||
Section 4.10 Tax Matters |
21 | |||
Section 4.11 Benefit Plans |
24 | |||
Section 4.12 Litigation |
26 | |||
Section 4.13 State Takeover Statutes |
26 | |||
Section 4.14 Intellectual Property |
26 | |||
Section 4.15 Properties |
27 | |||
Section 4.16 Environmental Laws |
29 | |||
Section 4.17 Employment and Labor Matters |
30 | |||
Section 4.18 Material Contracts |
31 | |||
Section 4.19 Insurance Policies |
33 | |||
Section 4.20 Affiliate Transactions |
33 | |||
Section 4.21 Opinion of the Company’s Financial Advisors |
33 | |||
Section 4.22 Brokers |
34 |
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TABLE OF CONTENTS
(continued)
(continued)
Page | ||||
ARTICLE V |
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REPRESENTATIONS AND WARRANTIES OF PARENT, SUB AND MISSOURI |
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Section 5.1 Organization |
34 | |||
Section 5.2 Authority |
34 | |||
Section 5.3 Consents and Approvals; No Violations |
34 | |||
Section 5.4 Information Supplied |
35 | |||
Section 5.5 Litigation |
35 | |||
Section 5.6 Capitalization of Sub |
35 | |||
Section 5.7 Financing |
35 | |||
Section 5.8 Brokers |
36 | |||
Section 5.9 Certain Tax Matters |
36 | |||
ARTICLE VI |
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REPRESENTATIONS AND WARRANTIES OF ARIZONA |
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Section 6.1 Organization |
36 | |||
Section 6.2 Authority |
36 | |||
Section 6.3 Consents and Approvals; No Violations |
36 | |||
Section 6.4 Information Supplied |
37 | |||
Section 6.5 Litigation |
37 | |||
Section 6.6 Financing |
37 | |||
Section 6.7 Brokers |
38 | |||
ARTICLE VII |
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COVENANTS RELATING TO CONDUCT OF BUSINESS |
||||
Section 7.1 Conduct of Business by the Company Pending the Merger |
38 | |||
Section 7.2 Acquisition Proposals. |
42 | |||
Section 7.3 Actions by Parent and Conduct of Business of Sub Pending the Merger |
45 | |||
ARTICLE VIII |
||||
ADDITIONAL AGREEMENTS |
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Section 8.1 Employee Benefits |
45 | |||
Section 8.2 Deferred Share Awards |
46 | |||
Section 8.3 Preparation of Proxy Statement; Stockholder Approval |
46 | |||
Section 8.4 Access to Information; Confidentiality |
47 | |||
Section 8.5 Fees and Expenses |
48 | |||
Section 8.6 Public Announcements |
51 | |||
Section 8.7 Transfer Taxes |
51 | |||
Section 8.8 State Takeover Laws |
51 | |||
Section 8.9 Indemnification; Directors and Officers Insurance |
52 | |||
Section 8.10 Reasonable Best Efforts |
53 | |||
Section 8.11 Financing |
54 | |||
Section 8.12 Notification of Certain Matters |
56 | |||
Section 8.13 Buyer Party Vote |
56 |
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TABLE OF CONTENTS
(continued)
(continued)
Page | ||||
Section 8.14 Additional Tax Matters. |
57 | |||
Section 8.15 Certain Litigation Matters |
57 | |||
Section 8.16 Resignations |
57 | |||
Section 8.17 Third Party Consents |
57 | |||
Section 8.18 Suspension or Termination of Reinvestment Plan and Redemption Plan |
58 | |||
Section 8.19 Asset Sales |
58 | |||
ARTICLE IX |
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CONDITIONS PRECEDENT |
||||
Section 9.1 Conditions to Each Party’s Obligation to Effect the Transactions |
58 | |||
Section 9.2 Conditions to the Obligations of the Company to Effect the Transactions |
59 | |||
Section 9.3 Conditions to the Obligations of the Buyer Parties to Effect the Transactions |
59 | |||
ARTICLE X |
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TERMINATION AND AMENDMENT |
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Section 10.1 Termination |
61 | |||
Section 10.2 Effect of Termination |
62 | |||
Section 10.3 Extension; Waiver |
62 | |||
ARTICLE XI |
||||
GENERAL PROVISIONS |
||||
Section 11.1 Non-Survival of Representations and Warranties and Agreements |
63 | |||
Section 11.2 Notices |
63 | |||
Section 11.3 Counterparts |
64 | |||
Section 11.4 Entire Agreement; No Third-Party Beneficiaries |
64 | |||
Section 11.5 Assignment |
65 | |||
Section 11.6 Governing Law; Venue; Waiver of Jury Trial |
65 | |||
Section 11.7 Severability |
65 | |||
Section 11.8 Enforcement of this Agreement. |
66 | |||
Section 11.9 Obligations of Subsidiaries |
66 | |||
Section 11.10 Interpretation; Construction |
66 | |||
Section 11.11 Amendment; Consents |
67 | |||
ARTICLE XII |
||||
SALE OF SPECIFIED ASSETS |
||||
Section 12.1 Entry into Parent Asset Purchase Agreement |
67 | |||
Section 12.2 Entry into Arizona Asset Purchase Agreement |
67 | |||
Section 12.3 Declaration of Special Dividend |
68 | |||
Section 12.4 Payment of Special Dividend |
68 | |||
Section 12.5 Right to Structure Asset Sales as Purchase of Ownership Interests |
68 |
iii
EXHIBITS
Exhibit A: Form of Guaranty
Exhibit B: Form of Tax Opinion
Exhibit C: Form of Parent Asset Purchase Agreement
Exhibit D: Form of Arizona Asset Purchase Agreement
Exhibit B: Form of Tax Opinion
Exhibit C: Form of Parent Asset Purchase Agreement
Exhibit D: Form of Arizona Asset Purchase Agreement
iv
AGREEMENT AND PLAN OF MERGER, dated as of January 18, 2007 (this “Agreement”), by and
among MS Resort Holdings LLC, a Delaware limited liability company (“Parent”), MS Resort
Acquisition LLC, a Delaware limited liability company and a wholly-owned subsidiary of Parent
(“Sub”), MS Resort Purchaser LLC, a Delaware limited liability company and wholly-owned
subsidiary of Parent (“Missouri”), Ashford Sapphire Acquisition LLC, a Delaware limited
liability company (“Arizona”), and CNL Hotels & Resorts, Inc., a Maryland corporation (the
“Company”). Except as otherwise set forth herein, capitalized terms used herein shall have
the meanings set forth in Section 1.1. Parent, Sub, Missouri and Arizona are hereinafter
collectively referred to as the “Buyer Parties”.
W I T N E S S E T H:
WHEREAS, the board of directors of the Company (the “Board”), has declared that it is
advisable and in the best interests of the Company and the stockholders of the Company, to enter
into this Agreement to provide for the Merger (as defined below) and Asset Sales (as defined below)
on the terms and conditions set forth in this Agreement;
WHEREAS, on the next day immediately following completion of the Parent Asset Sale and Arizona
Asset Sale (each as hereinafter defined) the Company and Sub wish to effect a business combination
through a merger of Sub with and into the Company (the “Merger”), in accordance with the
Maryland General Corporation Law (the “MGCL”) and the Delaware Limited Liability Company
Act (the “DLLCA”), upon the terms and subject to the conditions set forth in this
Agreement, whereby each issued and outstanding share of common stock, par value $0.01 per share, of
the Company (the “Company Common Stock” or the “Shares”), other than Dissenting
Shares (as defined herein) and Shares owned directly or indirectly by Parent, will be converted
into the right to receive cash in an amount equal to the Per Share Merger Consideration;
WHEREAS, the Board approved the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby, including the Merger, the Parent Asset Sale
and the Arizona Asset Sale (collectively, the “Transactions”), in accordance with the MGCL,
upon the terms and subject to the conditions contained herein and resolved to recommend approval of
the Merger by the stockholders of the Company;
WHEREAS, the sole member of Parent and Parent, as the sole member of Sub and Missouri, have;
(a) approved this Agreement and declared it advisable for Parent, Sub and Missouri to enter into
this Agreement and (b) approved the execution, delivery and performance of this Agreement by
Parent, Sub and Missouri and the consummation of the transactions contemplated hereby, including
the Merger and the Parent Asset Sale, in accordance with the DLLCA, upon the terms and conditions
contained herein;
WHEREAS, the board of managers of Arizona has (a) approved this Agreement and declared it
advisable for Arizona to enter into this Agreement and (b) approved the execution,
delivery and performance of this Agreement and the consummation of the Arizona Asset Sale upon
the terms and conditions contained herein;
WHEREAS, concurrently with the execution of this Agreement, the Guarantors have delivered to
the Company a joint and several guaranty (the “Guaranty”) of the obligations arising under
this Agreement of the Buyer Parties in the form attached as Exhibit A to this Agreement;
and
WHEREAS, the parties intend that for federal, and applicable state and local, income tax
purposes the Merger will be treated as a taxable sale of the Shares.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements
herein contained, and intending to be legally bound hereby, each of Parent, Sub, Missouri, Arizona
and the Company hereby agrees as follows:
ARTICLE I
DEFINITIONS; INTERPRETATION
DEFINITIONS; INTERPRETATION
Section 1.1 Definitions. As used in this Agreement, the following terms have the
meanings specified or referred to in this Section 1.1 and shall be equally applicable to
both the singular and plural forms. Any agreement referred to below shall mean such agreement as
amended, supplemented or modified from time to time to the extent permitted by the applicable
provisions thereof and by this Agreement.
“Access” shall have the meaning set forth in Section 8.4.
“Acquisition Proposal” shall have the meaning set forth in Section 7.2(d).
“Affiliate” means, with respect to any Person, any other Person that, at the time of
determination, directly or indirectly Controls, is Controlled by or is under common Control with
such Person.
“Aggregate Award Amount” shall have the meaning set forth in Section 8.2.
“Agreement” shall have the meaning set forth in the introductory paragraph of this
Agreement.
“Arizona” shall have the meaning set forth in the introductory paragraph of this
Agreement.
“Arizona Asset Purchase Agreement” shall have the meaning set forth in Section
12.2.
“Arizona Asset Sale” shall have the meaning set forth in Section 12.2.
“Arizona Commitment Letters” shall have the meaning set forth in Section 6.6.
“Arizona Debt Financing” shall have the meaning set forth in Section 6.6.
“Articles of Merger” shall have the meaning set forth in Section 2.3.
2
“Asset Sale Time” means the time at which the first of the Asset Sales is consummated.
“Asset Sales” means the Parent Asset Sale and the Arizona Asset Sale.
“Benefit Plan” means any bonus, pension, profit sharing, deferred compensation,
incentive compensation, stock ownership, stock purchase, stock option, phantom stock, deferred
stock, retirement, vacation, severance, disability, death benefit, hospitalization, medical,
employee stock purchase, stock appreciation, restricted stock or other employee benefit plan,
program, agreement or arrangement as to which the Company or any of its Subsidiaries sponsors,
maintains, contributes or is obligated to contribute for the benefit of any current or former
employee, officer, director, consultant or independent contractor of the Company or any of its
Subsidiaries, including any ERISA Benefit Plan.
“Board” shall have the meaning set forth in the first recital of this Agreement.
“Board Recommendation” shall have the meaning set forth in Section 4.4(b).
“Business Day” means any day other than a Saturday or Sunday or a day on which banks
are required or authorized to close in the City of New York.
“Buyer Parties” shall have the meaning set forth in the introductory paragraph of this
Agreement.
“Certificate” shall have the meaning set forth in Section 3.1(c).
“Change in Recommendation” shall have the meaning set forth in Section 7.2(e).
“Closing” shall have the meaning set forth in Section 2.2.
“Closing Date” shall have the meaning set forth in Section 2.2.
“Code” means the U.S. Internal Revenue Code of 1986, as amended.
“Company” shall have the meaning set forth in the introductory paragraph of this
Agreement.
“Company Bylaws” shall have the meaning set forth in Section 4.1(b).
“Company Charter” shall have the meaning set forth in Section 4.1(b).
“Company Common Stock” shall have the meaning set forth in the second recital of this
Agreement.
“Company Expenses” shall have the meaning set forth in Section 8.5(c).
“Company Intellectual Property” shall have the meaning set forth in Section
4.14.
“Company Letter” means the letter from the Company to the Buyer Parties dated the date
hereof, which letter relates to this Agreement and is designated therein as the Company Letter.
3
“Company Preferred Stock” shall have the meaning set forth in Section 4.3.
“Company Properties” means, collectively, the Leased Real Property and the Owned Real
Property.
“Company Subsidiary REIT” shall mean CNL Hotel Investors, Inc., a Maryland
corporation.
“Company SEC Documents” shall have the meaning set forth in Section 4.6(a).
“Company Stock Plan” shall have the meaning set forth in Section 4.3.
“Company Stockholder Approval” shall have the meaning set forth in Section
8.3(b).
“Company Title Insurance Policies” means policies of title insurance issued and
insuring, as of the effective date of each such policy, the Company’s or its applicable
Subsidiary’s title to or leasehold interest in the Company Properties.
“Confidentiality Agreement” shall have the meaning set forth in Section 8.4.
“Contract” means any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other binding commitment, instrument or obligation.
“Control” means, as to any Person, the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting securities, by
contract or otherwise. The terms “Controlled by,” “under common Control with” and “Controlling”
shall have correlative meanings.
“Counterproposal” shall have the meaning set forth in Section 7.2(e).
“Debt Financing” means the Arizona Debt Financing and the Parent Financing.
“Deferred Share Awards” means deferred shares of Company Common Stock granted under
the Company Stock Plan.
“Delaware Certificate of Merger” shall have the meaning set forth in Section
2.3.
“Dissenting Shares” shall have the meaning set forth in Section 3.1(d).
“Dissenting Stockholder” shall have the meaning set forth in Section 3.1(d).
“DLLCA” shall have the meaning set forth in the second recital of this Agreement.
“DSOS” shall have the meaning set forth in Section 2.3.
“Effective Time” shall have the meaning set forth in Section 2.3.
4
“Environmental Laws” means all Laws relating to the protection of the environment,
including the soil, subsurface strata, sediment, surface water or groundwater, or relating to the
protection of human health from exposure to Hazardous Substances.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
together with the rules and regulations promulgated thereunder.
“ERISA Benefit Plan” means a Benefit Plan that is also an “employee pension benefit
plan” (as defined in Section 3(2) of ERISA) or that is also an “employee welfare benefit plan” (as
defined in Section 3(1) of ERISA).
“Escrowed Amount” shall have the meaning set forth in Section 8.5(e).
“Exchange Act” means the Securities Exchange Act of 1934, as amended, together with
the rules and regulations promulgated thereunder.
“Exchange Fund” shall have the meaning set forth in Section 3.2(a).
“Excess Shares” shall have the meaning set forth in Section 4.3.
“Final Condition Satisfaction Date” shall have the meaning set forth in Section
12.1.
“GAAP” means United States generally accepted accounting principles and practices as
in effect from time to time consistently applied.
“Governmental Entity” means any federal, state, provincial, local or foreign
government, any governmental, regulatory or administrative authority, agency or commission, or any
court, tribunal or other judicial body (including any political or other subdivision, department or
branch of any of the foregoing).
“Guaranty” shall have the meaning set forth in the sixth recital of this Agreement.
“Guarantors” shall mean the guarantors under that certain Guaranty, dated as of the
date hereof, the form of which is attached hereto as Exhibit A.
“Hazardous Substances” means (i) regardless of whether subject to the jurisdiction of
a Governmental Entity, those substances defined in or regulated under the following United States
federal statutes and their state counterparts and all regulations thereunder, including the
Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and
Liability Act, the Clean Water Act, the Safe Drinking Water Act, the Atomic Energy Act, the Clean
Air Act; the Oil Pollution Act and the Toxic Substances Control Act, (ii) natural gas, petroleum
and petroleum products, including crude oil and any fractions thereof and waste oil; (iii)
polychlorinated biphenyls, asbestos and radon; and (iv) any other pollutant, contaminant,
substance, material, waste or condition regulated by any Governmental Entity pursuant to any
Environmental Law.
“Hotel Contracts” means all material service contracts, material maintenance
contracts, and other material contracts or agreements, including material equipment leases
capitalized for
5
accounting purposes, in each case with respect to the ownership, maintenance, operation,
provisioning, or equipping of the Company Properties and material guaranties relating thereto, if
any.
“HSR Act” means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended.
“Indebtedness” means (a) indebtedness of the Company or any of its Subsidiaries for
borrowed money (including the aggregate principal amount thereof and the aggregate amount of any
accrued but unpaid interest thereon), (b) obligations of the Company or any of its Subsidiaries
evidenced by bonds, notes, debentures, letters of credit or similar instruments and (c) all
obligations of the Company or any of its Subsidiaries to guarantee any of the foregoing types of
payment obligations on behalf of any Person other than the Company or any of its Subsidiaries.
“Indemnified Person” shall have the meaning set forth in Section 8.9(a).
“Intellectual Property” means intellectual property or other proprietary rights of any
kind, including (a) all patents, patent applications and patent disclosures, together with all
reissuances, continuations, provisionals, continuations-in-part, divisions, revisions, extensions
and reexaminations thereof (collectively, “Patents”), (b) all trademarks, service marks,
logos, trade names, corporate names, domain names, trade dress, including all goodwill associated
therewith, and all applications, registrations and renewals in connection therewith (collectively,
“Marks”), (c) all copyrights and copyrightable works and all applications, registrations
and renewals in connection therewith (collectively, “Copyrights”), (d) all trade secrets
and confidential business and technical information (including research and development, know-how,
formulas, compositions, manufacturing and production processes and techniques, methods, schematics,
technology, technical data, designs, drawings, flowcharts, block diagrams, specifications, customer
and supplier lists, pricing and cost information and business and marketing plans and proposals)
(collectively, “Trade Secrets”) and (e) all computer data and software (including databases
and related documentation).
“IRS” means the U.S. Internal Revenue Service.
“Knowledge” means, (i) with respect to the Company, the actual knowledge of the
Company’s chief executive officer; president and chief operating officer; executive vice president,
chief financial officer and treasurer; executive vice president of portfolio management &
administration; executive vice president, chief general counsel and corporate secretary; and vice
president of tax; (ii) with respect to Parent, the actual knowledge of Xxxxxxx Xxxxxx and Xxxxxxx
Xxxxx; and (iii) with respect to Arizona, the actual knowledge of Ashford Hospitality Trust, Inc.’s
chief executive officer; president; chief operating officer; chief financial officer; general
counsel; and secretary.
“Law” means any federal, state, provincial, municipal or local statute, law,
ordinance, regulation, rule, code, executive order, injunction, judgment, decree or other order.
“Lease Documents” shall have the meaning set forth in Section 4.15(b).
6
“Leased Real Property” means all material real property leased or otherwise occupied
(as lessee or sublessee) as of the date hereof by the Company or any Subsidiary from a third party
other than the Company or any Subsidiary, including the improvements thereon.
“Liens” means, with respect to any asset, any pledges, claims, liens, mortgages,
charges, encumbrances or security interests of any kind in respect of such asset.
“Major Space Leases” means all leases, subleases, licenses, concessions, and other
similar agreements for the use or occupancy of more than 10,000 square feet of any of the Company
Properties.
“Management Agreement Documents” shall have the meaning set forth in Section
4.15(h).
“Marketed Portfolio Purchase and Sale Agreement” means that certain Agreement of
Purchase and Sale made and entered into on December 17, 2006 between W2005 New Century Hotel
Portfolio, L.P. and the Sellers identified therein.
“Marketed Portfolio Sale” means, whether effected directly or indirectly or in one
transaction or a series of related transactions, any sale, transfer or other business combination
involving the 32 hotel properties owned by the Company and under contract for sale on the date
hereof pursuant to the Marketed Portfolio Purchase and Sale Agreement.
“Material Adverse Effect” means, (I) with respect to the Company, any change,
development, circumstance, event or effect that, when considered either individually or in the
aggregate together with all other changes, circumstances, developments, events or effects (a
“Change”), (a) that would prevent or reasonably be expected to prevent the Company from
consummating any of the Transactions or (b) is materially adverse to the properties, business,
condition (financial or otherwise), liabilities or results of operations of the Company and its
Subsidiaries taken as a whole, excluding any Change to the extent resulting from: (i) the execution
or announcement of this Agreement or the performance of obligations under this Agreement, (ii)
Changes affecting the United States economy or capital or financial markets generally (including
Changes in interest rates) or Changes that are the result of factors generally affecting the
industries in which the Company and its Subsidiaries conduct their respective business, except to
the extent that such Changes have a materially disproportionate effect on the Company or the
Company Properties relative to other similarly situated participants in the business or industry in
which the Company operates, (iii) general Changes in conditions in or otherwise affecting hotel
real estate properties or hotel operators (including diseases and epidemics), except to the extent
that such Changes have a materially disproportionate effect on the Company or the Company
Properties relative to other similarly situated participants in the business or industry in which
the Company operates (it being understood that the phrase “similarly situated” shall take into
account the geographical markets in which the Company operates), (iv) any Changes in applicable Law
or GAAP or interpretation or application thereof, (v) earthquakes, hurricanes or other natural
disasters, except to the extent that such Changes cause physical damage to a Company Property or
have a materially disproportionate effect on the Company or the Company Properties relative to
other similarly situated participants in the business or industry in which the Company operates (it
being understood that the phrase
7
“similarly situated” shall take into account the geographical markets in which the Company
operates), (vi) the commencement, occurrence, continuation or escalation of any war, armed
hostilities or acts of terrorism involving or affecting the United States, its armed forces or any
part thereof, except to the extent that such Changes cause physical damage to a Company Property or
have a materially disproportionate effect on the Company or the Company Properties relative to
other similarly situated participants in the business or industry in which the Company operates (it
being understood that the phrase “similarly situated” shall take into account the geographical
markets in which the Company operates) and (vii) any failure, but only in and of itself, by the
Company to meet any financial projection of the Company’s revenues, earnings or other financial
performance for any period (it being understood that the phrase “but only in and of itself” shall
mean that any Change from such failure that could otherwise be described in clause (I)(a)
or (b), above, shall constitute a Material Adverse Effect); and (II) when used with respect
to any of the Buyer Parties, any change, development, circumstance, event or effect that, when
considered either individually or in the aggregate together with all other changes, developments,
circumstances, events or effects, would, with the passage of time or otherwise, prevent the
consummation of the Transactions following the satisfaction of all other conditions precedent
thereto or prevent any of the Buyer Parties from performing their respective obligations under this
Agreement.
“Material Contract” shall have the meaning set forth in Section 4.18(a).
“Maximum Premium” shall have the meaning set forth in Section 8.9(b).
“Merger” shall have the meaning set forth in the second recital of this Agreement.
“MGCL” shall have the meaning set forth in the second recital of this Agreement.
“Missouri” shall have the meaning set forth in the introductory paragraph of this
Agreement.
“Owned Real Property” means all real property owned by the Company or any Subsidiary
as of the date hereof, together with all buildings, structures, other improvements and fixtures
located on or under such real property and all easements, rights, and other appurtenances thereto.
“Parent” shall have the meaning set forth in the introductory paragraph of this
Agreement.
“Parent Asset Purchase Agreement” shall have the meaning set forth in Section
12.1.
“Parent Asset Sale” shall have the meaning set forth in Section 12.1.
“Parent Commitment Letter” shall have the meaning set forth in Section 5.7.
“Parent Debt Financing” shall have the meaning set forth in Section 5.7.
“Parent Expenses” shall have the meaning set forth in Section 8.5(c).
8
“Parent Financing” shall have the meaning set forth in Section 5.7.
“Parent Preferred Equity Funding Letter” shall have the meaning set forth in
Section 5.7.
“Paying Agent” shall have the meaning set forth in Section 3.2(a).
“Per Share Merger Consideration” means (i) $20.50 per Share, minus (ii) the Special
Dividend Amount, divided by the number of Shares outstanding, on a fully diluted basis, on the
Closing Date.
“Permits” shall have the meaning set forth in Section 4.9.
