Exhibit 2
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TRANSFER RESTRICTION AGREEMENT
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This Transfer Restriction Agreement (this "Agreement") is made as of April
25, 2001 among Xxxxxx X. Xxxxxxx, Xx. ("Xx. Xxxxxxx," or the "Voteco Member"),
Colony RIH Voteco, LLC, a Delaware limited liability company ("Voteco"), and
Colony Investors IV, L.P., a Delaware limited partnership ("Colony IV").
RECITALS
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WHEREAS, as of the date hereof (the "Closing Date"), Colony RIH
Acquisitions, Inc., a Delaware corporation ("CRA"), a wholly owned subsidiary of
Colony RIH Holdings, Inc., a Delaware corporation ("Holdings"), purchased (the
"Acquisition") (i) all the issued and outstanding shares of capital stock of
Resorts International Hotel, Inc., a New Jersey corporation (the "Company"),
(ii) all the issued and outstanding shares of capital stock of New Pier
Operating Company, Inc., a New Jersey corporation ("New Pier") and (iii) the
Warehouse Assets (as defined in the Purchase Agreement) pursuant to a Purchase
Agreement dated as of October 30, 2000 (as amended through the date hereof, the
"Purchase Agreement");
WHEREAS, Holdings was authorized to issue shares of common stock consisting
of (i) Class A Common Stock, par value $.01 per share (the "Class A Common"),
and (ii) Class B Common Stock, par value $.01 per share (the "Class B Common"
and, together with the Class A Common, the "Common Stock");
WHEREAS, immediately prior to the Acquisition, Voteco was the record owner
of 19,950 shares of Class A Common and no other shares of Common Stock, and
Colony IV was the record owner of 403,740 shares of Class B Common and no other
shares of Common Stock;
WHEREAS, as a result of the Acquisition, the Company and New Pier became
wholly owned subsidiaries of CRA;
WHEREAS, from time to time, Voteco may acquire additional shares of Class A
Common or other capital stock of Holdings convertible into, exchangeable for or
otherwise providing Voteco with the right to acquire shares of Class A Common,
and Colony IV may acquire additional shares of Class B Common or other capital
stock of the Company convertible into, exchangeable for or otherwise providing
Colony IV with the right to acquire shares of Class B Common;
WHEREAS, the Voteco Member is the record and beneficial owner of all the
issued and outstanding limited liability company interests of Voteco (the
"Voteco Interests");
WHEREAS, the parties hereto believe it is desirable and in their mutual
best interests to provide for procedures regarding the ownership of the Class A
Common owned by Voteco and the Voteco Interests owned by the Voteco Member; and
WHEREAS, the parties hereto further believe that the execution of this
Agreement will help facilitate the continuous, harmonious and effective
management of Colony IV's investment in Holdings.
NOW, THEREFORE, in consideration of the recitals and the mutual covenants,
promises, agreements, representations and warranties of the parties hereto, the
parties hereto hereby agree as follows:
Section 1. Certain Definitions. As used herein, the following terms have
the respective meanings set forth below:
"Acquisition" has the meaning given to such term in the recitals set forth
above.
"Agreement" has the meaning given to such term in the introduction hereof.
"Approved Purchaser" means a proposed purchaser of Common Stock or Common
Stock Equivalents, who, in connection with its proposed purchase of Common Stock
or Common Stock Equivalents, has obtained all licenses, permits, registrations,
authorizations, consents, waivers, orders, findings of suitability or other
approvals required to be obtained from, and has made all filings, notices or
declarations required to be made with, all Gaming Authorities under all
applicable Gaming Laws.
"Approved Sale" has the meaning given to such term in Section 3(a) hereof.
"Approved Sale Date" has the meaning given to such term in Section 3(b)
hereof.
"Call Notice" has the meaning given to such term in Section 3.2 hereof.
"Class A Common" has the meaning given to such term in the recitals set
forth above.
"Class A Equivalents" means any securities of the Company convertible into,
exchangeable for or otherwise providing the holder thereof any right to acquire
shares of Class A Common.
"Class A Holder" means a holder of Class A Common or Class A Equivalents;
provided that Colony IV shall not be considered a Class A Holder, regardless of
whether Colony IV holds any Class A Common.
"Class B Common" has the meaning given to such term in the recitals set
forth above.
"Class B Equivalents" means any securities of the Company convertible into,
exchangeable for or otherwise providing the holder thereof any right to acquire
shares of Class B Common, which securities are substantially equivalent in
designations, preferences, limitations, restrictions and relative rights, but
not as to voting, to a class or series of Class A Equivalents.
