SECURITIES AND EXCHANGE COMMISSION
the Securities Exchange Act of 1934
o | Preliminary Proxy Statement. | ||
o | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)). | ||
þ | Definitive Proxy Statement. | ||
o | Definitive Additional Materials. | ||
o | Soliciting material Pursuant to §240.14a-12. |
o | No fee required. | |
o | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
1) | Title of each class of securities to which transaction applies: | ||
2) | Aggregate number of securities to which transaction applies: | ||
3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): | ||
4) | Proposed maximum aggregate value of transaction: | ||
5) | Total fee paid: | ||
þ | Fee paid previously with preliminary materials. |
o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
1) | Amount Previously Paid: | ||
2) | Form, Schedule or Registration Statement No.: | ||
3) | Filing Party: | ||
4) | Date Filed: |
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EXHIBITS | ||||
Exhibit A-1 — Agreement and Plan of Merger | A-1-1 | |||
Exhibit A-2 — Voting Agreements | A-2-1 | |||
Exhibit B — Opinion of Barclays Capital Inc. | B-1 | |||
Exhibit C — Section 262 of the DGCL | C-1 |
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Q: | What matters will be voted on at the special meeting? | |
A: | You will be asked to consider and vote on the following proposals: | |
• to adopt the merger agreement and approve the merger and the other transactions contemplated by the merger agreement; | ||
• to approve any adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies; and | ||
• to consider and act upon any other matters that may properly be brought before the special meeting and at any adjournments or postponements thereof. |
Q: | How does the Company’s board of directors recommend that I vote on the proposals? | |
A: | The board of directors recommends that you vote: |
• “FOR”the proposal to adopt the merger agreement and approve the merger and the other transactions contemplated by the merger agreement; and | ||
• “FOR”the proposal to approve any adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies. |
Q: | What is the proposed transaction? | |
A: | The proposed transaction is the acquisition of the Company and the Operating Partnership by HAC, a Delaware limited liability company, under an agreement and plan of merger, dated as of December 18, 2009, by and among HAC, Merger Sub, a wholly-owned subsidiary of HAC, Merger Partnership, whose general partner is Merger Sub, the Company and the Operating Partnership. Once the merger has been approved by the Company’s stockholders and the other closing conditions under the merger agreement have been satisfied or waived, Merger Sub will merge with and into the Company with the Company being the surviving company, and Merger Partnership will merge with and into the Operating Partnership, with the Operating Partnership being the surviving partnership, and each will be subsidiaries of HAC. | |
Q: | What will I be entitled to receive in the merger? | |
A: | You will be entitled to receive $2.25 in cash, without interest, less any required withholding taxes, for each outstanding share of the Company’s common stock that you own as of the Company merger effective time. | |
Q: | When do you expect to complete the proposed transaction? |
A: | We are working toward completing the proposed transaction as promptly as practicable. Because a vote of our stockholders is only one of the conditions to the completion of the mergers, we can give you no assurance as to when or whether the mergers will occur. We expect to complete the mergers no later than the fifth business day after the other conditions to completion of the mergers are satisfied or waived. For more information, please see“The Merger Agreement — Conditions to the Mergers” beginning on page 72. |
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Q: | If the merger is completed, when can I expect to receive the merger consideration for my shares of the Company’s common stock? | |
A: | Promptly after the completion of the merger, you will receive a letter of transmittal describing how you may exchange your shares of the Company’s common stock for the merger consideration. At that time, if you hold physical share certificates, you must send those certificates with your completed letter of transmittal to the paying agent. If you do not hold any physical share certificates, you must execute a properly completed letter of transmittal and arrange to electronically transfer your shares. You should not send your certificates to us or anyone else until you receive these instructions. You will receive payment of your portion of the merger consideration after the paying agent receives from you a properly completed letter of transmittal together with your certificates, or, if you do not hold any physical certificates, promptly after the paying agent receives your properly completed letter of transmittal and electronic transfer of your shares. | |
Q: | If I hold class A units in the Operating Partnership, and if the mergers are completed, what will happen to my units, and when can I expect to receive the merger consideration for my units? | |
A: | Upon completion of the partnership merger, class A units in the Operating Partnership will be converted into the right to receive the merger consideration of $2.25 per unit in cash, without interest, less any required withholding taxes. Separate materials will be sent to the limited partners of the Operating Partnership providing instructions on how to receive payment for class A units in the Operating Partnership. | |
Q: | What is the location, date and time of the special meeting? |
A: | The special meeting will be held on March 11, 2010, at 10 a.m. Eastern Time, at the Hilton Arlington, 950 North Stafford Street, Arlington, Virginia 22203. |
Q: | What vote is required to approve the merger proposal? | |