“Permitted Liens” means (a) statutory liens for Taxes, assessments or other charges by
Governmental Entities not yet due and payable or the amount or validity of which is being contested
in good faith, (b) any matter disclosed in the Company Title Insurance Policies, (c) Liens and
obligations under the Material Contracts, Management Agreement Documents, the Third Party Franchise
Agreements and Lease Documents, (d) mortgages and deeds of trust granted as security for financings
listed or described in the Company Letter or Company SEC Documents, (e) inchoate mechanics’,
materialmen’s, carriers’, workmen’s, warehouseman’s, repairmen’s, landlords’ and similar liens
granted or which arise in the ordinary course of business, (f) liens, charges, encumbrances and/or
title exceptions or imperfections created by or resulting from the acts or omissions of the Buyer
Parties or any of their Affiliates, employees, officers, directors, agents, representatives,
contractors, invitees or licensees, (g) all matters that may be shown by a current, accurate survey
or physical inspection of the Company Properties that do not adversely affect, in a material
manner, the value or marketability of such property, (h) any applicable Laws, including building
and zoning Laws, now or hereafter in effect and (i) such other easements, rights of way,
restrictions, covenants, liens, encumbrances or imperfections that are not material in amount and
do not materially detract from the value of or materially impair the existing use of the Company
Property affected by such easement, right of way, restriction, covenant, lien, encumbrance or
imperfection.
“Person” means an individual, corporation, partnership, limited partnership, limited
liability partnership, limited liability company, joint venture, association, trust, unincorporated
organization, Governmental Entity or other entity (including any person as defined in Section
13(d)(3) of the Exchange Act).
“Proxy Statement” shall have the meaning set forth in Section 4.8.
“Qualifying Income” shall have the meaning set forth in Section 8.5(e).
“Redemption Plan” means the Company’s Amended and Restated Redemption Plan, effective
as of June 16, 2004, as the same may from time to time be amended or modified.
“Reinvestment Plan” means the Company’s Amended and Restated Reinvestment Plan, as in
effect as of the date hereof.
“REIT” shall have the meaning set forth in Section 4.10(c).
9
“Release” means any spilling, leaking, pumping, pouring, emitting, discharging,
injecting, escaping, leaching, dumping or disposing of a Hazardous Substance into the environment.
“Representatives” shall have the meaning set forth in Section 7.2(a).
“Required Vote” shall have the meaning set forth in Section 4.4(a).
“Retained Employees” shall have the meaning set forth in Section 8.1(a).
“SDAT” shall have the meaning set forth in Section 2.3.
“SEC” means the Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended, together with the rules
and regulations promulgated thereunder.
“Shares” shall have the meaning set forth in the second recital of this Agreement.
“Significant Subsidiary” of any Person means a Subsidiary of such Person that would
constitute a “significant subsidiary” of such Person within the meaning of Rule 1.02(w) of
Regulation S-X as promulgated by the SEC.
“Special Dividend” shall have the meaning set forth in Section 12.3.
“Special Dividend Amount” shall have the meaning set forth in Section 12.3.
“Stockholders’ Meeting” shall have the meaning set forth in Section 8.3(b).
“Sub” shall have the meaning set forth in the introductory paragraph of this
Agreement.
“Subsidiary” of any Person means another Person, of which at least a majority of the
securities or ownership interests having by their terms ordinary voting power to elect a majority
of the board of directors or other Persons performing similar functions is owned or controlled,
directly or indirectly, by such first Person and/or by one or more of its Subsidiaries.
“Superior Proposal” shall have the meaning set forth in Section 7.2(d).
“Surviving Entity” shall have the meaning set forth in Section 2.1.
“Tax” and “Taxes” means any federal, state, local or foreign income, property,
sales, hotel room sales, restaurant sales, excise, franchise, employment, withholding, or other
like assessment, together with any interest or penalty, imposed by any Governmental Entity.
“Tax Protection Agreement” shall have the meaning set forth in Section
4.10(j).
“Tax Sharing Agreement” shall have the meaning set forth in Section 4.10(j).
10
“Tax Return” means any return, report or similar statement filed or required to be
filed with respect to any Tax including any information return, claim for refund, amended return or
declaration of estimated Tax.
“Termination Date” shall have the meaning set forth in Section 10.1(b)(i).
“Termination Fee” shall have the meaning set forth in Section 8.5(b).
“Third Party Franchise Agreements” shall have the meaning set forth in Section
4.15(g).
“Transactions” shall have the meaning set forth in the third recital of this
Agreement.
“Transfer Taxes” shall have the meaning set forth in Section 8.7.
“Treasury Regulations” means the regulations promulgated by the U.S. Treasury
Department pursuant to the Code.
“Uncertificated Share” shall have the meaning set forth in Section 3.1(c).
“WARN” shall have the meaning set forth in Section 4.17(d).
Section 1.2 Interpretation. When a reference is made in this Agreement to an Article,
Section or clause, such reference shall be to an Article, Section or clause of this Agreement
unless otherwise indicated. The table of contents and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words “include,” “includes” or “including” are used in this Agreement,
they shall be deemed to be followed by the words “without limitation.” All references to “dollars”
or “$” means United States dollars.
ARTICLE II
THE MERGER
THE MERGER
Section 2.1 The Merger. Upon the terms and subject to the conditions hereof, and in
accordance with the DLLCA and the MGCL, Sub shall be merged with and into the Company at the
Effective Time. Following the Effective Time, the separate existence of Sub shall cease and the
Company shall continue as the surviving entity (the “Surviving Entity”) and shall succeed
to and assume all the rights, privileges, franchises, powers and obligations of Sub and the Company
in accordance with Subtitle 1 of Title 3 of the MGCL and Section 18-209(g) of the DLLCA. The
Company shall cause the opinion described in Section 9.3(d) to be brought down and dated as
of the Closing; provided, that the bringdown of such opinion shall not be a condition to
the consummation of the Merger.
Section 2.2 Closing. The closing of the Merger (the “Closing”) will take
place at 10:00 a.m. on the day following the consummation of the Asset Sales or such other date as
mutually agreed to by Parent and the Company, at the offices of Sidley Austin LLP, 000 Xxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, unless another date, time or place is agreed to in writing by the
parties hereto (the date upon which the Closing occurs shall be referred to herein as the
“Closing Date”).
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Section 2.3 Effective Time. The Merger shall become effective when Articles of Merger
(the “Articles of Merger”), executed in accordance with the relevant provisions of the
MGCL, are duly filed with and accepted for record by the State Department of Assessments and
Taxation in the State of Maryland (the “SDAT”) and a certificate of merger (the
“Delaware Certificate of Merger”) has been duly filed with the Secretary of State of
Delaware (the “DSOS”) in accordance with the DLLCA, or at such later time (not to exceed 30
days from the date of the acceptance for record of the Articles of Merger) as Sub and the Company
shall agree and is specified in the Articles of Merger and the Delaware Certificate of Merger.
When used in this Agreement, the term “Effective Time” shall mean the later of the date and
time at which the Articles of Merger are duly filed with and accepted for record by the SDAT and
the Delaware Certificate of Merger has been filed with the DSOS, or such later time (not to exceed
30 days from the date of the acceptance for record of the Articles of Merger) established by the
Articles of Merger and the Delaware Certificate of Merger. The filing of the Articles of Merger
and the Delaware Certificate of Merger shall be made at the Closing.
Section 2.4 Effects of the Merger. The Merger shall have the effects set forth in
Section 3-114 of the MGCL, Section 18-209(g) of the DLLCA and this Agreement.
Section 2.5 Charter and Bylaws; Officers and Directors.
(a) The Company Charter, as in effect immediately prior to the Effective Time, shall be the
charter of the Surviving Entity until thereafter changed or amended as provided therein or by
applicable Law.
(b) The Company Bylaws, as in effect immediately prior to the Effective Time, shall be the
bylaws of the Surviving Entity until thereafter changed or amended as provided by the charter or
bylaws of the Surviving Entity or by applicable Law.
(c) The managers of Parent, if any, immediately prior to the Effective Time shall be the
directors of the Surviving Entity, until the earlier of their resignation or removal or until their
respective successors are duly elected and qualify, as the case may be, in accordance with the
Surviving Entity’s charter and bylaws.
(d) The officers of Parent immediately prior to the Effective Time shall be the officers of
the Surviving Entity until the earlier of their resignation or removal or until their respective
successors are duly elected and qualify, as the case may be, in accordance with the charter and
bylaws of the Surviving Entity.
Section 2.6 Tax Treatment. The parties hereto (i) intend that for federal, and
applicable state and local, income tax purposes, the Merger will be treated as a taxable purchase
by Parent of all of the Company’s outstanding Shares and (ii) shall prepare and file their
applicable Tax Returns based on such treatment.
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ARTICLE III
EFFECT OF THE MERGER
EFFECT OF THE MERGER
Section 3.1 Effect on Stock. As of the Effective Time, by virtue of the Merger and
without any action on the part of any of Parent, Sub, the Company or the holders of shares of
Company Common Stock or holders of any membership interest in Sub:
(a) Stock of Sub. Each membership interest of Sub issued and outstanding immediately
prior to the Effective Time shall be converted into and become one validly issued, fully paid and
nonassessable share of common stock, par value $0.01 per share, of the Surviving Entity.
(b) Parent Owned Stock. Each Share that is owned by Parent, Sub, Missouri or any
other wholly-owned Subsidiary of Parent immediately prior to the Effective Time shall automatically
be cancelled and retired and shall cease to exist, and no consideration shall be delivered in
exchange therefor.
(c) Conversion of Shares. Subject to Section 3.1(d), each Share issued and
outstanding immediately prior to the Effective Time (other than Shares to be cancelled in
accordance with Section 3.1(b) and Dissenting Shares) shall be cancelled and be converted
into the right to receive in cash, without interest, the Per Share Merger Consideration. As of the
Effective Time, all such Shares shall be cancelled in accordance with this Section 3.1(c),
and when so cancelled, shall no longer be outstanding and shall automatically cease to exist, and
(x) each holder of a certificate (a “Certificate”) representing any such Shares shall cease
to have any rights with respect thereto, except the right to receive the Per Share Merger
Consideration for each such Share, without interest and (y) each holder of shares of Company Common
Stock not represented by a Certificate (each an “Uncertificated Share”) shall thereafter
only have the right to receive the Per Share Merger Consideration for each such Uncertificated
Share, without interest.
(d) Shares of Dissenting Stockholders. Notwithstanding anything in this Agreement to
the contrary, any issued and outstanding Shares held by a Person who has filed with the Company a
written objection to the Merger, has not voted in favor of or consented to the approval of the
Merger (a “Dissenting Stockholder”) and has properly exercised and perfected appraisal
rights under Title 3, Subtitle 2, of the MGCL (“Dissenting Shares”) shall not be converted
into the right to receive the Per Share Merger Consideration as described in Section
3.1(c), but shall be converted into the right to receive such consideration from the Surviving
Entity as may be determined to be due to such Dissenting Stockholder pursuant to the procedures set
forth in Title 3, Subtitle 2, of the MGCL. If such Dissenting Stockholder withdraws its demand for
appraisal or fails to perfect or otherwise loses its right of appraisal and payment, in any case
pursuant to the MGCL, such holder’s Shares shall be deemed to be converted as of the Effective Time
into the right to receive the Per Share Merger Consideration for each such Share, without interest,
and such Shares shall no longer be Dissenting Shares. The Company shall give Parent (i) prompt
notice of any demands received by the Company for appraisal of any Shares, withdrawals or such
demands and any other instruments served pursuant to Title 3, Subtitle 2, of the MGCL and received
by the Company and (ii) the opportunity to participate in all negotiations with respect to demands
for appraisals under the MGCL.
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Section 3.2 Paying Agent; Exchange Procedures.
(a) Paying Agent. Prior to the consummation of the Asset Sales, Parent shall
designate a bank or trust company, that shall be reasonably satisfactory to the Company, to act as
paying agent with respect to the Per Share Merger Consideration and the Special Dividend (the
“Paying Agent”). At or before the Effective Time, Parent shall deposit, or cause Sub to
deposit, with the Paying Agent a cash amount in immediately available funds equal to the product of
(x) the Per Share Merger Consideration and (y) the number of Shares issued and outstanding
immediately prior to the Effective Time (exclusive of any Dissenting Shares and Shares to be
cancelled pursuant to Section 3.1(b)). At or following the consummation of the Asset
Sales, the Company shall deposit, or cause the escrow agent under the Parent Asset Purchase
Agreement and the Arizona Asset Purchase Agreement to deposit, with the Paying Agent the Special
Dividend Amount. The amounts deposited pursuant to the prior two sentences shall be referred to
collectively as the “Exchange Fund”. Funds made available to the Paying Agent shall be
invested (if at all) by the Paying Agent as directed by Parent or, after the Effective Time, the
Surviving Entity; provided, however, that such investments shall only be in
obligations of or guaranteed by the United States (it being understood that any and all interest or
income earned on funds made available to the Paying Agent pursuant to this Agreement shall become a
part of the Exchange Fund, and any amounts in excess of the amounts payable under Section
3.1(c) shall be promptly returned to the Surviving Entity).
(b) Exchange Procedure. As soon as practicable after the Effective Time (and in any
event within four (4) Business Days thereof), the Surviving Entity or Parent shall cause the Paying
Agent to mail to each holder of record of one or more Shares (other than holders of Dissenting
Shares and Shares to be cancelled pursuant to Section 3.1(b)), (i) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates (or affidavits of loss in lieu
thereof) to the Paying Agent and shall be in a form and have such other provisions as Parent and
the Company may reasonably agree) and (ii) instructions for use in effecting the surrender of the
Certificates (or affidavits of loss in lieu thereof) in exchange for the Per Share Merger
Consideration as provided in Section 3.1. Upon surrender of a Certificate (or affidavits
of loss in lieu thereof) for cancellation to the Paying Agent, together with such letter of
transmittal, duly executed, and such other documents as may reasonably be required by the Paying
Agent or, in the case of Uncertificated Shares, at or promptly following the receipt by the Paying
Agent of a duly executed letter of transmittal and such other documents as may be required by the
Paying Agent, the holder of such Certificate or Uncertificated Shares shall be entitled to receive
in exchange therefor the amount of cash (after giving effect to any required Tax withholdings as
provided in Section 3.2(g)) equal to (x) the number of Shares held by such stockholder
multiplied by (y) the Per Share Merger Consideration, and any Certificates surrendered shall
forthwith be cancelled. No interest will be paid or will accrue on the cash payable upon the
surrender of any Certificate (or affidavits of loss in lieu thereof) or in exchange for
Uncertificated Shares. In the event of a transfer of ownership of Shares that is not registered in
the transfer records of the Company, payment may be made to a Person other than the Person in whose
name the Certificate so surrendered (or affidavits of loss in lieu thereof) is registered, if such
Certificate (or affidavits of loss in lieu thereof) shall be properly endorsed or otherwise be in
proper form for transfer and the Person requesting such payment shall pay any transfer or other
Taxes required by reason of the payment to a Person other than the registered holder of
14
such Certificate (or affidavits of loss in lieu thereof) or establish to the satisfaction of
the Surviving Entity or the Paying Agent that such Tax has been paid or is not applicable. Until
exchanged or surrendered as contemplated by this Section 3.2, Uncertificated Shares and
Shares represented by Certificates (other than Shares to be cancelled in accordance with
Section 3.1(b) and Dissenting Shares) shall be deemed at any time after the Effective Time
to represent only the right to receive upon such exchange or surrender the amount of cash, without
interest, into which the Shares theretofore represented shall have been converted pursuant to
Section 3.1.
(c) No Further Ownership Rights in Shares. All Per Share Merger Consideration paid
upon the surrender of Certificates (or affidavits of loss in lieu thereof) or in exchange for
Uncertificated Shares in accordance with the terms of this Article III shall be deemed to
have been paid in full satisfaction of all rights pertaining to such Shares. At the Effective
Time, (i) holders of Certificates or Uncertificated Shares shall cease to have any rights as
stockholders of the Company, (ii) the stock transfer books of the Company shall be closed and (iii)
there shall be no further registration of transfers on the stock transfer books of the Surviving
Entity of the Shares that were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Entity or the Paying Agent for any
reason, they shall be cancelled and exchanged as provided in this Article III.
(d) Termination of Exchange Fund. Any portion of the Exchange Fund that remains
undistributed to the holders of Shares for nine months after the Effective Time shall be delivered
to the Surviving Entity, upon demand, and any holders of Shares (other than Shares to be cancelled
in accordance with Section 3.1(b) and Dissenting Shares) who have not theretofore complied
with this Article III and the instructions set forth in the letter of transmittal mailed to
such holders after the Effective Time shall, after such funds have been delivered to the Surviving
Entity, look only to the Surviving Entity (subject to abandoned property, escheat or other similar
Laws) for payment of the Per Share Merger Consideration (after giving effect to any required Tax
withholdings as provided in Section 3.2(g)) due upon surrender of their Certificates (or
affidavits of loss in lieu thereof as provided in Section 3.2(f)) or exchange of their
Uncertificated Shares, without any interest thereon.
(e) No Liability. None of the Buyer Parties, the Company or the Paying Agent or any
of their respective officers, employees, stockholders, directors, agents or Affiliates shall be
liable to any Person in respect of any Per Share Merger Consideration delivered to a public
official pursuant to any applicable abandoned property, escheat or similar Law.
(f) Lost, Stolen or Destroyed Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such
Certificate to be lost, stolen or destroyed and, if required by the Surviving Entity, the posting
by such Person of a bond in customary amount and upon such terms as may be required by the
Surviving Entity as indemnity against any claim that may be made against it with respect to such
Certificate, the Paying Agent will issue a check in the amount (after giving effect to any required
Tax withholdings as provided in Section 3.2(g)) equal to the number of Shares represented
by such lost, stolen or destroyed Certificate multiplied by the Per Share Merger Consideration.
(g) Withholding Rights. The Surviving Entity and the Paying Agent shall be entitled
to deduct and withhold from the consideration otherwise payable pursuant to this
15
Agreement to any holder of Shares such amounts as the Surviving Entity or the Paying Agent is
required to deduct and withhold with respect to the making of such payment under the Code or under
any provision of state, local or foreign Tax Law. To the extent that amounts are so withheld by
the Surviving Entity or the Paying Agent, such withheld amounts (i) shall be remitted by the
Surviving Entity or the Paying Agent, as applicable, to the applicable Governmental Entity, and
(ii) shall be treated for all purposes of this Agreement as having been paid to the holder of the
Shares in respect of which such deduction and withholding was made by the Surviving Entity or the
Paying Agent, as the case may be. The parties acknowledge that this Section 3.2(g) is not
intended to, and shall not, amend the terms of any Deferred Share Award or employment agreement
related thereto.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Company Letter (it being agreed that disclosure of any item in any
section or subsection of the Company Letter shall be deemed disclosure with respect to any other
section or subsection to which the relevance of such item is reasonably apparent), the Company
hereby represents and warrants to the Buyer Parties as follows:
Section 4.1 Organization; Minute Books.
(a) The Company is duly organized, validly existing and in good standing under the Laws of the
jurisdiction of its organization and has the requisite corporate or similar power and authority to
own, lease and operate its properties and to carry on its business as now being conducted. Each of
the Company’s Subsidiaries is duly organized, validly existing and in good standing under the Laws
of the jurisdiction of its organization and has the requisite corporate or similar power and
authority to own, lease and operate its properties and to carry on its business as now being
conducted, except where the failure to be so organized, existing and in good standing or to have
such corporate or similar power and authority have not had and would not reasonably be expected to
have a Material Adverse Effect on the Company. The Company and each of its Subsidiaries are duly
qualified or licensed to do business and in good standing in each jurisdiction in which the nature
of their business or the ownership or leasing of their properties makes such qualification or
licensing necessary, except in such jurisdictions where the failure to be so duly qualified or
licensed and in good standing has not had and would not reasonably be expected to have a Material
Adverse Effect on the Company.
(b) The Company has made available to the Buyer Parties complete and correct copies of its
Articles of Amendment and Restatement, dated August 7, 2006 (the “Company Charter”), and
its Amended and Restated Bylaws, dated August 30, 2006 (the “Company Bylaws”), and has made
available to the Buyer Parties the charter and bylaws (or similar organizational documents) of each
of its Significant Subsidiaries. The charter and bylaws (or similar organizational documents) of
the Company and each of its Subsidiaries are in full force and effect and no dissolution,
revocation or forfeiture proceeding regarding the Company or any of its Subsidiaries has been
commenced. Neither the Company nor any of its Subsidiaries is in violation of any of the
provisions of its charter or bylaws (or similar organizational documents), except, in each case,
for such violations that would not have a Material Adverse Effect on the Company.
16
(c) The Company has made available to the Buyer Parties materially correct and complete copies
of the minute books of the Company of meetings of the Board and committees of the Board held since
January 1, 2004, except that the Company shall not be obligated to make available those portions of
any minutes of meetings of the Board or committees of the Board related to the deliberations by the
Board or such committee with respect to the consideration of strategic alternatives.
Section 4.2 Subsidiaries. A correct and complete list of all of the Subsidiaries of
the Company, together with the jurisdiction of organization of each such Subsidiary, and the
percentage, if any, of the outstanding equity of each such Subsidiary not owned, directly or
indirectly, by the Company is set forth in Item 4.2 of the Company Letter. All of the outstanding
shares of stock of each Subsidiary of the Company that is a corporation have been duly authorized
and validly issued and are fully paid and nonassessable. All of the outstanding shares of stock or
equity interests and other ownership interests of each Subsidiary of the Company are owned by the
Company, by one or more Subsidiaries of the Company or by the Company and one or more Subsidiaries
of the Company, free and clear of all Liens. The Company does not own, directly or indirectly, any
stock or other voting or equity securities or interests (or any interests convertible into or
exchangeable or exercisable for any equity or similar interests) in any other Person.
Section 4.3 Capital Structure. The authorized stock of the Company consists of
3,000,000,000 shares of Company Common Stock, 75,000,000 shares of preferred stock, $0.01 par value
per share (the “Company Preferred Stock”), and 600,000,000 excess shares, $0.01 par value
per share (the “Excess Shares”). At the close of business on January 17, 2007, (a)
156,968,775.0187 shares of Company Common Stock were issued and outstanding, all of which were duly
authorized, validly issued, fully paid and nonassessable and free of preemptive rights, (b)
2,872,743 shares of Company Common Stock were reserved for issuance pursuant to Deferred Share
Awards granted under the Company’s 2004 Omnibus Long-Term Incentive Plan (the “Company Stock
Plan”), (c) no shares of Company Preferred Stock were issued and outstanding, and (d) no Excess
Shares were issued and outstanding. As of the date of this Agreement, except as set forth above,
no shares of stock of the Company or options, warrants, convertible or exchangeable securities or
other rights to purchase stock of the Company are issued, reserved for issuance or outstanding.
There are no outstanding bonds, debentures, notes or other indebtedness of the Company having the
right to vote (or convertible into, or exchangeable for, securities having the right to vote) on
any matter on which the Company’s stockholders may vote. As of the date of this Agreement, except
as set forth above, there are no securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which the Company or any of its
Subsidiaries is a party or by which any of them is bound obligating the Company or any of its
Subsidiaries to issue, deliver or sell or create, or cause to be issued, delivered or sold or
created, additional shares of stock or other voting or equity securities or interests of the
Company or of any of its Subsidiaries or obligating the Company or any of its Subsidiaries to
issue, grant, extend or enter into any such security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking relating to the voting of stock or equity securities or
interests of the Company or any of its Subsidiaries. As of the date of this Agreement, other than
pursuant to this Agreement, there are no outstanding contractual obligations or rights of the
Company or any of its Subsidiaries to register or repurchase, redeem or otherwise acquire, vote,
dispose of or otherwise transfer or register
17
pursuant to any securities Laws any shares of stock or equity interests of the Company or any
of its Subsidiaries. There are no agreements or understandings to which the Company is a party
with respect to the voting of any shares of Company Common Stock and, to the Knowledge of the
Company, as of the date of this Agreement, there are no third party agreements or understandings
with respect to the voting of any shares of Company Common Stock.