"Colony IV" has the meaning given to such term in the introduction hereof.
"Colony IV Advisory Committee" means the advisory committee comprised of
certain limited partners of Colony IV.
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"ColonyGP IV" has the meaning given to such term in Section 2(b) hereof.
"Common Stock" has the meaning given to such term in the recitals set forth
above.
"Common Stock Equivalents" means the Class A Common, Class A Equivalents,
Class B Common or Class B Equivalents of the Company.
"Company" has the meaning given to such term in the recitals set forth
above.
"Corresponding Class A Equivalents" means, with respect to any referenced
Class B Equivalents, the Class A Equivalents that are substantially equivalent
in designations, preferences, limitations, restrictions and relative rights, but
not as to voting, to such specified Class B Equivalents, it being understood
that Series A Preferred is the Corresponding Class A Equivalent of Series B
Preferred.
"Corresponding Class B Equivalents" means, with respect to any referenced
Class A Equivalents, the Class B Equivalents that are substantially equivalent
in designations, preferences, limitations, restrictions and relative rights, but
not as to voting, to such specified Class A Equivalents, it being understood
that Series B Preferred is the Corresponding Class B Equivalent of Series A
Preferred.
"CRA" has the meaning given to such term in the recitals set forth above.
"Gaming Authorities" means all governmental authorities or agencies with
regulatory control or jurisdiction over the gaming or gambling operations of the
Company and its subsidiaries, including without limitation, the New Jersey
Casino Control Commission.
"Gaming Laws" means any U.S. Federal, state, local or foreign statute,
ordinance, rule, regulation, permit, consent, approval, license, judgment,
order, decree, injunction or other authorization governing or relating to the
current or contemplated manufacturing, distribution, casino gambling and gaming
activities and operations of the Company, including, without limitation, the New
Jersey Gaming Control Act and the rules and regulations promulgated thereunder.
"Holdings" has the meaning given to such term in the recitals set forth
above.
"Xx. Xxxxxxx" has the meaning given to such term in the introduction
hereto.
"Required Number" means the number of shares of Class A Common or Class A
Equivalents to be purchased by Colony IV from Voteco pursuant to the exercise by
Colony IV of its option to purchase Class A Common or Class A Equivalents
pursuant to the provisions of Section 3 hereof, in connection with an Approved
Sale, as specified by Colony IV in a Call Notice delivered by Colony IV to
Voteco; provided that unless otherwise approved by the Colony IV Advisory
Committee, such specified number shall be equal to the product of (i) the number
of shares of Class A Common or Class A Equivalents, as applicable, held by
Voteco immediately prior to the consummation of such Approved Sale times (ii) a
fraction, the numerator of which is the number of shares of Class B Common or
Corresponding Class B
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Equivalents, as applicable, to be Transferred by Colony IV to such Approved
Purchaser pursuant to such Approved Sale and the denominator of which is the
total number of shares of Class B Common or Corresponding Class B Equivalents,
as applicable, held by Colony IV immediately prior to consummation of such
Approved Sale.
"Securities Act" means the Securities Act of 1933, as amended.
"Transfer" means to voluntarily or involuntarily sell, assign, exchange or
in any other manner transfer with or without consideration, except pursuant to a
distribution of shares by Colony IV to its partners. "Transferred" has the
correlative meaning.
"Voteco" has the meaning given to such term in the introduction hereof.
"Voteco Interest" has the meaning given to such term in the recitals set
forth above.
"Voteco Member" has the meaning given to such term in the introduction
hereof.
Section 2. Restriction on Transfer.
(a) So long as Voteco holds any shares of Class A Common or Class A
Equivalents, Voteco shall not Transfer ownership of any or all such shares or
equivalents owned by it except as contemplated by Section 3 hereof. The Transfer
of record or beneficial ownership of any shares of Class A Common or Class A
Equivalents, by operation of law or otherwise, by or upon the direction or
authorization of Voteco shall be deemed invalid, null and void, and of no force
or effect, unless such Transfer is made pursuant to the provisions of Section 3
hereof.
(b) No Voteco Member shall Transfer record or beneficial ownership of any
or all Voteco Interests owned by such Voteco Member, unless such Transfer is
approved in writing by the Colony IV Advisory Committee. The Transfer of record
or beneficial ownership of any Voteco Interests, by operation of law or
otherwise, by or upon the direction or authorization of any Voteco Member shall
be deemed invalid, null and void, and of no force or effect, and the transferee
of any such Voteco Interests shall not be entitled to vote such Voteco Interests
or receive distributions on such Voteco Interests or have any other rights in or
respecting such Voteco Interests, unless such Transfer is approved in writing by
the Colony IV Advisory Committee.