A: | Under the Delaware General Corporation Law (which we refer to as the “DGCL”), adoption of the merger agreement and approval of the merger and the other transactions contemplated by the merger agreement requires the affirmative vote of at least a majority of the shares of the Company’s common stock that are outstanding and entitled to vote at the special meeting. Because the required vote is based on the number of shares of the Company’s common stock outstanding rather than on the number of votes cast, failure to vote your shares (including as a result of broker non-votes) and abstentions will have the same effect as voting against adoption of the merger agreement and approval of the merger and the other transactions contemplated by the merger agreement. We urge you to either complete, execute and return the enclosed proxy card or submit your proxy or voting instructions by telephone or Internet to assure the representation of your shares of the Company’s common stock at the special meeting. | |
Q: | What vote is required to approve the proposal to approve the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies? | |
A: | The proposal to approve the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies requires the affirmative vote of a majority of the shares of the Company’s common stock present or represented by proxy at the special meeting and entitled to vote on the matter. | |
Q: | What rights do I have if I oppose the merger? | |
A: | Under Delaware law, you have the right to seek appraisal of the fair value of your shares of the Company’s common stock as may be determined by the Delaware Court of Chancery if the merger is consummated. However, you must follow the appraisal procedures under Delaware law explained in this proxy statement. In order to preserve your appraisal rights, Delaware law requires, among other things, that you do not vote in favor of the adoption of the merger agreement and approval of the merger at the special meeting. | |
Q: | Who is entitled to vote at the special meeting? |
A: | Only stockholders of record at the close of business on the record date, February 5, 2010, are entitled to receive notice of the special meeting and to vote shares of the Company’s common stock that they held on |
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the record date at the special meeting, or any postponements or adjournments of the special meeting. Each stockholder has one vote for each share of the Company’s common stock owned on the record date. As of the record date, there were 33,380,558 shares of the Company’s common stock outstanding and entitled to vote at the special meeting. | ||
Q: | What happens if I sell my shares of the Company’s common stock before the special meeting? | |
A: | The record date for the special meeting is February 5, 2010. If you held your shares of the Company’s common stock on the record date but transfer them before the special meeting without granting a proxy, you will retain your right to vote at the special meeting but not the right to receive the merger consideration for the shares. The right to receive the merger consideration will pass to the person who owns your shares of the Company’s common stock when the merger is completed. | |
Q: | How do I vote? | |
A: | Mark, sign, date and return the enclosed proxy card in the postage-paid envelope provided, or submit your proxy or voting instructions by telephone or Internet in accordance with the instructions on the enclosed proxy card or the voting instruction form received from any broker, dealer, trustee, bank or other nominee that may hold your shares of the Company’s common stock on your behalf as soon as possible so that your shares can be voted at the special meeting. |
If you return a properly signed proxy card but do not indicate how you want to vote, your proxy will be counted as a vote“FOR”the adoption of the merger agreement and approval of the merger and the other transactions contemplated by the merger agreement and“FOR” the approval of any adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies. Stockholders that are present at the meeting may withdraw their proxy and vote in person if they so desire. |
Q: | What happens if I do not return a proxy card? | |
A: | If you fail to submit your proxy by mail, submit your proxy or voting instructions by telephone or Internet or vote in person at the special meeting, or if you mark your proxy “abstain,” the effect will be the same as a vote against the approval of the merger and the other transactions contemplated by the merger agreement, but will not affect the outcome of the vote regarding the proposal to approve the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies. | |
Q: | If my shares of the Company’s common stock are held for me by my broker, will my broker vote my shares for me? | |
A: | If you hold your shares of the Company’s common stock in “street name” through a broker or other nominee, your broker or nominee will not vote your shares unless you provide instructions on how to vote. You should instruct your broker or nominee how to vote your shares of the Company’s common stock by following the directions your broker or nominee will provide to you. If you do not provide instructions to your broker or nominee, your shares of the Company’s common stock will not be voted, and this will have the same effect as a vote against the approval of the merger and the other transactions contemplated by the merger agreement, but will not affect the outcome of the vote regarding the proposal to approve the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies. | |
Q: | May I vote in person? | |
A: | Yes. You may vote in person at the special meeting, rather than submitting a proxy, if you own shares of the Company’s common stock in your own name. If you bring a legal proxy from your broker, dealer, trustee, bank or other nominee and present it at the special meeting, you may also vote in person at the special meeting if your shares are held in “street name” through a broker, dealer, trustee, bank or other nominee. You may be asked to present photo identification for admittance. | |
Q: | May I change my vote after I have submitted my proxy? | |
A: | Yes. You may change your vote at any time before the shares of the Company’s common stock reflected on your proxy are voted at the special meeting. If you own your shares of the Company’s common stock |