Section 4.4 Authority. (a) The Company has the requisite corporate power and
authority to execute and deliver this Agreement and, subject to approval by the Company’s
stockholders of the Merger, to consummate the transactions contemplated hereby, including the Asset
Sales. The execution, delivery and performance of this Agreement by the Company and the
consummation by the Company of the Merger and the other transactions contemplated hereby, including
the Asset Sales, have been duly authorized by all necessary corporate action on the part of the
Company, subject to approval of the Merger and the other transactions contemplated hereby, by the
holders of a majority of the outstanding Shares entitled to vote thereon (the “Required
Vote”). This Agreement has been duly executed and delivered by the Company and (assuming the
valid authorization, execution and delivery of this Agreement by the Buyer Parties) constitutes the
legal, valid and binding obligation of the Company enforceable against the Company in accordance
with its terms.
(b) The Board, at a meeting duly called and held has unanimously (i) approved and declared
advisable and in the best interests of the Company and its stockholders this Agreement, the Merger,
the Parent Asset Purchase Agreement, the Arizona Asset Purchase Agreement and the Asset Sales and
(ii) resolved to recommend approval by the stockholders of the Company of the Merger and the
transactions contemplated by the Merger Agreement, which resolutions, subject to Section
7.2, have not been subsequently rescinded, modified or withdrawn in any way (collectively, the
“Board Recommendation”). Approval of the Merger and the other transactions contemplated
hereby, by the stockholders of the Company by the Required Vote is the only vote of the holders of
any class or series of stock of the Company required to approve the Merger and the transactions
contemplated hereby.
Section 4.5 Consents and Approvals; No Violations. Except (a) for filings, permits,
authorizations, consents and approvals as may be required under, and other applicable requirements
of, the Securities Act, Exchange Act, the HSR Act, the MGCL, the DLLCA, state securities Laws and
other applicable competition Law clearances, if any, and (b) as may be required in connection with
the Taxes described in Section 8.7, neither the execution, delivery or performance of this
Agreement by the Company nor the consummation by the Company of the transactions contemplated
hereby will (i) conflict with or result in any breach of any provision of the Company Charter or
Company Bylaws or of the similar organizational documents of any of the Significant Subsidiaries,
(ii) require any filing with, or permit, authorization, consent or approval of, any Governmental
Entity, (iii) conflict with or result in a breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination, amendment, cancellation
or acceleration) under, or result in a loss of benefit under or give rise to a right of purchase,
first offer or forced sale under, any of the terms, conditions or provisions of any Contract to
which the Company or any of its Subsidiaries is a party or by which any of them or any of their
properties or assets may be bound, (iv) violate any Law applicable to the Company, any of its
Subsidiaries or any of their properties or assets, (v) result in the creation of any Lien on any
properties or assets of the Company or any of its Subsidiaries,
18
except for Permitted Liens or (vi) require the Company or any of its Subsidiaries to make any
payment to any third Person, except in the case of clause (ii) where the failure to obtain
such permits, authorizations, consents or approvals or to make such filings or, in the case of
clauses (iii), (iv), (v) or (vi), for breaches, defaults,
terminations, amendments, cancellations, accelerations, losses of benefits, violations, Liens or
payments that have not had and would not reasonably be expected to have a Material Adverse Effect
on the Company.
Section 4.6 SEC Documents and Other Reports. (a) The Company has filed with the SEC
all forms, reports, statements, schedules, certifications, exhibits thereto and other documents
required to be filed by it since December 31, 2004 under the Securities Act or the Exchange Act
(collectively, the “Company SEC Documents”). As of their respective filing dates, the
Company SEC Documents (including any documents or information incorporated by reference therein)
complied, and all documents filed by the Company with the SEC under the Securities Act or the
Exchange Act between the date of this Agreement and the date of Closing will comply, in each case
subject to the accuracy of the representations and warranties set forth in Sections 5.4 and
6.4, in all material respects with the requirements of the Securities Act and the Exchange
Act, as the case may be, each as in effect on the date so filed. At the time filed with the SEC,
none of the Company SEC Documents (including any documents or information incorporated by reference
therein) contained, or, in the case of documents filed on or after the date hereof will contain, in
each case subject to the accuracy of the representations and warranties set forth in Sections
5.4 and 6.4, any untrue statement of a material fact or omitted, or, in the case of
documents filed on or after the date hereof will omit, in each case subject to the accuracy of the
representations and warranties set forth in Sections 5.4 and 6.4, to state a
material fact required to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading. The consolidated financial
statements of the Company included in the Company SEC Documents (including the related notes and
schedules thereto) complied as of their respective dates in all material respects with the then
applicable accounting requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with GAAP (except in the case of the unaudited
statements, as permitted by Form 10-Q under the Exchange Act) during the periods involved (except
as may be indicated therein or in the notes thereto) and fairly present in all material respects
the consolidated financial position of the Company and its consolidated Subsidiaries as of the
dates thereof and the consolidated results of their operations and their consolidated cash flows
for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments and to any other adjustments described therein).
(b) The Company has made available to the Buyer Parties correct and complete copies of all
material written correspondence between the SEC, on the one hand, and the Company and any of its
Subsidiaries, on the other hand, occurring since December 31, 2004 and prior to the date hereof and
will, promptly following the receipt thereof, make available to the Buyer Parties any such material
correspondence sent or received after the date hereof. To the Knowledge of the Company, none of
the Company SEC Documents is the subject of ongoing SEC review or outstanding SEC comment.
(c) Neither the Company nor any of the Subsidiaries has any liability or obligation of any
nature (whether accrued, absolute, contingent or otherwise) which would be required to be
reflected, reserved for or disclosed in a consolidated balance sheet of the Company
19
and its consolidated Subsidiaries, including the notes thereto, prepared in accordance with
GAAP except (i) as reflected, reserved for or disclosed in the consolidated balance sheet of the
Company and its consolidated Subsidiaries as of September 30, 2006, including the notes thereto,
(ii) as incurred since September 30, 2006 in the ordinary course of business consistent with past
practice, (iii) as incurred or to be incurred by the Company or any Subsidiary pursuant to, in
connection with, or as a result of, the Merger and the other transactions contemplated by this
Agreement, or (iv) as would not, or would not reasonably be expected to, have a Material Adverse
Effect on the Company.
(d) The Company has (i) implemented and maintains disclosure controls and procedures (as
defined in Rule 13a-15(e) of the Exchange Act) designed to ensure that material information
relating to the Company, including the consolidated Subsidiaries of the Company, is made known to
the management of the Company, and (ii) has disclosed, based on its most recent evaluation prior to
the date hereof, to the Company’s outside auditors and the audit committee of the Board (A) all
significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) which are reasonably
likely to adversely affect the Company’s ability to record, process, summarize and report financial
data and (B) any fraud whether or not material, that involves management or other employees who
have a significant role in the Company’s or any of Subsidiary of the Company’s internal controls
over financial reporting.
(e) The Company has not identified, based on its most recent evaluation, any material
weaknesses in the design or operation of internal controls over financial reporting.
Section 4.7 Absence of Material Adverse Effect. Since September 30, 2006 and prior to
the date hereof, the Company and its Subsidiaries have conducted their respective businesses in all
material respects in the ordinary course consistent with past practice, and, other than in
connection with the Marketed Portfolio Sale, there has not been (a) any effect, event, development,
change or circumstance that, individually or in the aggregate, with all other effects, events,
developments and changes, has resulted in a Material Adverse Effect on the Company, (b) except for
regular quarterly distributions to the Company’s stockholders with customary record and payment
dates, any declaration, setting aside or payment of any dividend or other distribution with respect
to its stock or equity interests or, except for regular redemptions of Shares pursuant to the
Redemption Plan, any redemption, purchase or other acquisition of any of its stock or equity
interests, (c) any change in accounting methods, principles or practices used by the Company or any
of its Subsidiaries materially affecting its assets, liabilities or business, except insofar as may
have been required by a change in GAAP, (d) any material damage, destruction or loss not covered by
insurance to the Owned Real Property, (e) any material amendment of any term of any material
outstanding debt or equity security of the Company or any of its Subsidiaries other than in the
ordinary course of business, (f) any material amendment of any material employment, consulting,
severance, incentive stock, stock option, deferred compensation, bonus, retirement, retention or
any other agreement, or the adoption of any material new such agreement, between (i) the Company or
any Company Subsidiary, on the one hand and (ii) any officer, trustee or director of the Company or
any Company Subsidiary, on the other hand, earning more than $200,000 per year, other than as
required by any contract, agreement or Benefit Plan, (g) any incurrence of indebtedness for
borrowed money or guarantee for such indebtedness, in each case by the Company or any Subsidiary of
the Company in excess
20
of $1,000,000, other than (i) to meet the current cash needs of the Company and any Subsidiary
of the Company not exceeding the amount contemplated by the Company’s capital budget for such
period, a copy of which has been previously provided to the Buyer Parties and (ii) for projects
currently under construction in amounts disclosed in the Company’s capital budget for such period,
or (h) any agreement by the Company or any of its Subsidiaries involving any of the foregoing since
September 30, 2006 and prior to the date hereof, except as disclosed on Item 4.7 of the Company
Letter.
Section 4.8 Information Supplied. None of the information supplied or to be supplied
by the Company or any of its Subsidiaries or representatives specifically for inclusion or
incorporation by reference in the proxy statement relating to the Stockholders’ Meeting (together
with any amendments or supplements thereto and including any related filings required pursuant to
the Exchange Act, the “Proxy Statement”) will, at the time the Proxy Statement is first
mailed to the Company’s stockholders or at the time of the Stockholders’ Meeting, contain any
untrue statement of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the circumstances under
which they are made, not misleading, except that no representation or warranty is made by the
Company with respect to statements made or incorporated by reference therein based on information
supplied by any Buyer Party or any of their respective representatives specifically for inclusion
or incorporation by reference therein.
Section 4.9 Compliance with Laws. The businesses and assets of the Company and its
Subsidiaries are not and, since December 31, 2005, have not been, conducted or held in violation of
any Law of any Governmental Entity, except for any violations that have not had a Material Adverse
Effect on the Company. Each of the Company and its Subsidiaries has in effect all federal, state,
local and provincial governmental licenses, authorizations, consents, permits and approvals
(collectively, “Permits”) necessary for it to own, lease or operate its properties and
assets and to carry on its business as now conducted, and no violation or default has occurred
under any such Permit, except for the absence of Permits and for violations or defaults under
Permits that have not had and would not reasonably be expected to have a Material Adverse Effect on
the Company.
Section 4.10 Tax Matters.
(a) The Company and each of its Subsidiaries has timely filed or caused to be filed (after
taking into account all applicable extensions) all material Tax Returns required to be filed by
them, except where the failure to timely file would not reasonably be expected to have a Material
Adverse Effect on the Company, and all such Tax Returns are true, correct and complete in all
material respects.
(b) Each of the Company and its Subsidiaries has paid or caused to be paid all material Taxes
required to be paid (whether or not shown on any Tax return).
(c) The Company and the Company Subsidiary REIT (i) for all taxable years commencing in the
year in which the Company or the Company Subsidiary REIT, as applicable, first made an election to
be subject to taxation as a real estate investment trust within the meaning of Section 856 of the
Code (a “REIT”), through the most recent
December 31, has
21
qualified and been subject to taxation as a REIT and (ii) has operated, and intends to
continue to operate until the Effective Time, in such a manner as would permit it to continue to
qualify as a REIT, from the most recent December 31 and through the Effective Time, without,
however, taking into account the effect on the Company or the Company Subsidiary REIT, as
applicable, of any of the Transactions required to be entered into, or distributions required to be
made, by the Company or the Company Subsidiary REIT under this Agreement, and without any express
or implied representation being made that the Company or the Company Subsidiary REIT will have
satisfied as of the Effective Time any requirement to make dividend distributions as a REIT with
respect to 2007 that would have existed if the Company’s and the Company Subsidiary REIT’s 2007
taxable years were to have closed at the Effective Time. The Company has no Subsidiary classified
as a REIT for federal income tax purposes other than the Company Subsidiary REIT. To the Company’s
Knowledge, no challenge to the Company’s or the Company Subsidiary REIT’s status as a REIT is
pending or threatened in writing. Each Subsidiary of the Company and each Subsidiary of the
Company Subsidiary REIT that is a partnership, joint venture, or limited liability company and that
has not elected for federal income tax purposes to be a corporation or a “taxable REIT subsidiary”
within the meaning of Section 856 of the Code is treated for federal income tax purposes as a
partnership or disregarded entity, as the case may be, and not as a corporation or an association
taxable as a corporation. Each Subsidiary of the Company or the Company Subsidiary REIT that is a
corporation for federal income tax purposes is a “qualified REIT subsidiary” pursuant to Section
856(i) of the Code, a “taxable REIT subsidiary” pursuant to Section 856(l) of the Code or a
corporation which qualifies under the transitional rules set forth in Section 546(b) of the Tax
Relief Extension Act of 1999. Neither the Company, the Company Subsidiary REIT nor any of their
Subsidiaries holds any assets the disposition of which would be subject to rules similar to Section
1374 of the Code as a result of (A) an election under IRS Notice 88-19 or Treasury Regulations
Section 1.337(d)-5 or Section 1.337(d)-6 or (B) the application of Treasury Regulations Section
1.337(d)-7.
(d) No written requests for waivers of the time to assess any material Taxes of the Company or
its Subsidiaries are pending.
(e) There are no material pending or threatened audits, examinations, investigations or other
proceedings in respect of Taxes of the Company or any of its Subsidiaries with respect to which the
Company or any of its Subsidiaries has been notified in writing. To the Knowledge of the Company,
there are no pending or threatening audits, examinations, investigations or other proceedings in
respect of Taxes of the Company or any of its Subsidiaries.
(f) All Taxes which the Company or any of its Subsidiaries are required by Law to withhold or
to collect for payment have been withheld and collected except as would not reasonably be expected
to have a Material Adverse Effect on the Company.
(g) Neither the Company nor any of its Subsidiaries is a party to any agreement, arrangement,
understanding or plan that has resulted, or would result in connection with the transactions
contemplated by this Agreement or any change in control, in the payment of any amount that would,
by operation of Section 280G of the Code, not be deductible by the entity making such payment.
22
(h) Neither the Company nor any Subsidiary has made or is obligated to make any payment that
would not be deductible pursuant to Section 162(m) of the Code.
(i) There are no Liens for Taxes (other than Taxes not yet due and payable) upon any of the
assets of the Company or any of its Subsidiaries.
(j) Neither the Company nor any of its Subsidiaries is a party to any Tax Sharing Agreement or
Tax Protection Agreement, other than any agreement or arrangement solely between the Company and
any of its Subsidiaries, pursuant to which it will have any obligation to make any payments after
the Closing. For purposes of this Section 4.10(j), a “Tax Sharing Agreement” means
any written agreement for the allocation or payment of Tax liabilities or payment for Tax benefits
with respect to a consolidated, combined or unitary Tax Return which Tax Return includes or
included the Company or any of its Subsidiaries. For purposes of this Section 4.10(j), a
“Tax Protection Agreement” means any written agreement to which the Company or any of its
Subsidiaries is a party pursuant to which, in connection with the deferral of income Taxes of a
third party partner in any Subsidiary of the Company that is classified as a partnership for
federal income Tax purposes, the Company nor any of its Subsidiaries has agreed to (i) maintain a
minimum level of debt or provide rights to guarantee debt, (ii) retain or not dispose of assets for
a period of time that has not since expired, (iii) make or refrain from making Tax elections,
and/or (iv) only dispose of assets in a particular manner.
(k) Neither the Company nor any Subsidiary (other than a “taxable REIT subsidiary” or a
subsidiary of a “taxable REIT subsidiary”) has engaged at any time in any “prohibited transactions”
within the meaning of Section 857(b)(6) of the Code. Neither the Company nor any of its
Subsidiaries has engaged in any transaction that would give rise to “redetermined rents,”
“redetermined deductions” or “excess interest” described in Section 857(b)(7) of the Code.
(l) To the Knowledge of the Company, no claim has been made in writing by a taxing authority
in a jurisdiction where the Company or any of its Subsidiaries does not file Tax Returns that the
Company or any such Subsidiary is or may be subject to taxation by that jurisdiction.
(m) Neither the Company nor any of its Subsidiaries has requested a private letter ruling from
the IRS or comparable rulings from other taxing authorities.
(n) Neither the Company nor any of its Subsidiaries is a party to any “listed transaction”
described in Treasury Regulations Section 1.6011-4(b).
(o) Neither the Company nor any of its Subsidiaries has entered into any “closing agreement”
as described in Section 7121 of the Code (or any corresponding or similar provision of state, local
or foreign income Tax Law).
(p) Neither the Company nor any of its Subsidiaries has recognized taxable gain or loss from
the disposition of any property transferred or received in an exchange that was reported as a “like
kind exchange” under Section 1031 of the Code.
23
(q) As of the date hereof, neither the Company nor the Company Subsidiary REIT has any
earnings and profits attributable to any non-REIT year of the Company or the Company Subsidiary
REIT, as applicable, or any other corporation within the meaning of Section 857 of the Code and the
Treasury Regulations thereunder.
(r) The dividends paid deduction of the Company and the Company Subsidiary REIT for each
taxable year of each such entity ending with the taxable year ended December 31, 2006, will equal
or exceed the sum of (i) the amount determined under Code Section 857(a)(1) with respect to the
Company or the Company Subsidiary REIT, as applicable, but computed with the modifications
described in the next sentence, and (ii) the net capital gain of the Company or the Company
Subsidiary REIT, as applicable, for such taxable year; provided, however, that such
dividends paid deduction of the Company for the taxable year ended December 31, 2006 takes into
account any Section 858 dividend made by the Company prior to the Closing Date. The amount
described under clause (i) above shall be computed by substituting “100%” for “90%” in each
place it appears in Code Section 857(a)(1).
(s) The Special Dividend Amount will equal or exceed the sum of (i) the amount determined
under Code Section 857(a)(1) with respect to the Company’s current taxable year, computed with the
modifications described in the next sentence and, and (ii) the net capital gain of the Company for
such taxable year, assuming for purposes of clauses (i) and (ii) that the current
taxable year of the Company will end on the date of the Closing. The amount described under
clause (i) above shall be computed by substituting “100%” for “90%” in each place it
appears in Code Section 857(a)(1).
(t) The net proceeds received by the Company Subsidiary REIT from the Asset Sales will equal
or exceed the sum of (i) the amount determined under Code Section 857(a)(1) with respect to the
Company Subsidiary REIT’s current taxable year, computed with the modifications described in the
next sentence and, and (ii) the net capital gain of the Company Subsidiary REIT for such taxable
year, assuming for purposes of clauses (i) and (ii) that the current taxable year
of the Company will end on the date of the Closing. The amount described under clause (i)
above shall be computed by substituting “100%” for “90%” in each place it appears in Code Section
857(a)(1).
(u) As of the Effective Time, the net operating loss for federal income tax purposes carried
over to the Company in its acquisition of KSL Recreation Corp. in April 2004 that remained unused,
based on the Company’s information and belief, was not less than $125 million, with the use of such
net operating losses in 2007 and thereafter being subject to the limitations of Section 382 of the
Code.
Section 4.11 Benefit Plans. (a) With respect to each Benefit Plan, the Company has
made available to the Buyer Parties a true and correct copy of (i) each such Benefit Plan that has
been reduced to writing and all amendments thereto and a summary of any unwritten Benefit Plan;
(ii) each trust, insurance or administrative agreement or insurance policy or other funding medium
relating to each such Benefit Plan; (iii) the most recent written explanation of each Benefit Plan
provided to participants, and, if applicable, the most recent summary plan description provided to
participants; (iv) if applicable, the three most recent annual reports (Form 5500) filed with the
IRS, including all schedules and accountants’ opinions; (v) the most recent
24
determination letter and/or application thereof, if any, issued by the IRS with respect to any
Benefit Plan intended to be qualified under Section 401(a) of the Code, and (vi) all correspondence
to and from any state or federal agency within the last six years with respect to any Benefit Plan.
Except as required or deemed advisable by Law, neither the Company nor any of its Subsidiaries has
adopted or amended in any material respect any Benefit Plan since September 30, 2006 and copies of
any such amendments or Benefit Plans have been provided to Parent.
(b) Except as would not reasonably be expected to have a Material Adverse Effect on the
Company, (i) each Benefit Plan has been maintained in compliance with its terms and, both as to
form and in operation, with the requirements of applicable Law and (ii) all employer or employee
contributions, premiums and expenses to or in respect of each Benefit Plan have been paid in full
or, to the extent not yet due, have been adequately accrued on the applicable financial statements
of the Company included in the Company SEC Documents in accordance with GAAP. Each asset held
under any such Benefit Plan (other than assets held in the Company’s 401(k) plan for the benefit of
the participants) may be liquidated or terminated without the imposition of any redemption fee,
surrender charge or comparable liability. There is no Person (other than the Company or any of its
Subsidiaries) that together with the Company or any of its Subsidiaries would be treated as a
single employer under Section 414 of the Code or Section 4001(b) of ERISA. Neither the Company nor
any of its Subsidiaries has at any time during the six-year period preceding the date hereof
maintained, contributed to or incurred any liability under any “multiemployer plan” (as defined in
Section 3(37) of ERISA) or any ERISA Benefit Plan that is subject to Title IV of ERISA or Section
412 of the Code.
(c) As of the date of this Agreement there are no pending or, to the Knowledge of the Company,
threatened disputes, arbitrations, claims, suits, grievances, governmental proceedings or, to the
Knowledge of the Company, investigations involving a Benefit Plan (other than routine claims for
benefits payable under any such Benefit Plan) that would reasonably be expected to have a Material
Adverse Effect on the Company.
(d) All Benefit Plans that are intended by their terms to be qualified under Section 401(a) of
the Code have been determined by the IRS to be so qualified, or a timely application for such
determination is now pending and, except as would not reasonably be expected to have a Material
Adverse Effect on the Company, the Company has no Knowledge of any reason why any such Benefit Plan
is not so qualified in operation. Except as set forth on Item 4.11 of the Company Letter, neither
the Company nor any of its Subsidiaries has any liability or obligation under any welfare plan or
agreement to provide benefits after termination of employment or service to any employee, director,
consultant or dependent other than as required by Section 4980B of the Code. Each Benefit Plan may
be amended, terminated, or otherwise modified by the Company to the greatest extent permitted by
applicable Law, including the elimination of any and all future benefit accruals and no employee
communications or provision of any relevant document has failed to effectively reserve the right of
the Company to so amend, terminate or otherwise modify such Benefit Plan.
(e) Neither the execution and delivery of this Agreement by the Company nor the consummation
of the transactions contemplated hereby will or may (either alone or in connection with the
occurrence of any additional or subsequent events) (i) result in the
25
acceleration or creation of any rights of any Person to compensation or benefits under any
Benefit Plan or other compensatory arrangement, loan forgiveness or result in an obligation to fund
benefits with respect to any Benefit Plan or other compensatory arrangement; or (ii) constitute an
event under any Benefit Plan or other arrangement that will or may result in any payment of
deferred compensation subject to Section 409A of the Code.
(f) The Company has made available to the Buyer Parties (or as described in Item 4.11(f) of
the Company Letter) all of the employment agreements, bonus agreements, severance agreements,
severance plans and similar obligations that include amounts that are payable as a result of
consummation transactions contemplated hereby. Item 4.11(f) of the Company Letter sets forth a
good faith estimate of the amounts that will become payable to employees of the Company under the
terms of any employment agreements, bonus agreements, severance agreements, severance plans and
similar obligations as a result of the consummation of the transactions contemplated by this
Agreement.
Section 4.12 Litigation. As of the date hereof, there is no outstanding judgment,
order, writ, injunction or decree and no suit, claim, audit, action, proceeding, arbitration or
investigation pending or, to the Knowledge of the Company, threatened against the Company or any of
its Subsidiaries that could reasonably be expected to have a Material Adverse Effect on the Company
or that seeks to materially delay or prevent the consummation of the transactions contemplated
hereby. Except as set forth in Item 4.12 of the Company Letter, none of the Company or any of its
Subsidiaries is subject to any order, judgment, writ, injunction or decree, except as would not
have a Material Adverse Effect on the Company.