Section 3. Call Option.
(a) Right to Call Class A Common and Class A Equivalents. Notwithstanding
any other provision hereof, on each occasion that Colony IV proposes to Transfer
(including, without limitation, by operation of law or pursuant to any merger,
consolidation, reorganization or recapitalization) any of the Class B Common or
Class B Equivalents held by it to an Approved Purchaser (any such transaction,
an "Approved Sale"), then Colony IV shall have an option, which, unless Colony
IV otherwise receives approval from Gaming Authorities, Colony IV shall assign
to such Approved Purchaser (such Approved Purchaser or Colony IV, as applicable,
hereinafter referred to as the "Optionholder"), to purchase
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from Voteco upon such Approved Sale the Required Number of Class A Common, in
the case of an Approved Sale of Class B Common, or Corresponding Class A
Equivalents, in the case of an Approved Sale of Class B Equivalents, at a cash
price per share equal to the sum of (a) the amount in cash or fair market value
of any other consideration originally paid by Voteco for such Required Number of
Class A Common or Corresponding Class A Equivalents, as applicable, plus (b) the
amount equivalent to a six percent (6%) annual rate of interest on such amount
or fair market value, compounded annually, calculated from the date Voteco
acquired such shares of Corresponding Class A Common or Corresponding Class A
Equivalents, as applicable, on the basis of a 360-day year comprised of twelve
30-day months, to and excluding the Approved Sale Date.
(b) Call Notice. Prior to consummating any Approved Sale, if the
Optionholder elects to exercise the options granted to it under this Section 3,
Colony IV shall provide each of the Class A Holders with a written notice (the
"Call Notice") not less than five (5) days prior to the proposed date of the
Approved Sale (the "Approved Sale Date"). The Call Notice shall state that the
Optionholder is exercising its option to purchase Class A Common or Class A
Equivalents pursuant to this Section 3 and shall set forth: (i) the name and
address of the Optionholder, (ii) the aggregate number of Class B Common and
Class B Equivalents held of record by Colony IV as of the date of the Call
Notice, (iii) the number of Class B Common or Class B Equivalents to be sold by
Colony IV to the Approved Purchaser pursuant to such Approved Sale, (iv) the
Required Number of Class A Common or Class A Equivalents to be purchased by the
Optionholder in connection with such Approved Sale, (v) the Approved Sale Date
and (vi) the address for delivery of the certificates representing the Class A
Common or Class A Equivalents to be purchased by the Optionholder.
(c) Delivery of Certificates. On the Approved Sale Date, Voteco shall
deliver to the Optionholder the certificates for the Class A Common or Class A
Equivalents being sold by it to the Optionholder, duly endorsed for transfer
with signatures guaranteed, in the manner and at the address indicated in the
Call Notice against delivery of immediately available funds in the amount of the
purchase price for such Class A Common or Class A Equivalents.
Section 4. Legends. Voteco shall use its reasonable efforts to cause each
certificate representing Class A Common or Class A Equivalents owned of record
and beneficially by Voteco to contain the following legends:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR STATE SECURITIES
LAWS, AND NO TRANSFER OF THESE SECURITIES MAY BE MADE EXCEPT (A) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, OR (B) PURSUANT TO AN
EXEMPTION THEREFROM WITH RESPECT TO WHICH THE COMPANY MAY, UPON REQUEST,
REQUIRE A SATISFACTORY OPINION OF COUNSEL FOR THE HOLDER THAT SUCH TRANSFER
IS EXEMPT FROM THE REQUIREMENTS OF THE ACT.
"THE OWNERSHIP AND TRANSFER OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO AND RESTRICTED
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BY THE TERMS AND CONDITIONS OF A CERTAIN TRANSFER RESTRICTION AGREEMENT
DATED APRIL 25, 2001. THE CORPORATION WILL FURNISH A COPY OF SUCH TRANSFER
RESTRICTION AGREEMENT WITHOUT CHARGE TO ANY STOCKHOLDER ON REQUEST."
Section 5. Recapitalization, etc.; After-Acquired Stock.
(a) The provisions of this Agreement (including any calculation of share
ownership) shall apply to any and all shares of capital stock of the Company or
any capital stock, partnership interests or any other security evidencing
ownership interests in any successor of the Company (whether by merger,
consolidation, sale of assets or otherwise) that may be issued in respect of, in
exchange for, or in substitution of the Common Stock by reason of any stock
dividend, split, reverse split, combination, recapitalization, liquidation,
reclassification, merger, consolidation or otherwise.