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in your name, you can do this in one of three ways. First, you can send a written notice of revocation of your proxy to our Secretary at our principal executive offices. Second, you can either mark, sign, date and return a new proxy card or submit your proxy or voting instructions by telephone or Internet at a later date than your previously submitted proxy. Third, you can attend the meeting and vote in person. Your attendance alone will not revoke your proxy. If you have instructed a broker, dealer, trustee, bank or other nominee to vote your shares, you must follow the directions received from the broker, dealer, trustee, bank or other nominee to change your instructions. | ||
Q: | Have any stockholders already agreed to approve the merger? | |
A: | Yes. In connection with the merger agreement, certain of our executive officers, who collectively beneficially hold approximately 5% of the outstanding shares of our common stock as of the record date, and Coliseum Capital Management, LLC (together with certain of its affiliates), which beneficially holds approximately 11% of the outstanding shares of our common stock as of the record date, have entered into voting agreements with HAC, dated as of December 18, 2009, pursuant to which the signatory stockholders agreed to vote their shares of our common stock in favor of adoption of the merger agreement and approval of the merger and the other transactions contemplated by the merger agreement. For more information, please see“The Merger Proposal — Voting Agreements” beginning on page 50. | |
Q: | What do I need to do now? | |
A: | This proxy statement contains important information regarding the special meeting, the merger agreement and the mergers, as well as information about the Company, the Operating Partnership, HAC, Merger Sub and Merger Partnership. It also contains important information about some of the factors our board of directors considered in approving the merger agreement, the merger and the other transactions contemplated by the merger agreement. We urge you to read this proxy statement carefully, including the exhibits. You may also want to review the documents referenced in the section captioned“Where You Can Find Additional Information” beginning on page 83. The votes of all stockholders are important, as such, you are urged to return the enclosed proxy card or voting instruction form today. | |
Q: | Should I send my share certificates now? | |
A: | No. After the merger is completed, a paying agent will send you a letter of transmittal describing how you may exchange your certificates for the merger consideration. At that time, you must send in your certificates or execute an appropriate instrument of transfer of your shares of the Company’s common stock, as applicable, with your completed letter of transmittal to the paying agent to receive the merger consideration. If you do not hold any physical certificates, you must execute a properly completed letter of transmittal and arrange to electronically transfer your shares of the Company’s common stock. Do not send any stock certificates with your proxy card. | |
Q: | Where can I find more information about the Company? | |
A: | We file certain information with the Securities and Exchange Commission (the “SEC”) under the Securities Exchange Act of 1934 (the “Exchange Act”). You may read and copy this information at the SEC’s public reference facilities. You may call the SEC at1-800-SEC-0330 for information about these facilities. This information is also available at the Internet site the SEC maintains at www.sec.gov and on our website at www.ihrco.com. Information contained on our website is not part of, or incorporated in, this proxy statement. You can also request copies of these documents from us. See“Where You Can Find Additional Information” beginning on page 83. | |
Q: | How will proxy holders vote my shares of the Company’s common stock? | |
A: | If you properly submit a proxy prior to the special meeting, your shares of the Company’s common stock will be voted as you direct. If you submit a proxy but no direction is otherwise made, your shares of the Company’s common stock will be voted“FOR” the adoption of the merger agreement and approval of the merger and the other transactions contemplated by the merger agreement and“FOR” the approval of any adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies. |
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Q: | Whom can I call with questions? | |
A: | We have selected MacKenzie Partners, Inc., which we refer to as “MacKenzie”, as our proxy solicitor, which you may contact with any questions or if you need assistance voting your shares as follows: MacKenzie can be reached toll-free at1-800-322-2885, 1-212-929-5500 (call collect) or via email at proxy@mackenziepartners.com. | |
Q: | Who will solicit and pay the cost of soliciting proxies? |
A: | Our board of directors is soliciting your proxy. We will bear the cost of soliciting proxies. In addition to solicitation by mail and, without additional compensation for these services, proxies may be solicited by telephone and facsimile, on the Internet or in person. We will pay approximately $9,500 to our proxy solicitor. We will also request that banking institutions, brokerage firms, custodians, directors, nominees, fiduciaries and other like parties forward the solicitation materials to the beneficial owners of shares of the Company’s common stock held of record by such person, and we will, upon request of such record holders, reimburse forwarding charges andout-of-pocket expenses. |
If you have further questions, you may contact MacKenzie at the address and telephone number indicated above. |
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4501 N. Fairfax Drive, Suite 500
Arlington, Virginia 22203
(703) 387-3100
4501 N. Fairfax Drive, Suite 500
Arlington, Virginia 22203
(703) 387-3100
c/o Thayer Lodging Group, Inc.
1997 Annapolis Exchange Parkway, Suite 550
Annapolis, MD 21401
(410) 268-0515
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c/o Thayer Lodging Group, Inc.
1997 Annapolis Exchange Parkway, Suite 550
Annapolis, MD 21401
(410) 268-0515
c/o Thayer Lodging Group, Inc.