Section 4.13 State Takeover Statutes. The Company has taken all action required to be
taken by it in order to exempt this Agreement, the Parent Asset Purchase Agreement, the Arizona
Asset Purchase Agreement and the Merger from, and this Agreement, the Parent Asset Purchase
Agreement, the Arizona Asset Purchase Agreement and the Merger are exempt from, the requirements of
any “fair price,” “moratorium,” “control share acquisition” or other similar antitakeover statute
or regulation enacted under state or federal Laws in the United States, including the Maryland
Business Combination Act and the Maryland Control Share Acquisition Act, or any takeover provision
in the Company Charter or Company Bylaws.
Section 4.14 Intellectual Property. Item 4.14 of the Company Letter contains a
complete and accurate list of all registered Marks and material unregistered Marks and issued
Patents and pending applications for Patents or pending registrations for Marks, in each case owned
or purported to be owned by the Company and/or used in the conduct of the business of the Company.
The Company and its Subsidiaries own, or are validly licensed or otherwise have the right to use,
in each case free and clear of all Liens, except for Permitted Liens, all Intellectual Property
purported to be owned by the Company and/or used in the conduct of the business of the Company and
its Subsidiaries as currently conducted, except for such Intellectual Property where the failure to
so own, be validly licensed or have the right to use would not reasonably be expected to have a
Material Adverse Effect on the Company (the “Company Intellectual Property”). Except as
would not reasonably be expected to have a Material Adverse Effect on the Company, all
registrations and applications filed by the Company or its Subsidiaries with respect to
Intellectual Property owned or purported to be owned by the Company or any Subsidiary have been
duly maintained (including payment of maintenance fees) and are valid,
26
enforceable, subsisting and unexpired. No claims are pending or, to the Knowledge of the
Company, threatened, (a) challenging the ownership, enforceability, validity, or use by the Company
or any Subsidiary of any Company Intellectual Property, or (b) alleging that the Company or any of
its Subsidiaries is violating, misappropriating or infringing or otherwise adversely affecting the
rights of any Person with regard to any Company Intellectual Property, other than claims that would
not reasonably be expected to have a Material Adverse Effect on the Company. Except as would not
reasonably be expected to have a Material Adverse Effect on the Company, (i) to the Knowledge of
the Company, no Person is infringing the rights of the Company or any of its Subsidiaries with
respect to any Company Intellectual Property and (ii) the operation of the business of the Company
and its Subsidiaries as currently conducted does not violate, misappropriate or infringe (or has
since December 31, 2004 violated, misappropriated or infringed) the Intellectual Property of any
other Person, other than the rights of any other Person under any Patent, and to the Knowledge of
the Company, the operation of the business of the Company and its Subsidiaries as currently
conducted does not violate, misappropriate or infringe (or has since December 31, 2004 violated,
misappropriated or infringed) the Intellectual Property of any other Person under any Patent. To
the Knowledge of the Company, no other Person is violating, misappropriating or infringing any of
the Company Intellectual Property. The Company has taken reasonable security measures to protect
the secrecy, confidentiality and value of any Trade Secrets owned by the Company that are used in
and material to the conduct of the business of the Company.
Section 4.15 Properties.
(a) Item 4.15(a) of the Company Letter sets forth a correct and complete list of all the Owned
Real Property owned or held by the Company and its Subsidiaries as of the date of this Agreement.
(b) Item 4.15(b) of the Company Letter sets forth a correct and complete list as of the date
of this Agreement of (i) all the Leased Real Property and (ii) each ground lease with a third party
pursuant to which the Company or any of its Subsidiaries is a lessee and, in each case, the
Subsidiary of the Company holding the leasehold interest, the date of the lease and each material
amendment or guaranty or other material agreement relating thereto (the leases referred to in
clauses (i) and (ii), collectively, the “Lease Documents”). True, correct
and complete copies of all Lease Documents have been made available to Parent. Each of the Lease
Documents is valid, binding and in full force and effect, in all material respects, as against the
Company or its applicable Subsidiary and, to the Company’s Knowledge, as against the other party
thereto. As of the date hereof, neither the Company nor any of its Subsidiaries or, to the
Company’s Knowledge, other party is in material breach or violation of, or material default (in
each case, with or without notice or lapse of time or both) under, any of the Lease Documents and
none of the Company or any of its Subsidiaries has received or given any written notice of material
default under any such agreement which remains uncured.
(c) Except as would not reasonably be expected to have a Material Adverse Effect on the
Company, (i) the Company or one of its Subsidiaries has good fee simple title to all Owned Real
Property and valid leasehold estates in all Leased Real Property, free and clear of all Liens,
except for Permitted Liens and (ii) there are no pending or, to the Knowledge of the Company,
threatened condemnation, eminent domain or similar proceedings or actions affecting
27
any portion of the Company Properties, and, neither the Company nor any of its Subsidiaries
has received any written notice of the intention of any Governmental Entity or other Person to take
or use any of the Company Properties.
(d) Company Title Insurance Policies have been issued insuring, as of the effective date of
each such Company Title Insurance Policy, the Company’s or the applicable Subsidiary’s (or the
applicable predecessor’s or acquiror’s) fee simple or leasehold title to the Company Properties,
subject only to Permitted Liens, and to the Company’s Knowledge, such policies are, at the date
hereof, valid and in full force and effect and no written claim has been made against any such
policy. A true, accurate, and complete copy of each Company Title Insurance Policy has been made
available to the Buyer Parties.
(e) Since January 1, 2005, neither the Company nor any of its Subsidiaries has received any
written notice to the effect that (i) any rezoning proceedings adversely affecting the current use
as a hotel of any of the Company Properties are pending or, to the Knowledge of the Company,
threatened with respect to any of the Company Properties, or (ii) any laws including any zoning
regulation or ordinance, building or similar Law have been violated for any Company Property, or
will be violated by the continued maintenance, operation or use of any buildings or other
improvements on any of the Company Properties, that, in the case of clauses (i) and
(ii) above, would reasonably be expected to have a Material Adverse Effect on the Company.
(f) Except as set forth on Item 4.15(f) of the Company Letter, there are no unexpired option
agreements or rights of first refusal with respect to the purchase of any real property that is
owned or held by the Company or any of its Subsidiaries.
(g) Item 4.15(g) of the Company Letter lists each franchise, license or other similar
agreement providing the right to utilize a brand name or other rights of a hotel chain or system at
any Company Property and sets forth the Company or any of its Subsidiary party to such agreement,
the date of such agreement and each material amendment, guaranty or other material agreement
binding on the Company or any of its Subsidiary and relating thereto (collectively, “Third
Party Franchise Agreements”). True, correct and complete copies of each Third Party Franchise
Agreement, including so-called property improvement plans required to be completed by the
franchisor or any property improvement plans proposed by the franchisor, have been made available
to the Buyer Parties. Each Third Party Franchise Agreement is valid, binding and in full force and
effect, in all material respects, as against the Company or any of its applicable Subsidiaries,
and, to the Knowledge of the Company, as against the other party thereto. Neither the Company nor
any of its Subsidiaries is liable for any termination, cancellation or other similar fees or any
liquidated damages under any franchise, license or similar agreements providing the right to
utilize a brand name or other rights of a hotel chain or system in connection with or relating to
any hotel previously owned or leased by the Company or any of its Subsidiaries.
(h) Item 4.15(h) of the Company Letter lists each management agreement pursuant to which any
third party manages or operates any Company Property or material portion thereof on behalf of the
Company or any of its Subsidiaries, and identifies the property that is subject to such management
agreement, the Company or its Subsidiary that is a party, the date of such management agreement and
each material amendment, guaranty or other material
28
agreement binding on the Company or any of its Subsidiaries and relating thereto
(collectively, the “Management Agreement Documents”). True, correct and complete copies of
all Management Agreement Documents have been made available to Parent. Each of the Management
Agreement Documents is valid, binding and in full force and effect, in all material respects, as
against the Company or its applicable Subsidiary and, to the Company’s Knowledge, as against the
other party thereto.
(i) There are no structural defects or adverse physical conditions affecting any Company
Property or the improvements thereon and all building systems are in good working condition, except
as would not have a Material Adverse Effect on the Company.
(j) Item 4.15(j) of the Company Letter sets forth a correct and complete list, as of the date
hereof, of all agreements for the pending acquisition, sale, option to sell, right of first
refusal, right of first offer or any other contractual right to sell, dispose of, or lease (by
merger, purchase or sale of assets or stock or otherwise) any personal property valued at
$2,000,000 or more. The Company and each of its Subsidiaries have good and sufficient title, in
all material respects, to all the material personal and non-real properties and assets reflected in
their books and records as being owned by them, free and clear of all Liens, except for Permitted
Liens.
(k) A true, accurate and complete copy of all material equipment and personal property leases,
Major Space Leases, and Hotel Contracts entered into by the Company and each of its Subsidiaries
has been made available to the Buyer Parties.
Section 4.16 Environmental Laws. Except as would not reasonably be expected to have a
Material Adverse Effect on the Company:
(a) Each of the Company and its Subsidiaries is, and at all times during the Company’s and
each of its Subsidiaries’ ownership and operation of the Company Properties has been, in compliance
with applicable Environmental Laws except for any noncompliance which has been remedied;
(b) Each of the Company and its Subsidiaries has obtained and currently possesses and
maintains in good standing, and has been and is in compliance with the terms and subject to the
conditions thereof, all Permits required by Environmental Laws in connection with their ownership
or operation of the Company Properties or the development by the Company or its Subsidiaries of the
Company Properties; provided, that with respect to any permit required to be obtained by
any lessee of a Company Property or any Person other than the Company or its Subsidiaries with
respect to the conduct of business on the Company Properties, the representation contained in this
subsection (b) is limited to the Knowledge of the Company;
(c) There are no wetlands (as that term is defined in Section 404 of the Federal Water
Pollution Control Act, as amended, 33 U.S.C. Section 1254, and applicable state laws) at any of the
Company Properties, that would reasonably be expected to adversely affect any ongoing development
or currently planned development;
(d) All asbestos or asbestos-containing materials and lead-based paint at any Company Property
have been and are managed in accordance with Environmental Laws pursuant to an operations and
maintenance program;
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(e) Neither the Company nor any of its Subsidiaries has received any written notice alleging
that the Company or any of its Subsidiaries may be in violation of, or liable under, or a
potentially responsible party pursuant to, the Comprehensive Environmental Response, Compensation,
and Liability Act of 1980 (or any other Environmental Law) that has not been resolved without
further liability to the Company, and to the Knowledge of the Company, there is no basis for any
such notice or claim;
(f) Neither the Company nor any of its Subsidiaries has released, stored, treated or disposed
or transported, and to the Knowledge of the Company, no other Person has released, stored, treated
or disposed or transported, Hazardous Substances on or from any of the Company Properties in a
manner that would reasonably be expected to result in liability under Environmental Laws;
(g) Neither the Company nor any of its Subsidiaries (i) has entered into or agreed to any
consent decree or order or is a party to any judgment, decree or judicial or administrative order
relating to compliance with Environmental Laws, Permits or the investigation, sampling, monitoring,
treatment, remediation, removal or cleanup of Hazardous Substances and no investigation, litigation
or other proceeding is pending or threatened in writing with respect thereto or (ii) has assumed,
by contract or operation of Law, any liability under any Environmental Law or relating to any
Hazardous Substances or is an indemnitor in connection with any threatened or asserted claim by any
third-party indemnitee for any liability under any Environmental Law or relating to any Hazardous
Substances.
(h) No Liens have been imposed or are in effect on any of the Company Properties pursuant to
any Environmental Law;
(i) Underground storage tanks on any Company Property are in compliance with applicable
Environmental Laws; and
(j) The Company has made available to the Buyer Parties true and complete copies of all
environmental reports, investigations, assessments audits, Permits and material correspondence
relating to compliance under or liability pursuant to Environmental Laws in the possession or
within the control of the Company or any of its Subsidiaries.
Section 4.17 Employment and Labor Matters.
(a) (i) No employees of the Company or any of its Subsidiaries are represented by any labor
organization and neither the Company nor any of its Subsidiaries is a party to any collective
bargaining agreement; (ii) no labor organization or group of employees of the Company or any of its
Subsidiaries or, to the Knowledge of the Company, any third party manager of the Company Properties
has made a written demand for recognition or certification; (iii) to the Knowledge of the Company,
there are no representation or certification proceedings or petitions seeking a representation
proceeding presently filed, or to the Knowledge of the Company, threatened in writing to be brought
or filed with the National Labor Relations Board or any other labor relations tribunal or authority
concerning any employee of the Company or any of its Subsidiaries; (iv) to the Knowledge of the
Company, there are no organizing activities involving the employees of the Company or any of its
Subsidiaries pending with any labor
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organization or group of employees of the Company or any of its Subsidiaries, and (v) there is
no actual or threatened work stoppage strike or other labor disturbance involving employees of the
Company, any of its Subsidiaries or, to the Knowledge of the Company, any third party manager of
the Company Properties.
(b) There are no unfair labor practice charges, grievances or complaints filed or, to the
Company’s Knowledge, threatened in writing by or on behalf of any employee or group of employees of
the Company or any of its Subsidiaries that have not been settled or remedied that would reasonably
be expected to have a Material Adverse Effect on the Company and its Subsidiaries, taken as a
whole.
(c) There are no complaints, charges or claims against the Company or any of its Subsidiaries
filed or, to the Knowledge of the Company, threatened in writing to be brought or filed, with any
federal, state or local Governmental Entity or arbitrator based on, arising out of, in connection
with, or otherwise relating to the employment or termination of employment of any individual by the
Company, any of its Subsidiaries or third party manager of the Company Properties that have not
been settled or remedied that would reasonably be expected to have a Material Adverse Effect on the
Company and its Subsidiaries, taken as a whole.
(d) With respect to employees of the Company and its Subsidiaries, the Company and each of its
Subsidiaries are in compliance with all laws relating to the employment of labor, including all
such laws relating to wages, hours, the Worker Adjustment and Retraining Notification Act (as
amended, “WARN”) and any similar state or local “mass layoff” or “plant closing” Law,
collective bargaining, discrimination, civil rights, safety and health, workers’ compensation and
the collection and payment of withholding and/or social security Taxes and any similar Tax, except
for any non-compliance that would not reasonably be expected to have a Material Adverse Effect on
the Company; and there has been no “mass layoff” or “plant closing” as defined by WARN with respect
to the Company or any of its Subsidiaries within the last six (6) months. To the Knowledge of the
Company, with respect to the employees of any third party manager of any Company Property, any such
third party manager is in material compliance with all laws relating to the employment of labor,
including all such laws relating to wages, hours, WARN and any similar state or local “mass layoff”
or “plant closing” Law, collective bargaining, discrimination, civil rights, safety and health,
workers’ compensation and the collection and payment of withholding and/or social security Taxes
and any similar Tax, except for any non-compliance that would not reasonably be expected to have a
Material Adverse Effect on the Company; and, to the Knowledge of the Company, there has been no
“mass layoff” or “plant closing” as defined by WARN with respect to any third party manager of any
Company Property within the last six (6) months except as would not reasonably be expected to have
a Material Adverse Effect on the Company.
Section 4.18 Material Contracts.
(a) Except as filed as exhibits to the Company SEC Documents prior to the date of this
Agreement, none of the Company or any of its Subsidiaries is a party to or bound by any contract
that, as of the date hereof:
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(i) is a “material contract” (as such term is defined in Item 601(b)(10) of
Regulation S-K under the Securities Act);
(ii) calls for aggregate payments by the Company or any of its Subsidiaries
under such contract of more than $12,000,000 over the remaining term of such
contract;
(iii) calls for annual aggregate payments by the Company or any of its
Subsidiaries under such contract of more than $5,000,000 over the remaining
term of such contract;
(iv) contains any non-compete or exclusivity provisions binding on the Company
or any of its Subsidiaries with respect to any line of business or geographic
area with respect to the Company or any of its Subsidiaries, or that restricts
the conduct of any line of business by the Company or any of its Subsidiaries
or any geographic area in which the Company or any of its Subsidiary may
conduct business;
(v) creates any (x) material partnership, limited liability company agreement,
joint venture or other similar agreement entered into with any third party or
(y) management, operating, franchise, license or other similar agreement
entered into with any third party;
(vi) provides for the purchase, sale or exchange of, or option to purchase,
sell or exchange any real property of the Company or any of its Subsidiaries;
(vii) is a contract or agreement pursuant to which the Company or any of its
Subsidiaries agrees to indemnify or hold harmless any director or executive
officer of the Company or any of its Subsidiaries (other than the
organizational documents for the Company or its Subsidiaries);
(viii) is a material loan agreement, guaranty, letter of credit, indenture,
note, bond, debenture, mortgage or any other agreement or instrument evidencing
a capitalized leased obligation or other indebtedness of, or for the benefit
of, the Company or any Subsidiary or any guaranty thereof; or
(ix) is an interest rate cap, interest rate collar, interest rate swap,
currency hedging transaction or any other similar agreement to which the
Company or any of its Subsidiaries is a party.
Each contract of the type described in this Section 4.18(a), whether or not set forth in Item
4.18 of the Company Letter, is referred to herein as a “Material Contract.”
(b) Each Material Contract is valid and binding, in all material respects, on the Company
and/or each of its Subsidiaries party thereto, and, to the Knowledge of the Company, each other
party thereto.
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(c) Neither the Company nor any of its Subsidiaries is in default under any Material Contract
and no event or circumstance, with or without notice or the passage of time, has occurred pursuant
to any Material Contract which would result in a default or acceleration of payment, or forfeiture
of any rights, except as would not (i) prevent or materially delay the consummation of the Merger,
the Parent Asset Purchase or the Arizona Asset Purchase and the other transactions contemplated by
this Agreement or (ii) result in a Material Adverse Effect on the Company. To the Knowledge of the
Company, no counterparty of the Company or any of its Subsidiaries, as applicable, under any
Material Contract has failed to perform its material obligations thereunder when required to be so
performed and each is current in its material obligations to the Company or its Subsidiaries, as
applicable, thereunder.
(d) Prior to the date hereof, the Company has made available true, correct and complete copies
of all agreements described in Section 4.18(a).
Section 4.19 Insurance Policies. Item 4.19 of the Company Letter sets forth as of the
date hereof, a correct and complete list of the insurance policies, other than the Company Title
Insurance Policies, held by, or for the benefit of, the Company or any of its Subsidiaries,
including the underwriter of such policies and the amount of coverage thereunder. Except as would
not reasonably be expected to have a Material Adverse Effect on the Company, (a) all insurance
policies maintained by the Company and its Subsidiaries are in full force and effect and provide
insurance in such amounts and against such risks as the management of the Company reasonably has
determined to be prudent in accordance with industry practices and commercially available or as is
required by Law, and all premiums due and payable thereon have been paid and (b) neither the
Company nor any Subsidiary is in material breach or default of any of the insurance policies, and
neither the Company nor any Subsidiary has taken any action or failed to take any action which,
with notice or the lapse of time, would constitute such a breach or default or permit termination
or material modification of any of the insurance policies currently in effect. The Company has not
received any notice of termination or cancellation or denial of coverage with respect to any
material insurance policy currently in effect. Except as set forth in Item 4.19 of the Company
Letter, such policies will not terminate by their terms as a result of the consummation of the
transactions contemplated by this Agreement.
Section 4.20 Affiliate Transactions. There are no material transactions, agreements,
arrangements or understandings between (a) the Company or any of its Subsidiaries, on the one hand,
and (b) any officer, director or Affiliate of the Company (other than any of its Subsidiaries), on
the other hand, of the type that are required to be disclosed under Item 404 of Regulation S-K
under the Securities Act which have not been so disclosed.
Section 4.21 Opinion of the Company’s Financial Advisors. The Board has received an
opinion from each of Banc of America Securities LLC and Xxxxxxxx Xxxxx Xxxxxx & Xxxxx Financial
Advisors, Inc. to the effect that, as of the date of such opinions, the $20.50 per share cash
consideration to be received by holders of the Company Common Stock (other than the Buyer Parties
and their respective Affiliates) is fair, from a financial point of view, to such holders. The
Company shall deliver an executed copy of such opinions to Parent solely for informational purposes
promptly following the Company’s receipt thereof.
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Section 4.22 Brokers. No broker, investment banker, financial advisor or other
Person, other than Banc of America Securities LLC, UBS Securities LLC and Xxxxxxxx Xxxxx Xxxxxx &
Xxxxx Financial Advisors, Inc. (or Xxxxxx Xxxx Xxxxxx in connection with the Marketed Portfolio
Sale), is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or
commission in connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company. The Company promptly will make available to the
Buyer Parties a correct and complete copy of all agreements between the Company and each of Banc of
America Securities LLC, UBS Securities LLC, and Xxxxxxxx Xxxxx Xxxxxx & Xxxxx Financial Advisors,
Inc.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT, SUB AND MISSOURI
REPRESENTATIONS AND WARRANTIES OF PARENT, SUB AND MISSOURI
Each of Parent, Sub and Missouri, jointly and severally, hereby represents and warrants to the
Company as follows:
Section 5.1 Organization. Each of Parent, Sub and Missouri is a limited liability
company duly organized, validly existing and in good standing under the Laws of the jurisdiction of
its formation and has the requisite power and authority to carry on its business as now being
conducted.
Section 5.2 Authority. Each of Parent, Sub and Missouri has the requisite power and
authority to execute and deliver this Agreement and to consummate the Merger and the other
transactions contemplated hereby, including the Parent Asset Sale. The execution, delivery and
performance of this Agreement by Parent, Sub and Missouri and the consummation by each of Parent,
Sub and Missouri of the Merger and of the other transactions contemplated hereby, including the
Parent Asset Sale, have been duly authorized by all necessary action on the part of each of Parent,
Sub and Missouri. This Agreement has been duly executed and delivered by each of Parent, Sub and
Missouri and (assuming the valid authorization, execution and delivery of this Agreement by the
Company and Arizona) constitutes the legal, valid and binding obligation of each of Parent, Sub and
Missouri enforceable against each of them in accordance with its terms.
Section 5.3 Consents and Approvals; No Violations. Except (a) for filings, permits,
authorizations, consents and approvals as may be required under, and other applicable requirements
of, the Securities Act, the Exchange Act, the HSR Act, the MGCL, the DLLCA, state securities Laws
and other applicable competition Law clearances, if any, and (b) as may be required in connection
with the Taxes described in Section 8.7, neither the execution, delivery or performance of
this Agreement by Parent, Sub and Missouri nor the consummation by Parent, Sub or Missouri of the
transactions contemplated hereby will (i) conflict with or result in any breach of any provision of
the respective certificate of formation and other organizational documents of Parent, Sub or
Missouri, (ii) require any filing with, or permit, authorization, consent or approval of, any
Governmental Entity (except where the failure to obtain such permits, authorizations, consents or
approvals or to make such filings has not had and would not reasonably be expected to have a
Material Adverse Effect on Parent), (iii) conflict with or result in a breach of, or constitute
(with or without due notice or lapse of time or both) a default (or
34
give rise to any right of termination, amendment, cancellation or acceleration) under, or
result in a loss of benefit under, any of the terms, conditions or provisions of any Contract to
which Parent, any of its Subsidiaries or Missouri is a party or by which any of them or any of
their properties or assets may be bound, (iv) violate any Law, order, writ, injunction, judgment,
decree, statute, rule or regulation applicable to Parent, any of its Subsidiaries, Missouri or any
of their properties or assets or (v) require Parent, any of its Subsidiaries (including Sub) or
Missouri to make any payment to any third Person, except in the case of clauses (iii),
(iv) or (v) for breaches, defaults, terminations, amendments, cancellations,
accelerations, losses of benefits, violations or payments that have not had and would not
reasonably be expected to have a Material Adverse Effect on Parent.