(b) Whenever Voteco becomes the record or beneficial owner of any
additional shares of Class A Common, such shares shall be subject to the terms
of this Agreement and included in the definition of "Class A Common" hereunder.
Whenever Voteco becomes the record or beneficial owner of any additional Class A
Equivalents, such Class A Equivalents shall be subject to the terms of this
Agreement and included in the definition of "Class A Equivalents" hereunder. The
certificates therefor shall be surrendered for legending in accordance with
Section 4 of this Agreement, unless already so legended.
Section 6. Termination. This Agreement shall terminate upon the earlier of
(a) Voteco owning no shares of Class A Common and no Class A Equivalents or (b)
Colony IV owning no Class B Common and no Class B Equivalents.
Section 7. Notices. Whenever notice is required to be given under the
provisions of this Agreement, it shall be given in writing by hand-delivery,
telefax, or United States registered or certified mail, return receipt
requested, and shall be deemed to have been transmitted on the date such notice
is so delivered, transmitted or mailed, if addressed as set forth below or to
such other addresses and fax numbers as any of the parties hereto by written
notice to the other parties hereto, may from time to time designate.
if to Xx. Xxxxxxx:
c/o Colony Capital, LLC
1999 Avenue of the Stars, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
if to Voteco:
c/o Colony Capital, LLC
1999 Avenue of the Stars, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xx. Xxxxxxx
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if to Colony IV
c/o Colony Capital, LLC
1999 Avenue of the Stars, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xx. Xxxxxxxx X. Xxxxxxxxx
Section 8. Additional Actions and Documents. Each party hereto shall take
or cause to be taken such further actions and to execute and deliver such
documents or instruments as may from time to time be reasonably necessary in
order to carry out the purposes of this Agreement.
Section 9. Specific Performance. The parties hereto recognize that the
provisions herein contained are of particular importance for the protection and
promotion of their existing and future interests; that the shares of stock of
the Company and the Voteco Interests will be closely held; and that the
relationships of the parties to one another are and will be such that, in the
event of any breach of this Agreement, a claim for monetary damages may not
constitute an adequate remedy; and that it may, therefore, be necessary for the
protection of all of the parties hereto and for the effectuation of the
provisions of this Agreement, in the event of a breach of this Agreement, to
apply for specific performance thereof. It is, accordingly, hereby agreed that
no objection to the form of the action or to the form of relief prayed for in
any proceeding for specific performance of this Agreement, shall be raised by
any party hereto, in order that such relief may be obtained by the party
aggrieved.
Section 10. Construction. Unless the context of this Agreement clearly
requires otherwise, references to the plural include the singular, to the
singular include the plural, to the male gender include the female and neuter
genders and vice versa, and to the part include the whole. The term "including"
is not limiting. The words "hereof," "herein," "hereby," "hereunder" and similar
terms in this Agreement refer to this Agreement as a whole and not to any
particular provision of this Agreement. Section and clause references are to
this Agreement unless otherwise specified.
Section 11. Miscellaneous.
(a) No Waiver. No waiver or modification of any term or condition of this
Agreement shall be effective unless in writing signed by all the parties hereto.
(b) Severability. In case any of the provisions contained herein shall, for
any reason, be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement, but this Agreement shall be construed as if such invalid,
illegal or unenforceable provision or provisions are not contained herein.
(c) Binding Effect. This Agreement shall be binding and inure to the
benefit of the parties hereto, their respective heirs, guardians, personal
representatives, successors, successors in interest, and assigns.
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(d) Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
(e) Counterparts. This Agreement may be executed in counterparts, each of
which shall be an original, but all of which together shall constitute one
document.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement under
seal with the intent that this be a sealed instrument, as of the day and year
first above written.
/s/ Xxxxxx X. Xxxxxxx, Xx.
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XXXXXX X. XXXXXXX, XX.
COLONY RIH VOTECO, LLC
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
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Name: Xxxxxx X. Xxxxxxx, Xx.
Title: Member
COLONY INVESTORS IV, L.P.
By: COLONY CAPITAL IV, L.P.
its general partner
By: COLONY XX XX, INC.
its general partner
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
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Name: Xxxxxx X. Xxxxxxx, Xx.
Title: Managing Director, CEO and
President
[Signature Page to Transfer Restriction Agreement]