1997 Annapolis Exchange Parkway, Suite 550
Annapolis, MD 21401
(410) 268-0515
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• | has approved the merger, the merger agreement and the other transactions contemplated by the merger agreement; | |
• | has separately, on behalf of the Company as the general partner of the Operating Partnership, approved the merger agreement and the partnership merger; | |
• | has declared the merger, the merger agreement and the other transactions contemplated by the merger agreement advisable and in the best interests of the Company and our stockholders; and | |
• | recommends that you vote“FOR” the adoption of the merger agreement and approval of the merger and the other transactions contemplated by the merger agreement and“FOR” the approval of any adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies. |
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• | $2.25, multiplied by | |
• | the aggregate number of shares of Interstate common stock subject to such restricted stock award immediately prior to the Company merger effective time. |
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• | the merger agreement provides that our directors and executive officers will have their vested and unvested restricted stock awards cancelled as of the Company merger effective time in return for a cash payment of $2.25 per share subject to each such restricted stock award, less applicable withholding taxes; | |
• | Thomas F. Hewitt, our chief executive officer, will be entitled to severance and health benefits under his employment agreement if his employment is terminated without cause or he terminates his employment for good reason (other than a termination of employment by Mr. Hewitt within 12 months following the merger solely by reason of the merger itself as good reason, in which case he will only be entitled to health benefits) or his employment is terminated by the Company within two years following the merger. If Mr. Hewitt is assessed an excise tax under section 4999 of the Internal Revenue Code, in connection with accelerated termination payments for a change in control, the company willgross-up the termination payment equal to the amount of the assessed excise tax (subject to certain limitations); and | |
• | each of Bruce A. Riggins, our chief financial officer, Leslie Ng, our chief investment officer, Samuel E. Knighton, our president of hotel operations, and Christopher L. Bennett, our executive vice president and general counsel, will be entitled to severance benefits and health benefits under their employment agreements if their employment is terminated without cause or they leave for good reason (as defined in the employment agreements) within 18 months after completion of the merger. |
• | approval of the merger agreement by the requisite stockholder vote; | |
• | the expiry of the waiting period applicable to the consummation of the mergers under theHart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”), if applicable; | |
• | no effective injunction, writ or preliminary restraining order or any order of any nature issued by a governmental entity of competent jurisdiction to the effect that the mergers may not be consummated, no proceeding or lawsuit pending by any governmental entity for the purpose of obtaining any such injunction, writ or preliminary restraining order and no written notice received from any governmental entity indicating an intent to restrain, prevent, materially impair or delay or restructure the transactions contemplated by the merger agreement; | |
• | our and the Operating Partnership’s representations and warranties being true and correct in all respects without regard to any materiality or material adverse effect qualifications as of the closing as though made as of the closing (except for representations and warranties made as of a specified date, which must be true and correct in all respects as of that specified date), except where the failure of such representations and warranties to be true and correct in all respects would not, in the aggregate, have a material adverse effect. Certain of our and the Operating Partnership’s representations and warranties pertaining to authorization, enforceability, capitalization, voting, the opinion of the financial advisor, |
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brokers and finders and our tax preservation plan must be true and correct in all material respects (except for representations and warranties made as of a specified date, which must be true and correct in all material respects as of that specified date). In addition, our and the Operating Partnership’s representations and warranties pertaining to the absence of a material adverse effect on us must be true and correct in all respects as of the closing; |
• | the performance, in all material respects, by us and the Operating Partnership of our obligations under the merger agreement; | |
• | the receipt by HAC of a certificate signed by our chief executive officer or chief financial officer with respect to the truth and correctness of our and the Operating Partnership’s representations and warranties and the performance of our and the Operating Partnership’s obligations under the merger agreement; | |
• | no lender or agent of the lenders under any of our existing financing documents having provided valid written notice to us of any material default under any such existing financing document that is not capable of being cured or for which no remaining cure period exists, and the amendments to the existing financings remaining in full force and effect; | |
• | HAC’s, Merger Sub’s and Merger Partnership’s representations and warranties being true and correct in all respects without regard to any materiality qualifications as of the closing as though made as of the closing (except for representations and warranties made as of a specified date, which must be true and correct in all respects as of that specified date), except where the failure of their representations and warranties to be true and correct in all respects would not, in the aggregate, have a material adverse effect on HAC, Merger Sub or Merger Partnership; | |