Section 5.4 Information Supplied. None of the information supplied or to be supplied
by Parent, Sub or Missouri, or any of their representatives, specifically for inclusion or
incorporation by reference in the Proxy Statement will, at the time the Proxy Statement is first
mailed to the Company’s stockholders or at the time of the Stockholders’ Meeting, contain any
untrue statement of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in the light of the circumstances
under which they are made, not misleading, except that no representation or warranty is made by
Parent, Sub or Missouri with respect to statements made or incorporated by reference therein based
on information supplied by the Company or Arizona or any of their representatives specifically for
inclusion or incorporation by reference therein.
Section 5.5 Litigation. As of the date hereof, there is no outstanding judgment,
order, writ, injunction or decree and no suit, claim, audit, action, proceeding, arbitration or
investigation pending or, to the Knowledge of Parent or any of its Subsidiaries (including Sub),
threatened against Parent, any of its Subsidiaries (including Sub) or Missouri that has had or
would reasonably be expected to have a Material Adverse Effect on Parent.
Section 5.6 Capitalization of Sub. All of the issued and outstanding membership
interests of Sub and Missouri are, and at the Effective Time will be, owned by Parent or a direct
or indirect wholly-owned Subsidiary of Parent. Sub and Missouri have not conducted any business
prior to the date hereof and have no, and prior to the Effective Time will have no, assets,
liabilities or obligations of any nature other than those incident to their formation and pursuant
to this Agreement and the Merger and the other transactions contemplated by this Agreement,
including the Parent Debt Financing.
Section 5.7 Financing. Parent has delivered to the Company true and complete copies
of (a) an executed commitment letter from Xxxxxx Xxxxxxx Asset Funding, Inc. to invest in preferred
equity of Parent in an aggregate amount set forth therein (the “Parent Preferred Equity Funding
Letter”) and (b) an executed commitment letter (the “Parent Commitment Letter”) from
Xxxxxx Xxxxxxx Mortgage Capital Inc. to provide debt financing in an aggregate amount set forth
therein (the “Parent Debt Financing,” and together with the financing referred to in
clause (a) being collectively referred to as the “Parent Financing”). None of the
Parent Preferred Equity Funding Letter or the Parent Commitment Letter has been amended or modified
prior to the date of this Agreement and the respective commitments contained in such letters have
not been withdrawn or rescinded in any respect. Parent has fully paid any and all commitment fees
or other fees in connection with the Parent Preferred Equity Funding Letter and the Parent
35
Commitment Letter that are payable on or prior to the date hereof, and the Parent Preferred
Equity Funding Letter and the Parent Commitment Letter are in full force and effect and are the
valid, binding and enforceable obligations of Parent and, to the Knowledge of Parent, the other
parties thereto. There are no conditions precedent related to the funding of the full amount of
the Parent Financing, other than as set forth in or expressly contemplated by the Parent Preferred
Equity Funding Letter or the Parent Commitment Letter. The aggregate proceeds contemplated by the
Parent Preferred Equity Funding Letter and the Parent Commitment Letter, together with the amounts
funded by the other equity owners of Parent, will be sufficient for Sub to pay the aggregate Per
Share Merger Consideration and for Missouri to pay the purchase price for the Parent Asset Sale and
for each of them to pay all related fees and expenses. As of the date hereof, no event has
occurred which, with or without notice, lapse of time or both, would constitute a default on the
part of Parent, Sub or Missouri under the Parent Preferred Equity Funding Letter and the Parent
Commitment Letter and, as of the date of this Agreement, Parent does not have any reason to believe
that any of the conditions to the Parent Financing will not be satisfied or that the Parent
Financing will not be available to Sub at the Closing.
Section 5.8 Brokers. No broker, investment banker, financial advisor or other Person
is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Parent, Sub or Missouri.
Section 5.9 Certain Tax Matters. Parent’s ownership of the Surviving Entity as of and
after the Effective Time will not cause the Surviving Entity or any Company Subsidiary REIT to fail
to satisfy any requirements for qualification as a REIT for the taxable year that includes the
Effective Time.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF ARIZONA
REPRESENTATIONS AND WARRANTIES OF ARIZONA
Arizona hereby represents and warrants to the Company as follows:
Section 6.1 Organization. Arizona is a limited liability company duly organized,
validly existing and in good standing under the Laws of the jurisdiction of its formation and has
the requisite power and authority to carry on its business as now being conducted.
Section 6.2 Authority. Arizona has the requisite power and authority to execute and
deliver this Agreement and to consummate the Arizona Asset Sale. The execution, delivery and
performance of this Agreement by Arizona and the consummation by Arizona of the Arizona Asset Sale
have been duly authorized by all necessary action on the part of the board of managers of Arizona.
This Agreement has been duly executed and delivered by Arizona and (assuming the valid
authorization, execution and delivery of this Agreement by the Company, Parent and Sub) constitutes
the legal, valid and binding obligation of Arizona enforceable against Arizona in accordance with
its terms.
Section 6.3 Consents and Approvals; No Violations. Except (a) for filings, permits,
authorizations, consents and approvals as may be required under, and other applicable requirements
of, the Securities Act, the Exchange Act, the XXX Xxx, xxx XXXX, xxx XXXXX,
00
state securities Laws and other applicable competition Law clearances, if any, and (b) as may
be required in connection with the Taxes described in Section 8.7, neither the execution,
delivery or performance of this Agreement by Arizona nor the consummation by Arizona of the Arizona
Asset Sale will (i) conflict with or result in any breach of any provision of the certificate of
formation and other organizational documents of Arizona, (ii) require any filing with, or permit,
authorization, consent or approval of, any Governmental Entity (except where the failure to obtain
such permits, authorizations, consents or approvals or to make such filings has not had and would
not reasonably be expected to have a Material Adverse Effect on Arizona), (iii) conflict with or
result in a breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, amendment, cancellation or acceleration) under,
or result in a loss of benefit under, any of the terms, conditions or provisions of any Contract to
which Arizona or any of its Subsidiaries is a party or by which any of them or any of their
properties or assets may be bound, (iv) violate any Law, order, writ, injunction, judgment, decree,
statute, rule or regulation applicable to Arizona, any of its Subsidiaries or any of their
properties or assets or (v) require Arizona or any of its Subsidiaries to make any payment to any
third Person, except in the case of clauses (iii), (iv) or (v) for
breaches, defaults, terminations, amendments, cancellations, accelerations, losses of benefits,
violations or payments that have not had and would not reasonably be expected to have a Material
Adverse Effect on Arizona.
Section 6.4 Information Supplied. None of the information supplied or to be supplied
by Arizona, or any of their representatives, specifically for inclusion or incorporation by
reference in the Proxy Statement will, at the time the Proxy Statement is first mailed to the
Company’s stockholders or at the time of the Stockholders’ Meeting, contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under which they are made,
not misleading, except that no representation or warranty is made by Arizona with respect to
statements made or incorporated by reference therein based on information supplied by the Company
or Parent or any of their representatives specifically for inclusion or incorporation by reference
therein.
Section 6.5 Litigation. As of the date hereof, there is no outstanding judgment,
order, writ, injunction or decree and no suit, claim, audit, action, proceeding, arbitration or
investigation pending or, to the Knowledge of Arizona or any of its Subsidiaries, threatened
against Arizona or any of its Subsidiaries that has had or would reasonably be expected to have a
Material Adverse Effect on Arizona.
Section 6.6 Financing. Arizona has delivered to the Company true and complete copies
of executed commitment letters (the “Arizona Commitment Letters”) from Wachovia Capital
Markets, LLC to provide debt financing in an aggregate amount set forth therein (being collectively
referred to as the “Arizona Debt Financing”). The Arizona Commitment Letters have not been
amended or modified prior to the date of this Agreement, no such amendment or modification is
contemplated, and the respective commitments contained in such letters have not been withdrawn or
rescinded in any respect. Arizona has fully paid any and all commitment fees or other fees in
connection with the Arizona Commitment Letters that are payable on or prior to the date hereof, and
the Arizona Commitment Letters are in full force and effect and are the valid, binding and
enforceable obligations of Arizona and, to the Knowledge of Arizona, the other parties thereto.
There are no conditions precedent related to the funding of the full amount
37
of the Arizona Debt Financing, other than as set forth in or expressly contemplated by the
Arizona Commitment Letters. The aggregate proceeds contemplated by the Arizona Commitment Letters,
together with the amounts funded by the equity owner of Arizona, will be sufficient for Arizona to
pay the purchase price for the Arizona Asset Sale and any other repayment or refinancing of debt
contemplated in the Arizona Commitment Letters or the Arizona Debt Financing and to pay all related
fees and expenses. As of the date hereof, no event has occurred which, with or without notice,
lapse of time or both, would constitute a default on the part of Arizona under the Arizona
Commitment Letters and, as of the date of this Agreement, Arizona does not have any reason to
believe that any of the conditions to the Arizona Debt Financing will not be satisfied or that the
Arizona Debt Financing will not be available to Arizona at the time of consummation of the Arizona
Asset Sale.
Section 6.7 Brokers. No broker, investment banker, financial advisor or other Person,
other than Wachovia Capital Markets LLC and Eastdil Secured, L.L.C., the fees and expenses of which
will be paid by Arizona, is entitled to any broker’s, finder’s, financial advisor’s or other
similar fee or commission in connection with the transactions contemplated by this Agreement based
upon arrangements made by or on behalf of Arizona.
ARTICLE VII
COVENANTS RELATING TO CONDUCT OF BUSINESS
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 7.1 Conduct of Business by the Company Pending the Merger. Except as (v)
required by applicable Law or by a Governmental Entity, (w) expressly permitted or required by this
Agreement, (x) for any action expressly required by the Marketed Portfolio Purchase and Sale
Agreement (including the retirement of any Indebtedness in connection therewith), (y) otherwise set
forth in the Company Letter or (z) consented to by Parent in writing (which consent shall not be
unreasonably withheld, delayed or conditioned), during the period from the date of this Agreement
until the Effective Time (or such earlier date on which this Agreement may be terminated in
accordance with its terms), the Company shall, and shall cause each of its Subsidiaries to, in all
material respects carry on its business in the ordinary course consistent with past practice and,
to the extent consistent therewith, the Company and its Subsidiaries shall use their respective
reasonable best efforts to preserve substantially intact their business organizations and
Intellectual Property and maintain in all material respects, existing relations and goodwill with
tenants, management companies, customers, suppliers, officers and employees and others having
business dealings with them and, except as provided in clauses (v)-(z) above, during such
period, the Company shall not, and shall not permit any of its Subsidiaries to, without the prior
written consent of Parent (which consent shall not be unreasonably withheld, delayed or
conditioned; provided, that, for purposes of this Section 7.1, a failure of Parent
to respond to a request for consent from the Company within five (5) Business Days from the receipt
of such request shall be deemed to constitute consent to such request):
(a) (i) declare, set aside or pay any dividends on, or make any other distributions in respect
of, any of its stock or equity interests (except to the extent necessary to maintain the Company’s
status as a REIT or to eliminate any Taxes otherwise payable (provided that any such dividend or
distribution shall require prior consultation with Parent) and dividends paid by any direct or
indirect Subsidiary to the Company or to any other direct or indirect Subsidiary of the Company in
the ordinary course of business consistent with past practice) or
38
(ii) split, combine or reclassify or redeem, purchase or otherwise acquire, directly or
indirectly, any of its or its Subsidiaries’ stock or equity interests or securities convertible or
exchangeable into or exercisable for any shares of its or its Subsidiaries’ stock or equity
interests, or issue or authorize the issuance of any other securities in respect of, in lieu of or
in substitution for shares of its or its Subsidiaries’ stock or equity interests or securities
convertible or exchangeable into or exercisable for any shares of its or its Subsidiaries’ stock or
equity interests, except (x) as required by the terms of such securities issued prior to the date
of this Agreement, (y) for any such transaction by a wholly-owned Subsidiary of the Company which
remains a wholly-owned Subsidiary after the consummation of such transaction or (z) the acquisition
of any Shares tendered by current or former employees or directors in order to pay Taxes in
connection with the vesting of Deferred Share Awards outstanding on the date of this Agreement or
expressly permitted to be issued under this Agreement, in accordance with the terms of the Deferred
Share Awards;
(b) issue, sell, pledge, dispose of, grant, transfer or encumber, or authorize the issuance,
sale, pledge, disposition, grant, transfer or encumbrance of, any shares of its or its
Subsidiaries’ stock or equity interests, any other voting securities or any securities convertible
or exchangeable into or exercisable for any such shares or interests, or any rights, warrants or
options to acquire, any such shares or interests, voting securities or convertible or exchangeable
securities, other than the issuance or award of Shares in connection with Deferred Share Awards
under the Company Stock Plan outstanding on the date hereof;
(c) adopt or propose any amendment to the Company Charter, the Company Bylaws (other than to
change the Company’s annual stockholder meeting date) or the organizational documents of any
Subsidiary;
(d) acquire (by merger, consolidation, purchase of stock or assets or otherwise), or agree to
so acquire, in a single transaction or in a series of related transactions, any Person, entity or
division thereof, or otherwise acquire or agree to acquire any assets outside the ordinary course
consistent with past practice having a purchase price in excess of $1,000,000 in the aggregate (it
being understood that this clause (d) shall not apply to capital expenditures by the
Company, which shall be covered by clause (e) below);
(e) other than as required to avoid a breach of a Contract in effect prior to the date of this
Agreement (in which case the Company shall consult with Parent to the extent reasonably requested
by Parent), make or agree to make any capital expenditure other than expenditures (i) out of
reserves or escrows for furniture, fixtures and equipment included in 2007 property budgets either
approved by the Company prior to the date hereof or, if the budget for a property has not been
approved prior to the date hereof, as made available to Parent prior to the date hereof, (ii)
reasonably required in response to an incident at any Company Property to prevent further damage or
injury to such Company Property, following consultation with Parent or (iii) to the extent not
covered in clauses (i) or (ii), up to an aggregate amount of $1,000,000;
(f) dispose of any Company Property or, other than for transactions that are in the ordinary
course of business or pursuant to Contracts in effect prior to the date of this Agreement,
transfer, sell, lease, license, mortgage, pledge, surrender, encumber, divest, cancel, abandon or
allow to lapse or expire or otherwise dispose of (by merger, consolidation, sale of
39
stock or assets or otherwise), or agree to transfer, sell, lease, license, mortgage, pledge,
surrender, encumber, divest, cancel, abandon or allow to lapse or expire or otherwise dispose of,
any entity, business or assets;
(g) incur, guarantee or modify in any respect material and adverse to the Company, any
Indebtedness, other than Indebtedness (i) existing solely between the Company and its wholly-owned
Subsidiaries or among such wholly-owned Subsidiaries or (ii) incurred in the ordinary course of
business consistent with past practice in an amount not to exceed $2,000,000 for all such
incurrences, guarantees and modifications in the aggregate or pursuant to Contracts in effect prior
to the execution of this Agreement;
(h) other than as expressly required by Contracts in effect prior to the date of this
Agreement, make any loans, advances or capital contributions to, or investments in, any other
Person (other than the Company or any direct or indirect wholly-owned Subsidiary of the Company);
(i) (i) increase the salary, wages or other compensation payable or to become payable to or
the fringe benefits of its directors, officers or employees, except for any increases required
under employment agreements existing on the date hereof, and except for increases for employees in
the ordinary course of business consistent with past practice; or (ii) enter into any employment,
change in control, consulting or severance agreement with, or establish, adopt, enter into or amend
any Benefit Plan, bonus, profit sharing, thrift, stock option, restricted stock, pension,
retirement, deferred compensation, employment, change in control, termination or severance plan,
agreement, policy or arrangement for the benefit of, any director, officer or employee of the
Company, except, in each case, in the ordinary course of business consistent with past practice, or
as may be required by the terms of any such plan, agreement, policy or arrangement existing on the
date hereof and disclosed in the Company Letter or to comply with applicable Law;
(j) except as may be required by GAAP, as a result of a change in Law or SEC rule, regulation
or interpretation, make any material change in its method of accounting;
(k) other than in the ordinary course of business or to the extent reasonably necessary to
maintain the Company’s status as a REIT, (i) make, change or revoke any material Tax election or
(ii) settle or compromise any material federal, state, local or foreign Tax liabilities;
provided, that in the event the Company takes any such action with respect to Taxes that is
permitted under this Section 7.1(k), the Company shall notify Parent of such action;
(l) waive, release, settle or compromise any pending or threatened suit, action, claim,
arbitration, mediation, inquiry, proceeding or investigation against the Company or any of its
Subsidiaries, other than where the amounts paid or to be paid either (A) do not exceed $1,000,000
in the aggregate for all such waivers, releases, settlements or compromises or (B) are fully
covered by insurance coverage maintained by the Company; provided, in each case that any
such waiver, release, settlement or compromise includes a full release of the Company with respect
to the matters covered by the subject litigation; provided, further, that no
pending or threatened claim brought by or on behalf of the Company’s stockholders may be settled
without the prior written consent of Parent;
40
(m) adopt or enter into a plan of complete or partial liquidation, dissolution, restructuring
or recapitalization of the Company or any of its Subsidiaries;
(n) modify or amend in any material respect or terminate any Material Contract, Lease
Documents (including ground leases), Third Party Franchise Agreement or Management Agreement
Documents or enter into any new contract or agreement that, if entered into prior to the date of
this Agreement, would have been required to be listed in Item 4.18 of the Company Letter as a
Material Contract or enter into any new Lease Documents (including ground leases), Third Party
Franchise Agreement or Management Agreement Documents;
(o) except as may be required by the terms thereof or in connection with the Marketed
Portfolio Sale, pre-pay any long-term debt, which shall be deemed to include pre-payments or
elective repayments of revolving credit facilities or other similar lines of credit, payments made
in respect of any termination or settlement of any interest rate swap or other similar hedging
instrument relating thereto, or repayments of mortgage Indebtedness, or, except in the ordinary
course of business consistent with past practice, pay, discharge or satisfy any material claims,
liabilities or obligations (absolute, accrued, contingent or otherwise);
(p) initiate, continue or otherwise engage in any discussions, whether formal or informal, or
effect any filing, including administrative relief in the form of a settlement or closing agreement
or otherwise, with the IRS, including any discussions relating to the classification of the
“goodwill” or “intangibles” of the Company or the ongoing audits of KSL Recreation Corporation with
respect to income Taxes;
(q) take any action that is not in accordance in all material respects with the Marketed
Portfolio Purchase and Sale Agreement or take any action that could reasonably be expected to
materially frustrate or delay the consummation of the Market Portfolio Sale;
(r) amend or modify in any material respect or terminate or waive or fail to enforce any
material rights of the Subsidiaries of the Company under the Marketed Portfolio Purchase and Sale
Agreement;
(s) fail to maintain in full force and effect the existing insurance policies covering the
Company and its Subsidiaries and their respective properties, assets and businesses (unless such
coverage cannot be maintained on substantially similar terms, in which case the Company shall
consult with Parent);
(t) adopt, renew, terminate, change or increase in any material respect any liability or other
obligations of the Company or any of its Subsidiaries under any operating standards, loyalty
programs or amenity packages with the franchisors of any of the properties of the Company or its
Subsidiaries;
(u) modify or amend in any material respect or terminate any Contract with an Affiliate of the
Company or modify in any material respect any material relationship between the Company and its
Affiliates, including the manner in which the Company and its Affiliates own or holds their
respective assets; provided, that for purposes of this clause (u) only,
“Affiliates” of the Company shall be deemed to include Persons that were Affiliates of CNL
Hospitality Corp.
41
immediately prior to the time at which CNL Hospitality Corp. merged with, and became, a
Subsidiary of the Company; or
(v) enter into any Contract to do any of the foregoing.
Section 7.2 Acquisition Proposals.
(a) No Solicitation. Neither the Company nor any of its Subsidiaries shall, nor shall
any of them authorize or permit any officer, director, employee, or agent or any investment banker,
financial advisor, attorney, accountant or other representative (collectively, the
“Representatives”) to, directly or indirectly:
(i) solicit, initiate, or knowingly facilitate or knowingly encourage any
inquiries regarding, or the making, submission or reaffirmation of any proposal
or offer that constitutes, or that reasonably may be expected to lead to the
submission of, any Acquisition Proposal;
(ii) engage in, continue or otherwise participate in any discussions or
negotiations with, or furnish any non-public information or provide access to
its books, records or personnel to, any Person in respect of, or otherwise
cooperate with respect to, any Acquisition Proposal; or
(iii) exempt any Person (other than the Buyer Parties) from the
restrictions on business combinations contained in Subtitle 6 of Title 3 of the
MGCL or from the similar restrictions contained in the Company Charter.
Without limiting the foregoing, the Company shall be responsible for any failure on the
part of its Representatives to comply with this Section 7.2.
(b) Notwithstanding anything to the contrary in this Section 7.2, nothing contained in
this Agreement shall prohibit the Company from, at any time prior to receipt of the Company
Stockholder Approval, furnishing any information to, or entering into or participating in
discussions or negotiations with, any Person that makes an unsolicited bona fide Acquisition
Proposal in writing that did not otherwise result from a breach of this Section 7.2, if (i)
the Board determines in good faith after consulting with the Company’s legal counsel and financial
advisors that such Acquisition Proposal constitutes or is reasonably likely to result in a Superior
Proposal, (ii) prior to furnishing such non-public information to, or entering into discussions or
negotiations with, such Person, the Company notifies Parent that it is furnishing information to,
or entering into discussions or negotiations with, such Person and (iii) prior to furnishing such
non-public information to such Person, the Company (A) provides Parent with the information to be
provided to such Person which Parent has not previously been provided, and (B) receives from such
Person an executed confidentiality and standstill agreement no less favorable in any material
respect to the Company than the Confidentiality Agreement; it being understood that such
confidentiality agreement need not prohibit the making, or amendment, of an Acquisition Proposal.
The Company will not release any Person from any standstill agreement or similar obligation to the
Company or any Subsidiary other than the automatic termination of standstill obligations pursuant
to the terms of agreements as in effect as of the date hereof, by virtue of the execution and
announcement of this Agreement or otherwise; provided, that if the Company
42
receives an Acquisition Proposal from a Person within 30 days from the date of this Agreement,
the Company may release such Person from such agreement or obligation but only if the Board
determines in good faith after consultation with outside legal counsel that failure to take such
action would be reasonably likely to be inconsistent with the directors’ duties under applicable
Law; provided, however, that if the Board has not made a determination within 15
days of the release that such Acquisition Proposal is a Superior Proposal, then the waiver of such
standstill agreement will be void and of no force or effect.
(c) The Company shall provide prompt (but in no event more than twenty-four (24) hours
following receipt thereof) oral and written notice to Parent of (i) the receipt of any Acquisition
Proposal, or any material modification or amendment to any Acquisition Proposal, by the Company,
any Subsidiary or any Representative, (ii) a copy of any documents or agreements provided in
contemplation of such Acquisition Proposal (including any amendments, supplements or modifications
thereto), (iii) the identity of such Person making any such Acquisition Proposal and (iv) the
Company’s intention, if any, to furnish information to, or enter into discussions or negotiations
with, such Person. The Company shall keep Parent reasonably informed in all material respects of
the status and details (including any change to the material terms and conditions thereof) of any
such Acquisition Proposal. The Company shall not, and shall cause each of the Subsidiaries not to,
enter into any confidentiality agreement with any Person subsequent to the date hereof which
prohibits the Company from providing such information to the Buyer Parties.
(d) For purposes of this Agreement, (i) an “Acquisition Proposal” means (A) any
proposal or offer with respect to a merger, joint venture, partnership, consolidation, dissolution,
liquidation, tender offer, recapitalization, reorganization, share exchange, business combination
or similar transaction other than the Marketed Portfolio Sale or (B) any other direct or indirect
acquisition, in the case of clause (A) or (B), involving 30% or more of the total
voting power or of any class of equity securities of the Company, or 30% or more of the
consolidated total assets (including, equity securities of its Subsidiaries but excluding the
assets associated with the Marketed Portfolio Sale) of the Company, in each case other than the
transactions contemplated by this Agreement, and (ii) a “Superior Proposal” means any bona
fide Acquisition Proposal, (with all percentages in the definition of Acquisition Proposal
increased to 50%) that is on terms that the Board determines in its good faith judgment (after
consultation with the Company’s independent financial advisor(s) and outside legal counsel), and
after taking into account all of the terms and conditions of such Acquisition Proposal and such
other factors as the Board considers to be appropriate (including, without limitation, financing
terms, any termination fee or expense reimbursement payable under this Agreement, any conditions to
the consummation thereof, the likelihood of the Acquisition Proposal being consummated and the
likely timing of consummating the Acquisition Proposal), are more favorable to the Company and its
stockholders than the Transactions contemplated hereby.