• | the performance, in all material respects, by HAC, Merger Sub and Merger Partnership of their obligations under the merger agreement; and | |
• | the receipt by us of an officer’s certificate with respect to the truth and correctness of the representations and warranties of HAC, Merger Sub and Merger Partnership and the performance of their obligations under the merger agreement. |
• | by mutual written consent of HAC and us; | |
• | by either HAC or us if: |
• | the closing has not occurred on or before June 30, 2010, so long as the failure to complete the mergers is not the result of the terminating party’s failure to comply with the terms of the merger agreement; | |
• | the merger agreement has been submitted to our stockholders for adoption at a duly convened stockholders meeting (or adjournment or postponement thereof) and the requisite vote of our stockholders to approve the merger and the other transactions contemplated by the merger agreement upon a vote being taken at a duly convened stockholders meeting is not obtained upon a vote taken thereon; |
• | by HAC if: |
• | our board of directors withdraws, modifies or amends its recommendation with respect to the merger agreement or the mergers in any manner adverse to HAC solely in response to a material event, |
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development, state of affairs or change in circumstances arising after the date of the merger agreement (other than in connection with a takeover proposal); |
• | (i) our board (or any authorized committee of the board) approves, endorses or recommends a takeover proposal, (ii) our board (or any authorized committee of the board) withdraws, modifies or amends its recommendation with respect to the merger agreement in any manner adverse to HAC in response to our receipt of a takeover proposal, (iii) our board fails to recommend against acceptance by our stockholders of a tender offer or exchange offer that is commenced prior to obtaining the requisite vote of our stockholders to approve the mergers, or (iv) we or our board (or any authorized committee of the board) publicly announces the intention to do any of the foregoing; or | |
• | (i) we are in breach (or material breach in certain cases) of any of our covenants and agreements pertaining to solicitation and change of our board’s recommendation or (ii) we are in breach of any of our other representations, warranties, covenants or agreements in the merger agreement (and such breach has not been cured within 20 business days after receipt of written notice of such breach) such that the conditions pertaining to our representations and warranties and our obligations under the merger agreement would not be satisfied by June 30, 2010 (provided that HAC may only exercise this termination right if neither it nor Merger Sub nor Merger Partnership is then in material breach of its obligations under the merger agreement); |
• | by us if our board (or any authorized committee of the board) approves and authorizes us to enter into a definitive agreement to implement a superior proposal, so long as: |
• | the requisite stockholder vote has not yet been obtained; | |
• | we are not in and have not been in breach of our obligations under the merger agreement with regard to soliciting acquisition proposals or changing our board’s recommendation in any material respect; | |
• | our board (or any authorized committee of the board) has determined in good faith, after consulting with a nationally-recognized financial advisor, that such definitive agreement constitutes a superior proposal and has determined in good faith, after consultation with its outside legal counsel, that failure to take such actions would be reasonably likely to be inconsistent with its fiduciary obligations to our stockholders under applicable laws; | |
• | we have provided written notice to HAC regarding our intention to enter into such definitive agreement; | |
• | we have provided HAC with a five business day period, during which time we must negotiate in good faith with HAC to make adjustments to the terms and conditions of the merger agreement to enable the mergers and other transactions contemplated by the merger agreement to proceed and our board (or the authorized committee of the board) has determined in good faith, after the end of such five business day period, after considering the results of such negotiations and HAC’s revised proposals, if any, that the superior proposal continues to be a superior proposal; and | |
• | we simultaneously pay to HAC the termination fee and certain of HAC’s expenses in accordance with the merger agreement; and |
• | by us if we are not in material breach of our obligations under the merger agreement and if any of HAC, Merger Sub or Merger Partnership is in breach of any of its representations, warranties, covenants or agreements in the merger agreement (and such breach has not been cured within 20 business days after receipt of notice of such breach) such that the conditions pertaining to its representations and warranties and its obligations under the merger agreement would not be satisfied by June 30, 2010. |
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• | the filing of the Company merger certificate and the partnership merger certificate with the Secretary of State of the State of Delaware; | |
• | the filing with the SEC of (i) this proxy statement and (ii) any other filings and reports that may be required in connection with the merger agreement and the transactions contemplated by the merger agreement under the Exchange Act; | |
• | compliance with the New York Stock Exchange (“NYSE”) rules and regulations; and | |
• | compliance with any applicable state, federal or foreign laws governing the sale of liquor. |
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• | failure to obtain the approval of the merger proposal at the special meeting of our stockholders; | |
• | the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement, including a termination under circumstances that could require us to pay a termination fee in the amount of $3.0 million and reimburse HAC for up to $3.5 million of expenses; | |
• | the amount of the costs, fees, expenses and charges related to the mergers; | |
• | the failure of the mergers to close for any reason; | |
• | disruption from the announcement of the mergers, and the mergers, making it more difficult to maintain relationships with owners, customers, employees or suppliers; | |
• | the risk that the mergers may not be completed in a timely manner or at all, which may adversely affect our business and the price of our common stock; | |
• | the uncertainty as to the outcome of the pending litigation relating to the mergers and the impact of such litigation on the mergers; | |
• | the potential adverse effect on our business, properties and operations because of certain covenants we agreed to in the merger agreement; | |
• | our ability to continue as a going concern as a result of our non-compliance with certain debt covenants under our credit facility; | |
• | industry risks related to operating, managing and owning hotels; | |
• | the impact of general economic recession and the slowdown in the lodging industry on our financial results and growth; | |
• | the impact of acts of terrorism, the threat of terrorism, the ongoing war against terrorism and other factors on the hotel industry and all hotel companies’ results of operations; | |
• | failure to maintain adequate insurance levels or failure to be reimbursed by our hotel owners for property level insurance coverage or losses; | |
• | the insurance market having been adversely affected; | |
• | limitations in our franchising and licensing agreements; | |
• | compliance with employment laws and regulations; | |
• | compliance with environmental laws; |
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• | aspects of hotel, resort, conference center and restaurant operations that are subject to governmental regulation, and changes in regulations; | |
• | the lodging business being seasonal; | |
• | failure to maintain the integrity of internal or customer data; | |
• | our internal control over financial reporting; | |
• | retention of our executive officers and key personnel; and | |
• | other risk factors specific to our hotel ownership segment, hotel management segment and capital structure. |
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• | marking, signing, dating and returning the enclosed proxy card by mail; or | |
• | submitting your proxy or voting instructions by telephone or by Internet by following the instructions included with your proxy card; or | |
• | appearing and voting in person by ballot at the special meeting. |
• | by delivering a written revocation of your proxy dated after the date of the proxy that is being revoked to the Secretary of the Company at 4501 North Fairfax Drive, Suite 500, Arlington, VA 22203; or |
• | by delivering to the Secretary of the Company a later-dated, duly executed proxy or by submitting your proxy or voting instructions by telephone or by Internet at a date after the date of the previously submitted proxy relating to the same shares; or | |
• | by attending the special meeting and voting in person by ballot. |
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• | the current and historical market prices of shares of the Company’s common stock, the valuation analyses that Barclays Capital presented to the Board and the fact that the cash merger consideration of $2.25 per share of the Company’s common stock represented a 77.2% premium over the closing price on December 17, 2009, the last trading day prior to the initial release of published reports regarding a potential acquisition of the Company; | |
• | our financial condition, including our substantial leverage and limited free cash flow, and the significant restrictions contained in our debt agreements on our ability to make adequate investments to maintain or improve the competitive position of our properties, to make acquisitions of new properties or to invest in joint ventures on an accretive basis; | |
• | uncertainties with respect to our prospective performance and our ability to achieve management’s projections, particularly given industry expectations for further declines in RevPAR and our concerns regarding the future financial condition of certain of our joint venture partners; |
• | the relatively inflexible nature (including the presence of significant covenant restrictions) of our debt, the significant cost that we would incur if we were to attempt to refinance that debt (assuming that we would be successful in that effort) and the potential for financial covenant and other defaults in respect of a substantial portion of our debt in 2009 and 2010 (absent the waivers granted by the lenders in connection with the mergers, which may not have been available to us without further cost absent the proposed mergers). See“Amendments to Certain of Our Debt Instruments” on page 39; |
• | uncertainties with respect to future capital expenditure and property improvement requirements that might be imposed by franchisors and the sources of financing of such capital expenditures; | |
• | the high probability that the mergers would be completed, based on, among other things, Thayer Lodging’s proven ability to complete large acquisition transactions on the agreed terms, Thayer Lodging’s extensive experience in the lodging industry in the United States, the lack of a financing condition, the approval of the mergers by the lenders under our credit facilities, Capital Gathering’s contributed equity in HAC and THI V Inca’s equity commitment letter, and Thayer’s $50.5 million guarantee and Jin Jiang’s $12.5 million guarantee of the acquisition entities’ obligations under the merger agreement; |