(e) Except as set forth in this Section 7.2(e), the Board shall not (i) withdraw or
modify, or propose to withdraw or modify, in a manner adverse to either of the Buyer Parties, the
Board Recommendation, (ii) approve or recommend, or publicly propose to approve or recommend, any
Acquisition Proposal or (iii) enter into any agreement with respect to any Acquisition Proposal
(other than a confidentiality agreement referred to in Section 7.2(b)). Notwithstanding
the foregoing, at any time prior to receipt of the Company Stockholder
43
Approval, (x) if the Board determines in good faith that the failure to do so would be
inconsistent with its duties under applicable Law, then the Board may withdraw, or modify or change
in a manner adverse to the Buyer Parties, the Board Recommendation (“Change in
Recommendation”) and (y) in the case of any Change in Recommendation being made in response to
an unsolicited bona fide written Acquisition Proposal (which did not otherwise result from a breach
of Section 7.2) that the Board has determined in good faith, after consultation with the
Company’s independent financial advisor, is a Superior Proposal, the Board may approve and
recommend such Superior Proposal and exempt the Person submitting such Superior Proposal from the
restrictions contained in any state takeover or similar laws concurrently with terminating this
Agreement pursuant to Section 10.1(e); provided, however, that such actions
may only be taken at a time that is after (I) the third (3rd) Business Day following Parent’s
receipt of written notice from the Company that the Board is prepared to take such action, and (II)
at the end of such period, the Board determines in good faith, after taking into account all
amendments or revisions committed to by the Buyer Parties and after consultation with the Company’s
independent financial advisors, that such Acquisition Proposal remains a Superior Proposal relative
to the transactions contemplated by this Agreement, as supplemented by any Counterproposal (defined
below). Any such written notice shall specify the material terms and conditions of such applicable
Acquisition Proposal, include the most current version of any agreement relating to such
Acquisition Proposal (including any amendments, supplements or modifications thereto), identify the
Person making such Acquisition Proposal and state that the Board otherwise intends to make a Change
in Recommendation (subject to compliance with this subsection (e)). During any such three
(3) Business Day period, the Buyer Parties shall be entitled to deliver to the Company a
counterproposal to such Acquisition Proposal (a “Counterproposal”) and Parent and the
Company shall negotiate in good faith in respect of any such Counterproposal. For the avoidance of
doubt, the parties hereto acknowledge and agree that any amendment to the financial terms or any
other material amendment to any material term of an Acquisition Proposal which amendment affects
the determination of whether the Acquisition Proposal is a Superior Proposal to any Counterproposal
shall be treated as a new Acquisition Proposal for the purposes of this Section 7.2(e)
thereby requiring a new written notice by the Company and a new three (3) Business Day period.
(f) Nothing contained in this Agreement shall prevent the Company or the Board from taking and
disclosing to its stockholders a position contemplated by Rule 14d-9 and Rule 14e-2(a) promulgated
under the Exchange Act (or any similar communication to stockholders) or from making any legally
required disclosure to its stockholders; provided, however, that any action covered
by Section 7.2(e) may only be made in compliance with Section 7.2(e). Further, any
“stop-look-and-listen” communication by the Company or the Board to the stockholders of the Company
pursuant to Rule 14d-9(f) promulgated under the Exchange Act (or any similar communication to the
stockholders of the Company) shall not be considered a Change in Recommendation if it is made
within ten (10) Business Days of receiving an Acquisition Proposal.
(g) Upon execution of this Agreement, the Company and its Subsidiaries shall immediately cease
and cause to be terminated any and all existing activities, discussions or negotiations with any
parties conducted heretofore with respect to an Acquisition Proposal by or on behalf of the Company
or any of the Representatives and shall inform each of the Representatives of its obligations under
this Section 7.2 and instruct each of them to act in a
44
manner consistent with such obligations; provided, however, that the Company
may comply with the next sentence. To the extent not previously requested, the Company shall
promptly request each Person with whom it has executed a confidentiality agreement within the
twelve (12) months prior to the date hereof in connection with its consideration of any Acquisition
Proposal to return or destroy all confidential or other non-public information heretofore furnished
to such Person by or on behalf of the Company or any of the Representatives.
Section 7.3 Actions by Parent and Conduct of Business of Sub Pending the Merger.
Parent shall not knowingly take or permit any of its Subsidiaries to take any action that is
reasonably likely to prevent or delay the consummation of the Merger. During the period from the
date of this Agreement through the Effective Time, Sub shall not engage in any activity of any
nature except as provided in or contemplated by this Agreement.
ARTICLE VIII
ADDITIONAL AGREEMENTS
ADDITIONAL AGREEMENTS
Section 8.1 Employee Benefits. (a) For a period of not less than one (1) year
after the Effective Time, Parent shall cause the Surviving Entity to provide all individuals who
are employees of the Company or any of its Subsidiaries as of the Effective Time and remain an
employee of the Surviving Entity or its successors or assigns or any of their Subsidiaries
(including employees who are not actively at work on account of illness, disability or leave of
absence) (the “Retained Employees”), while employed by the Surviving Entity or its
successors or assigns or any of their Subsidiaries, with base salary and bonus opportunity and
benefits (other than those that pertain to equity-based compensation, equity-based benefits and
nonqualified deferred compensation programs) that are no less favorable in the aggregate to the
base salary and bonus opportunity and benefits provided to such Retained Employees immediately
prior to the Effective Time. After the Effective Time, the Surviving Entity may terminate Retained
Employees for any lawful reason and nothing contained in this Section 8.1 shall be deemed
to grant any employee any right to continued employment after the Effective Time, ensure a
continued amount of commission-based compensation or interfere with the Surviving Entity’s right or
obligation to make such changes as are necessary to conform to applicable Law. Parent shall take
all necessary action so that each Retained Employee shall after the Effective Time continue to be
credited with the unused vacation and sick leave credited to such employee through the Effective
Time under the applicable vacation and sick leave policies of the Company and its Subsidiaries, and
Parent shall permit or cause the Company, the Surviving Entity and their Subsidiaries to permit
such employees to use such vacation and sick leave in accordance with such policies. Parent shall
take all necessary action so that, for all purposes (except for benefit accrual under any defined
benefit plan) under each employee benefit plan maintained by Parent or any of its Subsidiaries in
which Retained Employees become eligible to participate as of or after the Effective Time, each
such Person shall be given credit for all service with the Company and its Subsidiaries recognized
by the Company immediately prior to the Effective Time.
(b) Except as otherwise provided in this Section 8.1 or in Section 8.2,
nothing in this Agreement shall be interpreted as limiting the power of the Surviving Entity to
amend or terminate any particular Benefit Plan or any other particular employee benefit plan,
program, agreement or policy pursuant to its terms or as requiring the Surviving Entity to continue
(other
45
than as required by its terms) any written employment contract; provided,
however, that no such termination or amendment may impair the rights of any Person with
respect to benefits or any other payments already accrued as of the time of such termination or
amendment without the consent of such Person.
(c) Notwithstanding Sections 8.1(a) and (b), Parent shall honor or cause to be
honored by the Company, the Surviving Entity and their Subsidiaries all employment agreements,
bonus agreements, severance agreements, severance plans and non-competition agreements with the
Persons who are, immediately prior to the Effective Time, directors, officers and employees of the
Company and its Subsidiaries (it being understood that nothing herein shall be deemed to mean that
the Company, the Surviving Entity and their Subsidiaries shall not be required to honor any of
their obligations under any such agreement).
(d) Parent shall, or shall cause the Company and the Surviving Entity to, (i) waive all
limitations as to preexisting conditions, exclusions and waiting periods with respect to
participation and coverage requirements applicable to the Retained Employees and former employees
of the Company and its Subsidiaries under any welfare or fringe benefit plan in which such
employees and former employees may be eligible to participate after the Effective Time, other than
limitations or waiting periods that are in effect with respect to such employees and that have not
been satisfied under the corresponding welfare or fringe benefit plan maintained by the Company or
its Subsidiaries for the Retained Employees and former employees prior to the Effective Time, and
(ii) provide each Retained Employee and former employee with credit under any welfare plans in
which such employee or former employee becomes eligible to participate after the Effective Time for
any co-payments and deductibles paid by such Retained Employee or former employee for the then
current plan year under the corresponding welfare plans maintained by the Company or its
Subsidiaries prior to the Effective Time.
Section 8.2 Deferred Share Awards. The Company shall take all necessary action to
ensure that, at the Effective Time, except as otherwise provided in Item 8.2 of the Company Letter,
each Deferred Share Award then outstanding, whether or not then fully vested, shall be cancelled by
the Company in consideration for which the holder thereof shall thereupon be entitled to receive,
at the Effective Time, a cash payment in respect of such cancellation from the Company in an amount
equal to (i) the product of (A) the number of shares of Company Common Stock remaining subject to
issuance pursuant to such Deferred Share Award and (B) the Per Share Merger Consideration, plus
(ii) the product of (A) the number of shares of Company Common Stock remaining subject to issuance
pursuant to such Deferred Share Award and (B) the amount of the Special Dividend issued with
respect to each Share, minus (iii) all applicable federal, State and local Taxes required to be
withheld by the Company (the aggregate amount of all such cash payments the “Aggregate Award
Amount”). At or prior to the Effective Time, Parent shall deposit, or shall cause Sub to
deposit, with the Company (or, at the Company’s request, the Paying Agent) a cash amount in
immediately available funds equal to the Aggregate Award Amount.
Section 8.3 Preparation of Proxy Statement; Stockholder Approval. (a) The Company
shall promptly prepare (in consultation with Parent) and file with the SEC, as soon as practicable
following the date of this Agreement, the Proxy Statement in preliminary form. The Company shall
use its reasonable efforts to respond as promptly as practicable (in consultation with Parent)
46
to any comments of the SEC or its staff, and, to the extent permitted by Law, to cause the
definitive Proxy Statement to be mailed to the Company’s stockholders as promptly as practicable
after responding to all such comments to the satisfaction of the SEC or its staff. The Company
shall, in accordance with Section 8.12, notify Parent promptly of the receipt of any
comments from the SEC or its staff and of any request by the SEC or its staff for amendments or
supplements to the Proxy Statement or for additional information and will supply Parent with copies
of all correspondence between the Company or any of its representatives, on the one hand, and the
SEC or its staff, on the other hand, with respect to the Proxy Statement or the transactions
contemplated by this Agreement. If at any time prior to the Stockholders’ Meeting there shall
occur any event that the Company reasonably determines should be set forth in an amendment or
supplement to the Proxy Statement, the Company shall promptly prepare (in consultation with Parent)
and mail to its stockholders such an amendment or supplement, in each case to the extent required
by applicable Law. The Buyer Parties agree that they shall cooperate with the Company in the
preparation of the Proxy Statement or any amendment or supplement thereto. Notwithstanding
anything to the contrary stated above, prior to filing or mailing the Proxy Statement or filing any
other required filings (or, in each case, any amendment or supplement thereto) or responding to any
comments of the SEC or its staff with respect thereto, the Company shall provide Parent with an
opportunity to review and comment on such document or response and the Company shall include in
such document or response all comments from Parent reasonably acceptable to the Company, and to the
extent practicable, the Company will provide Parent with the opportunity to participate in any
substantive calls between the Company or any of its Representatives and the SEC concerning the
Proxy Statement. All of the parties hereto shall cause the Proxy Statement to comply as to form
and substance as to such party in all material respects with the applicable requirements of the
Exchange Act. The Company and the Buyer Parties agree to include in the Proxy Statement the
disclosure set forth on Item 8.3 of the Company Letter.
(b) The Company shall, promptly (for the avoidance of doubt a forty-five day solicitation
period shall be deemed a prompt period of time) after the Proxy Statement is cleared by the SEC for
mailing to the Company’s stockholders, in accordance with the Company Charter and Company Bylaws,
duly call, give notice of, convene and hold a meeting of its stockholders (the “Stockholders’
Meeting”) for the purpose of obtaining the approval of the Merger and the transactions
contemplated hereby, by holders of a majority of the outstanding Shares (the “Company
Stockholder Approval”). The Company shall, through the Board (but subject to the right of the
Board to make a Change in Recommendation in accordance with Section 7.2), recommend to its
stockholders that the Company Stockholder Approval be given.
Section 8.4 Access to Information; Confidentiality. Upon reasonable notice and
subject to the terms of the Confidentiality Agreement, dated October 25, 2006, between Xxxxxx
Xxxxxxx Real Estate Advisor, Inc. and the Company and the Confidentiality Agreement, dated October
23, 2006, between Ashford Hospitality Trust, Inc. and the Company (collectively, the
“Confidentiality Agreements”), the Company shall, and shall cause each of its Subsidiaries
to, afford to the Buyer Parties and their respective officers, employees, accountants, financing
sources, counsel and other representatives of the Buyer Parties, reasonable access, during normal
business hours and upon reasonable advance notice during the period prior to the Effective Time, to
all of their respective senior employees, properties and material books, contracts and records
reasonably requested by the Buyer Parties (the “Access”) (it being agreed that Access
necessary
47
for Arizona to prepare financial statements required by Section 3.05 of Regulation S-X shall
be deemed reasonable), and during such period, the Company shall (and shall cause each of its
Subsidiaries to) furnish promptly to the Buyer Parties all information concerning its business,
properties and personnel as may reasonably be requested by the Buyer Parties; provided,
however, that such Access and information shall only be provided to the extent that such
Access or the provision of such information would not violate applicable Law or any applicable
contractual provisions; provided, further, that the foregoing shall not require the
Company (i) to permit any inspection, or to disclose any information, that in the reasonable
judgment of the Company would result in the disclosure of any trade secrets of third Persons or
violate any of its obligations with respect to confidentiality if the Company shall have used
reasonable efforts to obtain the consent of such third Person to such inspection or disclosure and
such consent was not obtained, (ii) to permit any invasive physical testing, except as agreed to in
writing by the Company, which consent shall not be unreasonably withheld or (iii) to disclose any
privileged information of the Company or any of its Subsidiaries so long as the Company has taken
all reasonable steps to permit inspection of or to disclose information described in this
clause (iii) on a basis that does not compromise the Company’s or such Subsidiary’s
privilege with respect thereto; and, provided, further, that notwithstanding
anything contained herein to the contrary, Buyer Parties shall have full Access with respect to any
matters relating to the Company and its Subsidiaries to the extent necessary to confirm the
Company’s and the Company Subsidiary REIT’s qualification as a REIT. The parties agree that they
shall seek appropriate substitute disclosure arrangements under circumstances in which clause
(iii) of the second proviso to the immediately preceding sentence applies. In no event shall
the Company be required to disclose to the Buyer Parties, or the Buyer Parties’ respective
officers, employees, accountants, counsel or other representatives, any information relating to the
indications of interest from, or discussions with, any other potential acquirors of the Company,
except to the extent necessary for use in the Proxy Statement or as required by Section
7.2. In the event of a termination of this Agreement for any reason, the Buyer Parties shall
promptly return or destroy, or cause to be returned or destroyed, all nonpublic information so
obtained from the Company or any of its Subsidiaries and any copies made of such documents for the
Buyer Parties. Notwithstanding the foregoing, neither the Company nor any of its Subsidiaries
shall be required to provide Access or to disclose information where such Access or disclosure
would jeopardize the attorney-client or work product privileges of the Company or its Subsidiaries
or contravene any Law or binding agreement entered into prior to the date of this Agreement. All
information provided pursuant to this Section 8.4 shall be governed by the terms of the
Confidentiality Agreement.
Section 8.5 Fees and Expenses. (a) The Surviving Entity shall pay all charges and
expenses, including those of the Paying Agent, in connection with the transactions contemplated in
Article III, and Parent shall, to the extent necessary, reimburse the Surviving Entity for
such charges and expenses. Except as otherwise expressly provided herein, all fees and expenses
incurred in connection with the Merger, this Agreement and the transactions contemplated hereby
shall be paid by the party incurring such fees or expenses, whether or not the Merger is
consummated. Costs and expenses incurred in connection with the filing, printing and mailing of
the Proxy Statement (including SEC filing fees) and the filing fees for the premerger notification
and report forms under the HSR Act, if any, shall be shared 50% by the Buyer Parties and 50% by the
Company.
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(b) The Company shall pay, or cause to be paid, by wire transfer in same day funds to Parent
the sum of $145,000,000 (the “Termination Fee”), under the circumstances and at the times
set forth as follows:
(i) if Parent terminates this Agreement under Section 10.1(d) or
the Company terminates this Agreement under Section 10.1(e), the
Company shall pay, in either case, the Termination Fee on the date of such
termination; and
(ii) if the Company or Parent terminates this Agreement under
Section 10.1(b)(iii) or 10.1(c) and prior to such
termination or, in the case of a termination under Section
10.1(b)(iii), prior to the Stockholders’ Meeting, any Person or “group”
(within the meaning of Section 13(d)(3) of the Exchange Act) (x) shall have
made an Acquisition Proposal to the Company or the stockholders of the Company
which shall be publicly announced or (y) shall have publicly announced an
intention to make an Acquisition Proposal and, in each case, such Acquisition
Proposal shall not have been withdrawn prior to such termination or, in the
case of a termination under Section 10.1(b)(iii), prior to the
Stockholders’ Meeting, then, if, within nine (9) months after such
termination, the Company shall enter into a definitive agreement providing for
an Acquisition Proposal (with all percentages in the definition of Acquisition
Proposal increased to 50%) or an Acquisition Proposal (with all percentages in
the definition of Acquisition Proposal increased to 50%) shall be consummated,
the Company shall pay the Termination Fee concurrently with the earlier of the
entering into of such definitive agreement or the consummation of such
Acquisition Proposal.
(c) If this Agreement is terminated by the Company pursuant to Section 10.1(f), the
Buyer Parties shall pay to the Company within three (3) Business Days after the date of termination
(i) all reasonable costs and expenses, including the reasonable fees and expenses of lawyers,
accountants, consultants, financial advisors and investment bankers, and expenses contemplated by
the last sentence of Section 8.5(a), incurred by the Company or its Subsidiaries in
connection with the entering into of this Agreement and the carrying out of any and all acts
contemplated hereunder up to an aggregate amount of $15,000,000 (the “Company Expenses”).
If this agreement is terminated by Parent pursuant to Section 10.1(b)(iii), 10.1(c)
or 10.1(d) or by the Company pursuant to Section 10.1(e), the Company shall pay to
Parent, within three (3) Business days after the date of termination, all reasonable costs and
expenses, including the reasonable fees and expenses of lawyers, accountants, consultants,
financial advisors, and investment bankers, and expenses contemplated by the last sentence of
Section 8.5(a), incurred by the Buyer Parties in connection with the entering into of this
Agreement and the carrying out of any and all acts contemplated hereunder up to an aggregate amount
of $15,000,000 (the “Parent Expenses”). Except as set forth in Section 8.5(g), the
payment of expenses set forth in this Section 8.5(c) is not an exclusive remedy, but is in
addition to any other rights or remedies available to the parties hereto (whether at Law or in
equity), and in no respect is intended by the parties hereto to constitute liquidated damages, or
be viewed as an indicator of the damages
49
payable, or in any other respect limit or restrict damages available in case of any breach of
this Agreement.
(d) Each of the Company and Parent acknowledges that the agreements contained in this
Section 8.5(d) are an integral part of the transactions contemplated by this Agreement. In
the event that the Company shall fail to pay the Termination Fee or Parent Expenses when due or
Parent shall fail to pay the Company Expenses when due, the Company or Parent, as the case may be,
shall reimburse the other party for all reasonable costs and expenses actually incurred or accrued
by such other party (including reasonable fees and expenses of counsel) in connection with the
collection under and enforcement of this Section 8.5(d).
(e) In the event that the Buyer Parties are obligated to pay the Company Expenses set forth in
Section 8.5(c), Parent shall pay to the Company from an amount deposited into escrow
(collectively, the “Escrowed Amount”) in accordance with the next sentence, an amount equal
to the lesser of (i) the Escrowed Amount and (ii) the sum of (1) the maximum amount that can be
paid to the Company without causing the Company to fail to meet the requirements of Sections
856(c)(2) and (3) of the Code determined as if the payment of such amount did not constitute income
described in Sections 856(c)(2)(A)-(H) or 856(c)(3)(A)-(I) of the Code (“Qualifying
Income”), as determined by the Company’s independent certified public accountants, plus (2) in
the event the Company receives either (A) a letter from the Company’s counsel indicating that the
Company has received a ruling from the IRS described in Section 8.5(f) or (B) an opinion
from the Company’s outside counsel as described in Section 8.5(f), an amount equal to the
Escrowed Amount less the amount payable under clause (1) above. To secure the Buyer
Parties’ obligation to pay these amounts, the Buyer Parties shall deposit into escrow an amount in
cash equal to the Company Expenses with an escrow agent selected by Parent and on such terms
(subject to Section 8.5(f)) as shall be mutually agreed upon by the Company, Parent and the
escrow agent. The excess of the amount placed in escrow over the amount(s) described in clause
(a) and/or (b) above, as applicable, shall be retained in escrow and released from time
to time over the five year period beginning on the date Company Expenses are deposited into escrow,
subject, in each case, to the Company’s satisfaction of the conditions set forth above. The
payment or deposit into escrow of the Escrowed Amount pursuant to Section 8.5(f) shall be
made at the time the Parent is obligated to pay the Company such amount pursuant to Section
8.5(f) by wire transfer or bank check.
(f) The escrow agreement shall provide that the Escrowed Amount in escrow or any portion
thereof shall not be released to the Company unless the escrow agent receives any one or
combination of the following: (i) a letter from the Company’s independent certified public
accountants indicating the maximum amount that can be paid by the escrow agent to the Company
without causing the Company to fail to meet the requirements of Sections 856(c)(2) and (3) of the
Code determined as if the payment of such amount did not constitute Qualifying Income or a
subsequent letter from the Company’s accountants revising that amount, in which case the escrow
agent shall release such amount to the Company, or (ii) a letter from the Company’s counsel
indicating that the Company received a ruling from the IRS holding that the Escrowed Amount would
either constitute Qualifying Income or would be excluded from gross income within the meaning of
Sections 856(c)(2) and (3) of the Code (or alternatively, the Company’s outside counsel has
rendered a legal opinion to the effect that the receipt by the Company of the Escrowed Amount would
constitute Qualifying Income, would be excluded
50
from gross income within the meaning of Sections 856(c)(2) and (3) of the Code or would not
otherwise disqualify the Company as a REIT), in which case the escrow agent shall release the
remainder of the Escrowed Amount to the Company. The Buyer Parties agree to amend this Section
8.5(f) at the request of the Company in order to (x) maximize the portion of the Escrowed
Amount that may be distributed to the Company hereunder without causing the Company to fail to meet
the requirements of Sections 856(c)(2) and (3) of the Code, (y) improve the Company’s chances of
securing a favorable ruling described in this Section 8.5(f) or (z) assist the Company in
obtaining a favorable legal opinion from its outside counsel as described in this Section
8.5(f). The escrow agreement shall also provide that any portion of the Company Expenses held
in escrow for five years shall be released by the escrow agent to Parent.