• | the extensive efforts made by us and our advisors over the past several years to consider and evaluate a broad range of potential strategic alternatives and Barclays Capital’s efforts to source potential acquirors, as discussed above under the heading“The Merger Proposal — Background of the Merger” beginning on page 17; |
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• | the terms and conditions of the merger agreement, which were reviewed by our Board with our financial and legal advisors and the fact that such terms were the product of arm’s-length negotiations between the parties; | |
• | the financial presentation of Barclays Capital, including its opinion dated December 18, 2009, to the effect that, as of that date and based upon and subject to the assumptions, qualifications and limitations stated in the opinion, the $2.25 per share merger consideration to be offered to the holders of shares of the Company’s common stock pursuant to the merger agreement was fair from a financial point of view to such stockholders (see“The Merger Proposal — Opinion of Barclays Capital Inc.” beginning on page 30); | |
• | the ability, under the merger agreement, under certain circumstances, to consider and respond to an unsolicited written bona fide takeover proposal, and if, after consultation with its advisors, the Board determines that such takeover proposal constitutes a superior proposal to the mergers and HAC decides not to negotiate improvements to its offer to make it superior, the ability to terminate the merger agreement upon the payment to HAC of a termination fee of $3.0 million plus reimbursement of up to $3.5 million of HAC’s expenses (see“The Merger Agreement — Termination” and“The Merger Agreement — Termination Fees and Expenses”); | |
• | the fact that the transaction is a purchase of the Company as a whole; | |
• | the fact that the all-cash merger consideration will provide our stockholders with immediate fair value, in cash, for their investment in our stock; and | |
• | the fact that the merger is subject to the approval of our stockholders. |
• | as a result of the merger, our stockholders will not participate in any future earnings growth and will not receive any appreciation in the value of the Company or its hotel ownership and management portfolio; | |
• | the fact that an all cash transaction would be taxable to our stockholders for U.S. federal income tax purposes; | |
• | the possibility that the $3.0 million termination fee and reimbursement of expenses up to $3.5 million payable by us to HAC upon the termination of the merger agreement may discourage other potential bidders from making a competing bid to acquire us; | |
• | the failure to complete the mergers may cause substantial damage to the Company’s relationships with hotel brands, management companies and customers and may divert management and employee attention from theday-to-day management of the business and lead to employee attrition; | |
• | some executive officers and directors of the Company may have other interests in the merger that are in addition to their interests as the Company’s stockholders (see“The Merger Proposal — Interests of the Company’s Directors and Executive Officers in the Mergers” beginning on page 41); and | |
• | the restrictions on the conduct of our business prior to the completion of the mergers, which require us to conduct our business in the ordinary course consistent with past practice, subject to specific limitations, delaying or preventing us from undertaking business opportunities that may arise pending completion of the mergers. |
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• | reviewed and analyzed a draft of the merger agreement dated December 16, 2009 and the specific terms of the proposed transaction; | |
• | reviewed and analyzed drafts of each of the equity commitment letters dated as of December 16, 2009 delivered to HAC in connection with the proposed transaction (which we will refer to as the “Commitment Letters”); |
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• | reviewed and analyzed publicly available information concerning Interstate that Barclays Capital believed to be relevant to its analysis, including Interstate’s Annual Report onForm 10-K for the fiscal year ended 2008 and Quarterly Reports onForm 10-Q for the fiscal quarters ended September 30, 2009; | |
• | reviewed and analyzed financial and operating information with respect to the business, operations and prospects of Interstate furnished to Barclays Capital by Interstate, including financial projections of the Interstate prepared by management of Interstate; | |
• | reviewed and analyzed a trading history of Interstate common stock from December 17, 2008 through December 17, 2009 and a comparison of such trading history with those of other companies that Barclays Capital deemed relevant; | |
• | reviewed and analyzed a comparison of the historical financial results and present financial condition of Interstate with those of other companies that Barclays Capital deemed relevant; | |
• | reviewed and analyzed a comparison of the financial terms of the proposed transaction with the financial terms of certain other recent transactions that Barclays Capital deemed relevant; | |
• | reviewed the results of Barclays Capital’s efforts to solicit indications of interest from third parties with respect to an acquisition of Interstate; | |
• | reviewed and analyzed the aggregate value of Interstate’s Owned Hotels, Management Business and Joint Venture business segments on a stand-alone basis; | |
• | reviewed and analyzed the limited alternatives available to Interstate in light of Interstate’s current liquidity position and its ability to meet its cash requirements, financial obligations and covenants contained in its credit facility; | |
• | had discussions with the management of Interstate concerning its business, operations, assets, liabilities, financial condition and prospects; and | |