(g) Notwithstanding anything to the contrary in this Agreement but subject to Sections
10.2 and 11.8, the parties hereby acknowledge that, if the Company is obligated to pay
the Parent Expenses and Termination Fee pursuant to Sections 8.5(b) and 8.5(c), the
right of the Buyer Parties to receive such payments shall be the sole and exclusive remedy of the
Buyer Parties for damages against the Company and any of its Subsidiaries and the Company’s and its
Subsidiaries’ respective directors, officers, employees, investment bankers, attorneys, accountants
and other advisors or representatives for the failure of the transactions contemplated hereby to be
consummated, and upon payment of such amounts in accordance with Sections 8.5(b) and
8.5(c), none of the Company, any of its Subsidiaries or any of their respective directors,
officers, employees, investment bankers, attorneys, accountants and other advisors or
representatives shall have any liability or obligation relating to or arising out of this Agreement
or the transactions contemplated hereby.
Section 8.6 Public Announcements. The Buyer Parties and the Company shall consult
with each other before issuing any press release or otherwise making any public statements with
respect to the transactions contemplated by this Agreement and shall not issue any such press
release or make any such public statement without the prior consent of the other parties (which
consent shall not be unreasonably withheld, conditioned or delayed), except as may be required by
applicable Law or fiduciary duties and shall provide the other parties with an opportunity to
review and comment on any such press release or statement to the extent practicable.
Section 8.7 Transfer Taxes. The Company and the Buyer Parties shall cooperate in the
preparation, execution and filing of all returns, questionnaires, applications or other documents
regarding any real property transfer, recordation, or gains, sales, use, license, excise, custom or
duty, transfer, value added, stock transfer and stamp Taxes, and transfer, recording, registration
and other fees and any similar Taxes that become payable in connection with the transactions
contemplated by this Agreement (together with any related interest, penalties or additions to Tax,
“Transfer Taxes”) and shall cooperate in attempting to minimize the amount of Transfer
Taxes. All Transfer Taxes shall be paid by the Buyer Parties and expressly shall not be a
liability of any holder of Shares.
Section 8.8 State Takeover Laws. If any “fair price,” “moratorium” or “control share
acquisition” statute or other similar anti-takeover statute or regulation enacted under state Laws
in the United States is or shall become applicable to the Merger or the other transactions
contemplated hereby, the Buyer Parties and the Company and their respective boards of directors
shall, subject to Section 7.2, use reasonable efforts to grant such approvals and take such
actions
51
as are necessary so that the transactions contemplated hereby may be consummated as promptly
as practicable on the terms contemplated hereby and otherwise act to minimize the effects of any
such statute or regulation on the transactions contemplated hereby.
Section 8.9 Indemnification; Directors and Officers Insurance. (a) For a period of
six years after the Effective Time (unless otherwise required by applicable Law), the charter and
bylaws of the Surviving Entity and its Subsidiaries shall contain provisions no less favorable with
respect to the exculpation of, indemnification of and advancement of expenses to directors,
officers, employees and agents than those set forth in the Company Charter or Company Bylaws (or
equivalent organizational documents) of the Company (or the relevant Subsidiary) as in effect on
the date hereof; provided, however, that if any claim or claims are asserted
against any individual entitled to the protections of such provisions within such six-year period,
such provisions shall not be modified until the final disposition of any such claims. Parent and
the Surviving Entity shall, jointly and severally, exculpate, indemnify and hold harmless, to the
fullest extent provided in the Company Charter or Company Bylaws or the organizational documents of
any Subsidiary, as applicable, any indemnification agreement or under any applicable Laws, in each
case, as in effect on the date of this Agreement (and Parent shall also advance expenses as
incurred to the fullest extent permitted under applicable Law), each present and former director
and officer of the Company or any of its Subsidiaries (each, an “Indemnified Person”)
against any costs or expenses (including reasonable attorneys’ fees), judgments, fines, losses,
claims, obligations, damages or liabilities incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or investigative (formal or
informal), in and to the extent of their capacities as such and not as stockholders and/or
optionholders of the Company or its Subsidiaries (including rights relating to advancement of
expenses and indemnification rights to which such persons are entitled because they are serving as
a director or officer of another entity at the request of the Company or any of its Subsidiaries)
at or prior to the Effective Time, whether asserted or claimed prior to, at or after the Effective
Time, including the transactions contemplated by this Agreement; provided, however,
that any determination required to be made with respect to whether an Indemnified Person’s conduct
complies with the standards set forth under the applicable Law, the Company Charter or Company
Bylaws or the organizational documents of any Subsidiary, as applicable, or any such agreement, as
the case may be, shall be made by independent legal counsel jointly selected by such Indemnified
Person and Parent; provided, further, that (i) nothing in this Section 8.9
shall impair any rights of any Indemnified Person and (ii) neither the Surviving Entity nor Parent
shall be liable for any settlement effected without the prior written consent of the Surviving
Entity (which consent shall not be unreasonably withheld, delayed or conditioned). Without
limiting the generality of the preceding sentence, if any Indemnified Person becomes involved in
any actual or threatened action, suit, claim, proceeding or investigation covered by this
Section 8.9 after the Effective Time, Parent shall, or shall cause the Company to, to the
fullest extent permitted by Law, promptly advance to such Indemnified Person his or her legal or
other expenses (including the cost of any investigation and preparation incurred in connection
therewith), subject to the providing by such Indemnified Person of an undertaking to reimburse all
amounts so advanced in the event of a non-appealable determination of a court of competent
jurisdiction that such Indemnified Person is not entitled to indemnification.
(b) Prior to the Effective Time, the Company shall purchase a “tail” insurance policy (which
policy by its express terms shall survive the Merger), of at least the same coverage
52
and amounts and containing terms and conditions that are no less favorable to the directors
and officers of the Company as the Company’s and the Subsidiaries’ existing policy or policies, for
the benefit of the current and former officers and directors of the Company and each Subsidiary
with a claims period of six (6) years from the Effective Time with respect to directors’ and
officers’ liability for claims arising from facts or events that occurred on or prior to the
Effective Time; provided, however, that in no event shall the aggregate premium
payable for such “tail” insurance policies for its entire period exceed $4,500,000 (such amount
being the “Maximum Premium”). If the Company is unable to obtain the “tail” insurance
described in the first sentence of this Section 8.9(b) for an amount equal to or less than
the Maximum Premium, the Company shall be entitled to obtain as much comparable “tail” insurance as
possible for an amount equal to the Maximum Premium.
(c) If Parent or the Surviving Entity or any of its successors or assigns (i) shall
consolidate with or merge into any other corporation or entity and shall not be the continuing or
surviving corporation or entity of such consolidation or merger or shall cease to continue to exist
for any reason or (ii) shall transfer all or a majority (measured by value) of its properties and
assets to any individual, corporation or other entity, then, and in each such case, proper
provisions shall be made so that the successors and assigns of Parent or the Company, as
applicable, shall assume all of the obligations set forth in this Section 8.9. In
addition, the Surviving Entity shall not distribute, sell, transfer or otherwise dispose of any of
its assets in a manner that would reasonably be expected to render the Surviving Entity unable to
satisfy its obligations under this Section 8.9.
(d) The provisions of this Section 8.9 are intended to be for the express benefit of,
and shall be enforceable by, each Indemnified Person (who are intended to be third party
beneficiaries of this Section 8.9), his or her heirs and his or her personal
representatives, shall be binding on all successors and assigns of Parent, the Company and the
Surviving Entity and shall not be amended in a manner that is adverse to the Indemnified Persons
(including their successors, assigns and heirs) without the prior written consent of the
Indemnified Person (including the successors, assigns and heirs) affected thereby. The exculpation
and indemnification provided for by this Section shall not be deemed to be exclusive of any
other rights to which an Indemnified Person is entitled, whether pursuant to applicable Law,
contract or otherwise.
Section 8.10 Reasonable Best Efforts. Each of the Company and the Buyer Parties
agrees to use its reasonable best efforts to effect the consummation of the Transactions as soon as
practicable after the date hereof. Without limiting the foregoing, each of the Company and the
Buyer Parties (i) agrees to use its reasonable best efforts to take, or cause to be taken, all
actions necessary to comply promptly with all legal requirements that may be imposed on itself with
respect to the Transactions (which actions shall include furnishing all information required in
connection with approvals of or filings with any other Governmental Entity) and shall promptly
cooperate with and furnish information to each other in connection with any such requirements
imposed upon any of them or any of their Subsidiaries in connection with the Transactions, (ii)
shall, and shall cause its Subsidiaries to, use its or their reasonable best efforts to obtain (and
shall cooperate with each other in obtaining) any consent, authorization, order or approval of, or
any exemption by, any Governmental Entity or other public Person required to be obtained or made by
the Buyer Parties, the Company or any of their Subsidiaries in connection with the
53
Transactions or the taking of any action contemplated thereby or by this Agreement, the Parent
Asset Purchase Agreement and the Arizona Asset Purchase Agreement and (iii) agrees to execute and
deliver any additional documents or instruments necessary, proper or advisable to consummate the
Transactions contemplated hereby, and to fully carry out the purposes of this Agreement, the Parent
Asset Purchase Agreement and the Arizona Asset Purchase Agreement. Subject to applicable Laws
relating to the exchange of information, each of the Buyer Parties and the Company shall have the
right to review in advance, and to the extent practicable each will consult with the other on and
consider in good faith the views of the other in connection with, all of the information relating
to the Buyer Parties or the Company, as the case may be, and any of their respective Subsidiaries,
that appears in any filing made with, or written materials submitted to, any third Person and/or
any Governmental Entity in connection with the Transactions (including the Proxy Statement). In
exercising the foregoing rights, the Company and each of the Buyer Parties shall act reasonably and
as promptly as practicable.
Section 8.11 Financing.
(a) Parent, Sub and Missouri shall use their reasonable best efforts to arrange the Parent
Financing on the terms and conditions described in the Parent Preferred Equity Funding Letter and
the Parent Commitment Letter (provided that Parent, Sub and Missouri may (x) replace or amend the
Parent Commitment Letter to add lenders, lead arrangers, bookrunners, syndication agents or similar
entities which had not executed the Parent Commitment Letter as of the date hereof, or otherwise or
(y) replace or amend the Parent Preferred Equity Funding Letter to add investors which had not
executed the Parent Preferred Equity Funding Letter as of the date hereof, or otherwise, in each
case so long as the terms would not reasonably be expected to adversely impact the ability of
Parent, Sub or Missouri to consummate the transactions contemplated hereby or the likelihood of
consummation of the transactions contemplated hereby), including using reasonable best efforts to
(i) maintain in effect the Parent Financing commitments, (ii) satisfy on a timely basis all
conditions applicable to Parent, Sub and Missouri to obtaining the Parent Financing set forth
therein, and (iii) negotiate and enter into definitive agreements with respect thereto on the terms
and conditions contemplated by the Parent Preferred Equity Funding Letter and the Parent Commitment
Letter or on other terms that would not adversely impact the ability of Parent, Sub or Missouri to
consummate the transactions contemplated hereby or the likelihood of consummation of the
transactions contemplated and (iv) consummate the Parent Financing at or prior to the Final
Condition Satisfaction Date. If any portion of the Parent Financing becomes unavailable on the
terms and conditions contemplated in the Parent Preferred Equity Funding Letter or the Parent
Commitment Letter, Parent shall use its reasonable best efforts to arrange to obtain alternative
financing from alternative sources on comparable or more favorable terms to Parent (as determined
in the reasonable judgment of Parent) in an amount sufficient to consummate the transactions
contemplated by this Agreement as promptly as practicable following the occurrence of such event.
Parent shall give the Company prompt notice of any material breach or alleged material breach by
any party to the Parent Preferred Equity Funding Letter or the Parent Commitment Letter of which
Parent, Sub or Missouri becomes aware, or any termination of the Parent Preferred Equity Funding
Letter or the Parent Commitment Letter. Parent shall keep the Company informed on a reasonably
current basis in reasonable detail of the status of its efforts to arrange the Parent Financing,
and shall not permit any material amendment or modification to be made to, or any waiver of any
material provision or remedy under, the Parent Preferred Equity Funding Letter or the Parent
54
Commitment Letter without first consulting with the Company or, if such amendment would or
would be reasonably expected to materially and adversely affect or delay in any material respect
the ability of Parent, Sub or Missouri to consummate the transactions contemplated by this
Agreement, without first obtaining the Company’s prior written consent (not to be unreasonably
withheld or delayed)
(b) Parent acknowledges and agrees that the consummation of the transactions contemplated by
this Agreement is not conditioned upon the receipt by Parent, Sub or Missouri of the proceeds
contemplated by the Parent Preferred Equity Funding Letter and the Parent Commitment Letter and
that any failure by Parent, Sub or Missouri to have available all funds contemplated by the Parent
Preferred Equity Funding Letter and the Parent Commitment Letter on the Final Condition
Satisfaction Date shall constitute a material breach by Parent, Sub and Missouri of this Agreement.
(c) Arizona shall use its reasonable best efforts to arrange the Arizona Financing on the
terms and conditions described in the Arizona Commitment Letter (provided that Arizona may replace
or amend the Arizona Commitment Letter to add lenders, lead arrangers, bookrunners, syndication
agents or similar entities which had not executed the Arizona Commitment Letter as of the date
hereof, or otherwise, so long as the terms would not reasonably be expected to adversely impact the
ability of Arizona to consummate the transactions contemplated hereby or the likelihood of
consummation of the transactions contemplated hereby), including using reasonable best efforts to
(i) maintain in effect the Arizona commitments, (ii) satisfy on a timely basis all conditions
applicable to Arizona to obtaining the Arizona Financing set forth therein, and (iii) negotiate and
enter into definitive agreements with respect thereto on the terms and conditions contemplated by
the Arizona Commitment Letter or on other terms that would not adversely impact the ability of
Arizona to consummate the transactions contemplated hereby or the likelihood of consummation of the
transactions contemplated and (iv) consummate the Arizona Financing at or prior to the Final
Condition Satisfaction Date. If any portion of the Arizona Financing becomes unavailable on the
terms and conditions contemplated in the Arizona Commitment Letter, Arizona shall use its
reasonable best efforts to arrange to obtain alternative financing from alternative sources on
comparable or more favorable terms to Arizona (as determined in the reasonable judgment of Arizona)
in an amount sufficient to consummate the transactions contemplated by this Agreement as promptly
as practicable following the occurrence of such event. Arizona shall give the Company prompt
notice of any material breach or alleged material breach by any party to the Arizona Commitment
Letter of which Arizona becomes aware, or any termination of the Arizona Commitment Letter.
Arizona shall keep the Company informed on a reasonably current basis in reasonable detail of the
status of its efforts to arrange the Arizona Financing, and shall not permit any material amendment
or modification to be made to, or any waiver of any material provision or remedy under, the Arizona
Commitment Letter without first consulting with the Company or, if such amendment would or would be
reasonably expected to materially and adversely affect or delay in any material respect the ability
of Arizona to consummate the transactions contemplated by this Agreement, without first obtaining
the Company’s prior written consent (not to be unreasonably withheld or delayed)
(d) Arizona acknowledges and agrees that the consummation of the transactions contemplated by
this Agreement is not conditioned upon the receipt by Arizona of
55
the proceeds contemplated by the Arizona Commitment Letter and that any failure by Arizona to
have available all funds contemplated by the Arizona Commitment Letter on the Final Condition
Satisfaction Date shall constitute a material breach by Arizona of this Agreement.
(e) The Company agrees to provide, and shall cause the Subsidiaries and its and their
representatives to provide, all reasonable cooperation in connection with the arrangement of the
Debt Financing as may be reasonably requested by each of the Buyer Parties (provided that such
requested cooperation does not unreasonably interfere with the ongoing operations of the Company
and its Subsidiaries and does not require the Company or any of its Representatives to execute and
deliver any certificate or opinion to the extent any such certificate or opinion certifies or
opines, as applicable, with respect to facts, circumstances or events that will exit after giving
effect to the transactions contemplated hereby and the incurrence of any indebtedness of the
Company pursuant to the Debt Financing); provided, that none of the Company or any
Subsidiary shall be required to pay any fees (including commitment or other similar fees) or incur
any other liability in connection with the Debt Financing prior to the Effective Time. Each of the
Buyer Parties, as applicable, shall, promptly upon request by the Company, reimburse the Company
for all reasonable out-of-pocket costs incurred by the Company or the Subsidiaries in connection
with such cooperation. Each of the Buyer Parties shall indemnify and hold harmless the Company,
the Subsidiaries and their respective representatives for and against any and all liabilities,
losses, damages, claims, costs, expenses, interest, awards, judgments and penalties suffered or
incurred by them prior to the Effective Time in connection with the arrangement of the Debt
Financing and any information utilized in connection therewith (other than historical information
relating to the Company or the Subsidiaries and information provided by the Company, the
Subsidiaries or the Representatives).
Section 8.12 Notification of Certain Matters. Subject to applicable Laws and the
instructions of any Governmental Entity, each of the Company and the Buyer Parties shall keep the
other apprised of the status of matters relating to completion of the transactions contemplated
hereby, including promptly furnishing the other with copies of notices or other communications
received by the Buyer Parties or the Company, as the case may be, or any of its Subsidiaries, from
any third Person and/or any Governmental Entity with respect to the Merger and the other
transactions contemplated by this Agreement. Neither the Company nor any Buyer Party shall permit
any of its officers or any other Representatives to participate in any meeting with any
Governmental Entity in respect of any filings, investigation or other inquiry unless it consults
with the other party in advance and, to the extent permitted by such Governmental Entity, gives the
other party the opportunity to attend and participate thereat.
Section 8.13 Buyer Party Vote. The Buyer Parties shall vote (or consent with respect
to) or cause to be voted (or a consent to be given with respect to) any Shares and any voting
interests held in Sub beneficially owned by it or any of its Subsidiaries or with respect to which
it or any of its Subsidiaries has the power (by agreement, proxy or otherwise) to cause to be voted
(or to provide a consent), in favor of the approval of the Merger and the transactions contemplated
hereby, at any meeting of stockholders of the Company or members of Sub, respectively, at which the
Merger and the transactions contemplated hereby shall be submitted for approval and at all
adjournments or postponements thereof (or, if applicable, by any action of stockholders of either
the Company or members of Sub by consent in lieu of a meeting).
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Section 8.14 Additional Tax Matters.
(a) To the maximum extent permitted by Law, Parent agrees that all Tax Returns of the Company,
the Surviving Entity, and the Company Subsidiaries (including withholdings and withholding Tax
Returns) shall be prepared on a basis consistent with (i) the Tax Returns filed by them prior to
the Closing Date, including as to all continuing elections, characterizations and other matters,
(ii) the principle that the Merger constitutes a purchase of stock of the Company by Parent and
(iii) subject to the foregoing, in accordance with the other provisions of this Agreement.
(b) To the maximum extent permitted by Law, Parent shall cause the Surviving Entity and each
Company Subsidiary REIT to properly designate any dividends paid prior to the Closing Date as
capital gain dividends for purposes of Code Section 857(b)(3).
(c) Parent and the Surviving Entity will take all actions, and cause each Company Subsidiary
to take all actions, necessary to ensure that the Company, the Surviving Entity and each Company
Subsidiary REIT will be classified and taxed as a REIT for its taxable year that includes the
Effective Time (including obtaining 100 shareholders as necessary for each REIT).
(d) Parent, the Company and the Surviving Entity agree to treat any gain recognized from the
Asset Sales as “net capital gain” of the Company for purposes of Code Sections 1(h) and
857(b)(3)(C) (but subject to the rate designation rules of IRS Notice 97-64, 1997-2 C.B. 323) and
to not take any tax position inconsistent with such treatment, except as may be required pursuant
to a “determination” within the meaning of Code Section 860(e)(1), (2) or (3).
Section 8.15 Certain Litigation Matters. Parent, Sub and the Surviving Entity shall
fulfill and comply with all of the Company’s obligations under that certain Stipulation of
Settlement (Case No. 6:04-cv-1231-Orl-31KRS (Consolidated with 6:04-cv-1341-Orl-19JGG)), including
payment on the notes issued by the Company in connection therewith, to the extent not already done
so by the Closing Date.
Section 8.16 Resignations. The Company shall use its reasonable efforts to obtain and
deliver to Parent at the Closing evidence reasonably satisfactory to Parent of the resignation,
effective as of the Effective Time, of those directors of the Company or any Subsidiary designated
by Parent to the Company in writing at least five Business Days prior to the Closing.
Section 8.17 Third Party Consents. Each of the Buyer Parties on one hand, and the
Company on the other hand, shall use their respective reasonable best efforts to obtain any third
party consents (i) necessary, proper or advisable to consummate the Transactions, (ii) disclosed in
Item 4.5 of the Company Letter or (iii) required to prevent a Material Adverse Effect of the
Company from occurring prior to the Effective Time. In the event that the Company shall fail to
obtain any third party consent described above, the Company shall use its reasonable best efforts,
and shall take such actions as are reasonably requested by Parent, to minimize any adverse effect
upon the Company and the Buyer Parties and their respective businesses resulting, or which could
reasonably be expected to result, after the Effective Time, from the failure to obtain such
57
consent. Notwithstanding anything to the contrary in this Agreement, in connection with
obtaining any approval or consent from any Person (other than a Governmental Entity) with respect
to any transaction contemplated by this Agreement, (i) without the prior written consent of Parent
which shall not be unreasonably withheld, conditioned or delayed, none of the Company or any of its
Subsidiaries shall pay or commit to pay to such Person whose approval or consent is being solicited
any cash or other consideration, make any commitment or incur any liability or other obligation due
to such Person and (ii) none of the Buyer Parties or their respective Affiliates shall be required
to pay or commit to pay to such Person whose approval or consent is being solicited any cash or
other consideration, make any commitment or incur any liability or other obligation.
Section 8.18 Suspension or Termination of Reinvestment Plan and Redemption Plan. The
Company shall promptly suspend or terminate, in accordance with its terms, and shall not reinstate
the Reinvestment Plan. The Company shall promptly suspend or terminate, in accordance with its
terms, and will not reinstate the Redemption Plan.
Section 8.19 Asset Sales. The Company and each of its Subsidiaries agree to take, or
cause to be taken, at the Buyer Parties’ sole cost and expense for the Company’s reasonable
out-of-pocket costs and expenses, all reasonable actions, and to do or cause to be done all
reasonable things as may be necessary to consummate and make effective each of the Asset Sales as
set forth in Article XII.
ARTICLE IX
CONDITIONS PRECEDENT
CONDITIONS PRECEDENT
Section 9.1 Conditions to Each Party’s Obligation to Effect the Transactions. The
respective obligations of each party hereto to effect the Merger and the Asset Sales shall be
subject to the fulfillment or waiver in writing (to the extent not prohibited by Law) at or prior
to the Asset Sale Time of the following conditions:
(a) Company Stockholder Approval. The Company Stockholder Approval shall have been
obtained.
(b) No Injunction or Restraint. No Governmental Authority in the United States shall
have enacted, issued, promulgated, enforced or entered any injunction, order, decree or ruling
(whether temporary, preliminary or permanent) which is then in effect and makes consummation of the
Merger or the Asset Sales illegal or prohibits consummation of the Merger or the Asset Sales;
provided, however, that the party claiming such failure of condition shall have
used its reasonable best efforts to prevent the entry of any such injunction or order, including
taking such action as is required to comply with Section 8.10, and to appeal as promptly as
possible any injunction or other order that may be entered.
(c) Regulatory Approvals. Any waiting period (and any extension thereof) applicable
to the consummation of the Merger and the Asset Sales under the HSR Act shall have expired or been
terminated, and any approvals of a Governmental Entity required to be obtained prior to the
Effective Time thereunder or otherwise shall have been obtained.
58
Section 9.2 Conditions to the Obligations of the Company to Effect the Transactions.
The obligation of the Company to effect the Transactions shall be subject to the fulfillment or
waiver in writing (to the extent not prohibited by Law) as of the Asset Sale Time of the following
additional conditions:
(a) Accuracy of Representations and Warranties. The representations and warranties of
the Buyer Parties set forth in this Agreement, disregarding all qualifications and exceptions
contained therein relating to materiality, Material Adverse Effect or similar standard or
qualifications, shall be true and correct as of the date of this Agreement and as of the Asset Sale
Time as though made on and as of such date and time (except to the extent that any such
representation and warranty expressly speaks as of an earlier date, in which case such
representation and warranty shall be true and correct as of such earlier date) except where the
failure of any such representations and warranties to be so true and correct has not had and would
not reasonably be likely to have a Material Adverse Effect on Parent. The Company shall have
received a certificate signed on behalf of the Buyer Parties by a duly authorized officer of each
of the Buyer Parties certifying as to the satisfaction of the condition in the preceding sentence.
(b) Performance of Obligations. The Buyer Parties shall have performed in all
material respects all obligations and complied in all material respects with all agreements and
covenants of the Buyer Parties to be performed and complied with by them under this Agreement prior
to the Asset Sale Time. The Company shall have received a certificate signed on behalf of the Buyer
Parties by a duly authorized officer of each of the Buyer Parties certifying as to the satisfaction
of the condition specified in the preceding sentence.
Section 9.3 Conditions to the Obligations of the Buyer Parties to Effect the
Transactions. The obligation of the Buyer Parties to effect the Transactions shall be subject
to the fulfillment or waiver in writing (to the extent not prohibited by Law) as of the Asset Sale
Time of the following additional conditions:
(a) Accuracy of Representations and Warranties. (i) Other than with respect to
Section 4.3 (Capital Structure), Section 4.4 (Authority), Section 4.13
(State Takeover Statutes) and Section 4.22 (Brokers), the representations and warranties of
the Company set forth in this Agreement, disregarding all qualifications and exceptions contained
therein relating to materiality, Material Adverse Effect or similar standard or qualifications,
shall be true and correct as of the date of this Agreement and as of the Asset Sale Time as though
made on and as of such date and time (except to the extent that any such representation and
warranty expressly speaks as of an earlier date, in which case such representation and warranty
shall be true and correct as of such earlier date) except where the failure of any such
representations and warranties to be so true and correct has not had and would not reasonably be
likely to have a Material Adverse Effect on the Company; and (ii) the representations and
warranties set forth in Section 4.3 (Capital Structure), Section 4.4 (Authority),
Section 4.13 (State Takeover Statutes) and Section 4.22 (Brokers), disregarding all
qualifications and exceptions contained therein relating to materiality, Material Adverse Effect or
similar standard or qualifications, shall be true and correct in all material respects as of the
date of this Agreement and as of the Asset Sale Time as though made on and as of such date and time
(except to the extent that any such representation and warranty expressly speaks as of an earlier
date, in which case such representation and
59
warranty shall be true and correct in all material respects as of such earlier date). Parent
shall have received a certificate signed on behalf of the Company by a duly authorized officer of
the Company certifying as to the satisfaction of the condition in the preceding sentence. For
purposes of this Section 9.3(a) only, a Material Adverse Effect with respect to either (i)
the Company Properties not subject to the Arizona Asset Sale, taken as a whole, or (ii) the Company
Properties subject to the Arizona Asset Sale, taken as a whole, shall be deemed to constitute a
Material Adverse Effect on the Company.
(b) Performance of Obligations. The Company shall have performed in all material
respects all obligations and complied in all material respects with all agreements and covenants of
the Company to be performed and complied with by it under this Agreement prior to the Asset Sale
Time. Parent shall have received a certificate signed on behalf of the Company by a duly
authorized officer of the Company certifying as to the satisfaction of the conditions specified in
the preceding sentence.
(c) No Material Adverse Effect. Since the date of this Agreement, there shall not
have been any Material Adverse Effect with respect to the Company that has occurred and is
continuing. Parent shall have received a certificate signed on behalf of the Company by a duly
authorized officer of the Company certifying as to the satisfaction of the conditions specified in
the preceding sentence.
(d) Tax Opinion. Parent shall have received a tax opinion of Sidley Austin LLP, or
other counsel to the Company reasonably satisfactory to Parent, dated as of the date on which the
Asset Sales are consummated, substantially in the form attached hereto as Exhibit B (which
opinion shall be based upon customary assumptions, exceptions and qualifications, and customary
representations made by the Company and its Subsidiaries substantially in the form attached hereto
as an exhibit to such tax opinion), to the effect that the Company has been organized and operated
in conformity with the requirements for qualification as a REIT under the Code for all taxable
periods commencing with the Company’s taxable year ended December 31, 1997 through the time
immediately prior to the consummation of the Asset Sales (determined without taking into account,
or giving effect to, the Merger, the Asset Sales, the Special Dividend or any other transaction or
distribution required to be taken or made by the Company under this Agreement in order to effect
the transactions contemplated hereby, and assuming for such purposes that the Company shall satisfy
all requirements required to be satisfied upon or after the consummation of the Asset Sales
necessary for the Company to qualify as a REIT for the 2007 taxable year including the applicable
distribution requirements under the Code for the taxable year including the date of consummation of
the Asset Sales) as though the Company’s taxable year ended immediately prior to the consummation
of the Asset Sales.
(e) Special Dividend. The Special Dividend shall have been authorized as set forth in
Section 12.3.
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ARTICLE X
TERMINATION AND AMENDMENT
TERMINATION AND AMENDMENT
Section 10.1 Termination. This Agreement may be terminated at any time prior to the
Effective Time, whether before or after the Company Stockholder Approval is obtained, only as
follows:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if the Merger shall not have been consummated on or before
July 1, 2007 (the “Termination Date”); provided,
however, that the right to terminate this Agreement pursuant to
this Section 10.1(b)(i) shall not be available to any party
whose failure to fulfill any obligation or other breach under this
Agreement has materially contributed to, or resulted in, the failure of
the Merger to occur on or before the Termination Date;
(ii) if any court or other Governmental Entity of competent
jurisdiction shall have issued an order, decree or ruling or taken any
other action permanently enjoining, restraining or otherwise
prohibiting the transactions contemplated by this Agreement and such
order, decree or ruling or other action shall have become final and
nonappealable; provided, however, that the right to
terminate this Agreement pursuant to this Section 10.1(b)(ii)
shall not be available to any party who has not used its reasonable
efforts to cause such order to be lifted or made inapplicable to such
transactions or otherwise taken such action as is required to comply
with Section 8.10; or
(iii) if the Company Stockholder Approval shall not have been
obtained upon a vote taken thereon (for the avoidance of doubt, not
including any vote to adjourn the Stockholders’ Meeting) at the
Stockholders’ Meeting or any adjournment or postponement thereof;
(c) by Parent, if none of the Buyer Parties is in material breach of its obligations under
this Agreement, and if (i) any of the representations and warranties of the Company herein are or
become untrue or incorrect such that the condition set forth in Section 9.3(a) would be
incapable of being satisfied by the Termination Date or (ii) there has been a breach on the part of
the Company of any of its covenants or agreements herein such that the condition set forth in
Section 9.3(b) would be incapable of being satisfied by the Termination Date;
(d) by Parent if (i) the Board has effected a Change in Recommendation, (ii) the Company
enters into an agreement with respect to an Acquisition Proposal (other than a confidentiality
agreement entered into in compliance with Section 7.2(b)), (iii) a tender offer or exchange
offer relating to the Company Common Shares shall have been commenced by a third
61
party and the Board shall not have recommended that the Company’s stockholders reject such
tender or exchange offer within ten (10) Business Days following commencement thereof (including,
for these purposes, by taking no position during such ten (10) Business Day period with respect to
the acceptance of such tender or exchange offer by the Company’s stockholders, which shall
constitute a failure to recommend rejection of such tender or exchange offer), or (iv) the Company
publicly announces its intention to do any of the foregoing or makes any public statement
inconsistent with the Board Recommendation;
(e) by the Company prior to the Company Stockholder Approval, if the Board authorizes the
Company, subject to complying with the terms of this Agreement to enter into a binding written
agreement, concerning a transaction that constitutes a Superior Proposal (other than a
confidentiality agreement entered into in compliance with Section 7.2(b));
provided, that for the termination to be effective the Company shall have paid the
Termination Fee; or
(f) by the Company, if it is not in material breach of its obligations under this Agreement,
and if (i) any of the representations and warranties of the Buyer Parties herein are or become
untrue or incorrect such that the condition set forth in Section 9.2(a) would be incapable
of being satisfied by the Termination Date or (ii) there has been a breach on the part of any of
the Buyer Parties of any of their respective covenants or agreements herein such that the condition
set forth in Section 9.2(b) would be incapable of being satisfied by the Termination Date.
Section 10.2 Effect of Termination. In the event of a termination of this Agreement
by either the Company or Parent as provided in Section 10.1, this Agreement shall forthwith
become void and there shall be no liability or obligation on the part of any party hereto or their
respective officers, directors, stockholders or Affiliates except with respect to Section
8.5 (Fees and Expenses), Section 8.6 (Public Announcements), this Section 10.2,
Article XI (General Provisions) and the last sentence of Section 8.4 (Access to
Information; Confidentiality); provided, however, that nothing herein shall relieve
any party for liability for any willful breach of any of its representations or warranties, or any
breach of its covenants or agreements set forth in this Agreement prior to or concurrently with
such termination.
Section 10.3 Extension; Waiver. At any time prior to the Effective Time, the parties
hereto, by action taken or authorized by their respective board of directors or members, as the
case may be, may, to the extent legally allowed, (a) extend the time for the performance of any of
the obligations or other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered pursuant hereto or (c)
waive compliance with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if set forth in a
written instrument signed on behalf of such party. The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise shall not constitute a waiver of those
rights.
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ARTICLE XI
GENERAL PROVISIONS
GENERAL PROVISIONS
Section 11.1 Non-Survival of Representations and Warranties and Agreements. None of
the representations and warranties in this Agreement or in any instrument delivered pursuant to
this Agreement shall survive the Effective Time.
Section 11.2 Notices. All notices, consents, waivers and other communications
hereunder shall be in writing and shall be deemed given if delivered personally, telecopied (which
is confirmed) or sent by overnight courier (providing proof of delivery) to the parties at the
following addresses (or at such other address for a party as shall be specified by like notice):
(a) if to Parent, Sub or Missouri, to:
Xxxxxx Xxxxxxx Real Estate Investing – MSREF
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Telecopier No. (000) 000-0000
Attention: Xxxxxxx Xxxxxx
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Telecopier No. (000) 000-0000
Attention: Xxxxxxx Xxxxxx
with a copy to:
Xxxxxxx Procter LLP
Xxxxxxxx Xxxxx
Xxxxxx, XX 00000
Telecopier No: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
Xxxxxxxx Xxxxx
Xxxxxx, XX 00000
Telecopier No: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
(b) if to the Company, to:
CNL Hotels & Resorts, Inc.
000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000-0000
Attn: Xxxxxxxx XxXxxxxx
Facsimile: (000) 000-0000
000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000-0000
Attn: Xxxxxxxx XxXxxxxx
Facsimile: (000) 000-0000
with a copy to:
Sidley Austin LLP
Xxx Xxxxx Xxxxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxx and Xxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
Xxx Xxxxx Xxxxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxx and Xxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
63
(c) if to Arizona, to:
Ashford Hospitality Trust, Inc.
00000 Xxxxxx Xxxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Fax Line: 000-000-0000
Attn: Xxxxx X. Xxxxxx,
Chief Legal Officer/Head of Transactions
00000 Xxxxxx Xxxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Fax Line: 000-000-0000
Attn: Xxxxx X. Xxxxxx,
Chief Legal Officer/Head of Transactions
with a copy to:
Xxxxxxx X. Xxxxxxx, P.C.
Akin Gump Xxxxxxx Xxxxx & Xxxx LLP
0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000-0000
Fax: 000-000-0000
Akin Gump Xxxxxxx Xxxxx & Xxxx LLP
0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000-0000
Fax: 000-000-0000
Section 11.3 Counterparts. This Agreement may be executed in counterparts, all of
which shall be considered one and the same agreement, and shall become effective when one or more
counterparts have been signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
Section 11.4 Entire Agreement; No Third-Party Beneficiaries. Except for the
Confidentiality Agreements, the Guaranty, the Parent Asset Purchase Agreement and the Arizona Asset
Purchase Agreement, this Agreement (together with the Company Letter) constitutes the entire
agreement and supersedes all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof. EACH PARTY HERETO AGREES THAT, EXCEPT FOR THE
REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT, NEITHER PARENT AND SUB NOR THE COMPANY
OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, FINANCIAL AND LEGAL ADVISORS OR
OTHER REPRESENTATIVES MAKES ANY OTHER REPRESENTATIONS OR WARRANTIES, AND EACH HEREBY DISCLAIMS ANY
OTHER REPRESENTATIONS OR WARRANTIES MADE BY ITSELF OR ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES,
AGENTS, FINANCIAL AND LEGAL ADVISORS OR OTHER REPRESENTATIVES, WITH RESPECT TO THE EXECUTION AND
DELIVERY OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, NOTWITHSTANDING THE DELIVERY OR
DISCLOSURE TO THE OTHER OR THE OTHER’S REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER INFORMATION
WITH RESPECT TO ANY ONE OR MORE OF THE FOREGOING. Parent, Sub, Missouri, Arizona and the Company
hereby agree that their respective representations and warranties set forth herein are solely for
the benefit of the other parties hereto, in accordance with and subject to the terms of this
Agreement, and this Agreement, except for the provisions of Section 8.9, is not intended
to, and does not, confer upon any Person other than the parties hereto any rights or remedies
hereunder, including the right to rely upon the accuracy or completeness of the representations and
warranties set forth herein.
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Section 11.5 Assignment. This Agreement shall not be assigned (whether pursuant to a
merger, by operation of Law or otherwise), except that each of the Buyer Parties may assign all or
any of its rights and obligations hereunder or the Parent Asset Purchase Agreement or the Arizona
Asset Purchase Agreement to any of their respective Affiliates; provided, that no such
assignment shall relieve the assigning party of its obligations hereunder if such assignee
does not perform such obligations
Section 11.6 Governing Law; Venue; Waiver of Jury Trial. (a) This Agreement shall
be governed by, and construed in accordance with, the Laws of the State of Maryland applicable to
contracts executed in and to be performed in that State. All actions and proceedings arising out
of or relating to this Agreement shall be heard and determined exclusively in any Maryland state or
federal court. The parties hereto hereby (a) submit to the exclusive jurisdiction of any Maryland
state or federal court for the purpose of any action arising out of or relating to this Agreement
brought by any party hereto, and (b) irrevocably waive, and agree not to assert by way of motion,
defense, or otherwise, in any such action, any claim that it is not subject personally to the
jurisdiction of the above-named courts, that its property is exempt or immune from attachment or
execution, that the action is brought in an inconvenient forum, that the venue of the action is
improper, or that this Agreement or the transactions contemplated by this Agreement may not be
enforced in or by any of the above-named courts.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS
AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, TO IT
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER,
(ii) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY
MAKES THIS WAIVER VOLUNTARILY AND (iv) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.6.
Section 11.7 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of Law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full force and effect so
long as the economic and legal substance of the transactions contemplated hereby are not affected
in any manner materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the transactions contemplated by this
Agreement may be consummated as originally contemplated to the fullest extent possible.
65
Section 11.8 Enforcement of this Agreement.
(a) Except as otherwise provided in Section 11.8(b) or elsewhere in this Agreement,
any and all remedies expressly conferred upon a party to this Agreement shall be cumulative with,
and not exclusive of, any other remedy contained in this Agreement, at law or
in equity and the exercise by a party to this Agreement of any one remedy shall not preclude
the exercise by it of any other remedy. Except as otherwise provided in Section 11.8(b),
the Company agrees that, to the extent it or its Subsidiaries have incurred losses or damages in
connection with this Agreement, prior to the consummation of either of the Asset Sales, (i) the
maximum aggregate liability of the Buyer Parties and the Guarantors for such losses or damages
shall be limited to $300,000,000, and the sole and exclusive remedy, (ii) the maximum liability of
the Guarantors, directly or indirectly, shall be limited to the respective obligations of such
Guarantors under the Guaranty and (iii) in no event shall the Company or the Subsidiaries seek to
recover any money damages in excess of such amount in clause (i) from the Buyer Parties or
the Guarantors or any of their respective shareholders, partners, members, managers, directors,
officers, agents, and Affiliates in connection therewith. Following the consummation of either of
the Asset Sales, each of the Buyer Parties shall be jointly and severally liable for any losses or
damages incurred by the Company or any of its Subsidiaries arising out of the breach by any of the
Buyer Parties of any of their respective covenants to be performed thereafter.
(b) The parties hereto agree that irreparable damage would occur in the event any provision of
this Agreement were not performed by the Company or in accordance with the terms hereof or were
otherwise breached and that, prior to the termination of this Agreement pursuant to Section
10.1, the Buyer Parties shall be entitled to specific performance of the terms and provisions
of this Agreement or an injunction to prevent any breach of this Agreement, in addition to any
other remedy at law or equity. The parties acknowledge that the Company shall not be entitled to
an injunction or injunctions to prevent breaches of this Agreement or to enforce specifically the
terms and provisions of this Agreement and that the Company’s sole and exclusive remedy with
respect to any such breach shall be the remedy set forth in Section 11.8(a);
provided, however, that the Company shall be entitled to seek specific performance
to prevent any breach by the Buyer Parties of or enforce their compliance with (i) the last
sentence of Section 8.4, (ii) Section 8.6 and (iii) those covenants of the Buyer
Parties to be performed following the consummation of either of the Asset Sales.
Section 11.9 Obligations of Subsidiaries. Whenever this Agreement requires any
Subsidiary of Parent (including Sub) or of the Company to take any action, such requirement shall
be deemed to include an undertaking on the part of Parent or the Company, as the case may be, to
cause such Subsidiary to take such action.
Section 11.10 Interpretation; Construction.
(a) The parties have participated jointly in negotiating and drafting this Agreement. In the
event that an ambiguity or a question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement.
66
(b) The fact that any item of information is disclosed in the Company Letter shall not be
construed to mean that such information is required to be disclosed by this Agreement.
Section 11.11 Amendment; Consents. This Agreement may be amended by the parties
hereto at any time prior to the Effective Time; provided, however, that, after
approval of the Merger by the stockholders of the Company, no amendment may be made without further
stockholder approval which the Company determines requires further approval by such stockholders
under applicable Laws. The Buyer Parties and the Company agree to amend this Agreement in the
manner provided in the immediately preceding sentence to the extent required to continue the status
of the Company as a REIT. This Agreement may not be amended except by an instrument in writing
signed by the parties hereto. Notwithstanding anything to the contrary contained herein, any
provision of this Agreement requiring the consent of any of the Buyer Parties hereunder shall be
deemed to be satisfied upon receipt of a consent from Parent.
ARTICLE XII
SALE OF SPECIFIED ASSETS
SALE OF SPECIFIED ASSETS
Section 12.1 Entry into Parent Asset Purchase Agreement. Concurrently with the
execution of this Agreement, the Company and Parent have entered into the asset purchase agreement
attached hereto as Exhibit C (the “Parent Asset Purchase Agreement”) which
agreement will become effective as provided therein. On the first (1st) Business Day following the
Stockholders’ Meeting and the satisfaction (or, to the extent permitted by Law, waiver by the party
or parties entitled to the benefits thereof) of the conditions set forth in Article IX
(other than Section 9.3(e) which shall be satisfied in accordance with Section
12.3) of this Agreement (such first (1st) Business Day, the “Final Condition Satisfaction
Date”; provided, that if the day following such first (1st) Business Day is not also a
Business Day, the Final Condition Satisfaction Date shall be delayed until the next Business Day
that is also immediately followed by a Business Day), the Parent Asset Purchase Agreement will
become effective and Parent and the Company will consummate the transactions contemplated by the
Parent Asset Purchase Agreement (the “Parent Asset Sale”). The obligation of the Company
to consummate the Parent Asset Sale is subject to the receipt by the Company of a written letter,
in form and substance, reasonably satisfactory to the Company from Parent and Sub on the Final
Condition Satisfaction Date that confirms that the conditions to the obligations of Parent and Sub
to effect the Merger set forth in Section 9.3 have been irrevocably satisfied or waived;
and the receipt by the Buyer Parties of a written letter, in form and substance reasonably
satisfactory to the Buyer Parties, from the Company on the Final Condition Satisfaction Date that
confirms that the conditions to the obligations of the Company to effect the Merger have been
irrevocably satisfied or waived. The Company and the Buyer Parties agree that the consummation of
the Asset Sales and the payment of the Special Dividend shall be conditions precedent to the
Closing of the Merger.
Section 12.2 Entry into Arizona Asset Purchase Agreement. Concurrently with the
execution of this Agreement, the Company and Arizona have entered into the asset purchase agreement
attached hereto as Exhibit D (the “Arizona Asset Purchase Agreement”) which
agreement will become effective as provided therein. On the first Final Condition Satisfaction
Date, the Arizona Asset Purchase Agreement will become effective and Arizona and the Company will
consummate the transactions contemplated by the Arizona Asset Purchase
67
Agreement (the “Arizona
Asset Sale”). The obligation of the Company to consummate the Arizona Asset Sale is subject to
the receipt by the Company of a written letter, in form and substance, reasonably satisfactory to
the Company from Parent and Sub on the Final Condition Satisfaction Date that confirms that the
conditions to the obligations of Parent and Sub to effect
the Merger set forth in Section 9.3 have been irrevocably satisfied or waived; and the
receipt by Arizona, Parent and Sub of a written letter, in form and substance reasonably
satisfactory to Arizona, Parent and Sub, from the Company on the Final Condition Satisfaction Date
that confirms that the conditions to the obligations of the Company to effect the Merger have been
irrevocably satisfied or waived.
Section 12.3 Declaration of Special Dividend. Immediately following, and subject to,
the consummation of the Asset Sales, the Company shall cause the Board to authorize, and the
Company shall declare, a dividend payable to the holders of record of Company Common Shares at the
close of business on the Final Condition Satisfaction Date (the “Special Dividend”). The
amount of the Special Dividend per Company Common Share shall be equal to the quotient that results
from dividing an amount, as reasonably determined by the Company following consultation with
Parent, equal to the Company’s current and accumulated earnings and profits through and including
the Effective Time (the “Special Dividend Amount”), by the aggregate number of Company
Common Shares outstanding at the close of business on the Final Condition Satisfaction Date.
Section 12.4 Payment of Special Dividend. The Special Dividend shall by payable on
the close of business on the day on which the Asset Sales are consummated and prior to the
Effective Time. The Per Share Merger Consideration shall be reduced by an amount equal to the
Special Dividend.
Section 12.5 Right to Structure Asset Sales as Purchase of Ownership Interests.
Notwithstanding the foregoing provisions of this Article XII, Parent and Arizona each shall
have the right to structure all or a portion of the Asset Sales as a purchase of ownership
interests in Subsidiaries of the Company that own Company Properties that are the subject of the
Asset Sales in order to minimize Transfer Taxes and other transaction costs or to insulate them
from liabilities of the general partner of any Subsidiary, so long as such revised structure has no
adverse impact on the Company or its stockholders and does not, and would not reasonably be
expected to, delay the Closing. The Company shall reasonably cooperate in connection with any such
restructuring of the Asset Sales.
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IN WITNESS WHEREOF, Parent, Sub, Missouri, Arizona and the Company have caused this Agreement
to be signed by their respective officers thereunto duly authorized all as of the date first
written above.
MS RESORT HOLDINGS LLC |
||||
By: | /s/ Xxxxxxx Xxxxx | |||
Name: | Xxxxxxx Xxxxx | |||
Title: | Vice President | |||
MS RESORT ACQUISITION LLC |
||||
By: | /s/ Xxxxxxx Xxxxx | |||
Name: | Xxxxxxx Xxxxx | |||
Title: | Vice President | |||
MS RESORT PURCHASER LLC |
||||
By: | /s/ Xxxxxxx Xxxxx | |||
Name: | Xxxxxxx Xxxxx | |||
Title: | Vice President | |||
ASHFORD SAPPHIRE ACQUISITION LLC |
||||
By: | /s/ Xxxxx X. Xxxxxx | |||
Name: | Xxxxx X. Xxxxxx | |||
Title: | Vice President | |||
CNL HOTELS & RESORTS, INC. |
||||
By: | /s/ Xxxxxxxx X. XxXxxxxx | |||
Name: | Xxxxxxxx X. XxXxxxxx | |||
Title: | Executive Vice President | |||
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