• | undertook such other studies, analyses and investigations as Barclays Capital deemed appropriate. |
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Time Period / Trading Days | Price ($/Share) | Premium | ||||||
December 17, 2009 | $ | 1.27 | 77.1 | % | ||||
10-Day Average | $ | 1.24 | 81.4 | % | ||||
30-Day Average | $ | 1.26 | 78.6 | % | ||||
60-Day Average | $ | 1.33 | 69.1 | % | ||||
90-Day Average | $ | 1.29 | 74.4 | % | ||||
180-Day Average | $ | 0.99 | 127.2 | % | ||||
52-Week High (9/23/09) | $ | 1.67 | 34.7 | % | ||||
52-Week Low (3/16/09) | $ | 0.21 | 971.4 | % |
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Lodging C-Corporations | Lodging REITs | |
• Marriott International, Inc. | • Host Hotels & Resorts, Inc. | |
• Starwood Hotels & Resorts Worldwide, Inc. | • Ashford Hospitality Trust, Inc. | |
• InterContinental Hotels Group, Plc | • FelCor Lodging Trust, Inc. | |
• Wyndham Worldwide Corporation | • Sunstone Hotel Investors, Inc. | |
• Hyatt Hotels Corporation | • Diamond Rock Hospitality Company | |
• Choice Hotels International, Inc. | • MHI Hospitality Corporation | |
• Gaylord Entertainment Company | ||
• Red Lion Hotels Corporation |
2010 Estimated | Implied Common | |||||||
EBITDA Multiple | Share Price | |||||||
High | 15.9 | x | $ | 2.83 | ||||
Mean | 12.5 | x | $ | 0.93 | ||||
Median | 13.4 | x | $ | 1.43 | ||||
Low | 7.0 | x | $ | 0.00 |
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Acquirer | Target | |
Inland American Real Estate Trust, Inc. | Apple Hospitality Five, Inc. | |
The Blackstone Group | Hilton Hotels Corporation | |
Whitehall Street Global Real Estate LP 2007 | Equity Inns, Inc. | |
AP AIMCAP Holdings LLC | Eagle Hospitality Properties Trust, Inc. | |
Apollo Investment Corporation | Innkeepers USA Trust | |
Inland American Real Estate Trust, Inc. | Winston Hotels, Inc. | |
ING Clarion Partners, LLC | Apple Hospitality Two, Inc. | |
Ashford Hospitality Trust, Inc. | CNL Hotels & Resorts, Inc. (hotel portfolio) | |
Hersha Hospitality Trust | Lodgeworks LP (hotel portfolio) | |
Westmont Hospitality Group | Boykin Lodging Company | |
JER Partners | Jameson Inns, Inc. | |
The Blackstone Group | MeriStar Hospitality Corporation | |
The Blackstone Group | La Quinta Corporation |
Forward | Implied Common | |||||||
EBITDA Multiple | Share Price | |||||||
High | 13.8 | x | $ | 1.68 | ||||
Mean | 12.0 | x | $ | 0.61 | ||||
Median | 11.7 | x | $ | 0.48 | ||||
Low | 10.2 | x | $ | 0.00 |
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Premium to 30 | ||||||
Days Prior to | ||||||
Acquirer | Target | Announcement | ||||
Green Court Partners | American Land Lease, Inc. | 126.8 | % | |||
American Campus Communities, Inc. | GMH Communities Trust | 100.2 | % | |||
Gramercy Capital Corporation | American Financial Realty Trust | 2.1 | % | |||
Liberty Property Trust | Republic Property Trust | 19.7 | % | |||
Sentinel Real Estate Corporation | America First Apartment Investors, Inc, | 14.4 | % | |||
Whitehall Street Global Real Estate LP | Equity Inns, Inc. | 21.1 | % | |||
2007 | ||||||
AP AIMCAP Holdings LLC | Eagle Hospitality Properties Trust, Inc. | 18.9 | % | |||
JER Partners | Highland Hospitality Corporation | 10.9 | % | |||
Apollo Investment Corporation | Innkeepers USA Trust | 8.3 | % | |||
Inland American Real Estate Trust, Inc. | Winston Hotels, Inc. | 9.3 | % | |||
Simon Property Group, Inc. and Farallon Capital Management, LLC | The Mills Corporation | 24.4 | % | |||
Ventas, Inc. | Sunrise Senior Living Real Estate Investment Trust | 24.9 | % | |||
JPMorgan Asset Management | Columbia Equity Trust, Inc. | 14.7 | % | |||
General Electric Company | Trustreet Properties, Inc. | 34.8 | % | |||
Record Realty Trust | Government Properties Trust, Inc. | 19.4 | % | |||
The GEO Group, Inc. | CentraCore Properties Trust | 13.8 | % | |||
Health Care REIT, Inc. | Windrose Medical Properties Trust | 21.0 | % | |||
Morgan Stanley Real Estate Group | Glenborough Realty Trust, Inc. | 15.2 | % | |||
Westmont Hospitality Group, Inc. | Boykin Lodging Company | 7.0 | % | |||
JER Partners | Jameson Inns, Inc. | 19.3 | % | |||
The Blackstone Group | MeriStar Hospitality Corporation | 9.4 | % | |||
LBA Realty Fund LP | Bedford Property Investors, Inc. | 15.9 | % |
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Premium to 30 Days | ||||
Prior to Announcement | ||||
High | $ | 2.88 | ||
Mean | $ | 1.57 | ||
Median | $ | 1.47 | ||
Low | $ | 1.30 |
Premium to 30 | ||||||
Days Prior to | ||||||
Acquirer | Target | Announcement | ||||
Green Mountain Coffee Roasters, Inc. | Diedrich Coffee, Inc. | 18.2 | % | |||
Applied Materials, Inc. | Semitool, Inc. | 27.5 | % | |||
Sprint Nextel Corporation | iPCS, Inc. | 32.2 | % | |||
Chaparral Energy, Inc. | United Refining Energy Corporation | 10.9 | % | |||
Kimberly-Clark Corporation | I-Flow Corporation | 35.4 | % | |||
Emerson Electric Company | Avocent Corporation | 45.4 | % | |||
ASP GT Acquisition Corporation | GenTek, Inc. | 34.8 | % | |||
Transformer Delaware Corporation | Aspect Medical Systems, Inc. | 84.6 | % | |||
Harbinger Capital Partners | SkyTerra Communications, Inc. | 75.4 | % | |||
Adobe Systems, Inc. | Omniture, Inc. | 47.5 | % | |||
Advent International Corporation | Charlotte Russe Holding, Inc. | 24.1 | % | |||
International Business Machines Corporation | SPSS, Inc. | 50.6 | % | |||
Agilent Technologies, Inc. | Varian, Inc. | 29.9 | % | |||
Ben Holdings, Inc. | Bankrate, Inc. | 13.6 | % | |||
Hisamitsu Pharmaceutical Company, Inc. | Noven Pharmaceuticals, Inc. | 38.2 | % | |||
Symphony Technology Group | MSC.Software Corporation | 7.3 | % |
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Premium to 30 Days | ||||
Prior to Announcement | ||||
High | $ | 2.34 | ||
Mean | $ | 1.73 | ||
Median | $ | 1.69 | ||
Low | $ | 1.36 |
Terminal Multiple | ||||||
WACC | 10.0x | 10.5x | 11.0x | |||
12.5% | $1.96 | $2.35 | $2.73 | |||
13.0% | $1.80 | $2.18 | $2.56 | |||
13.5% | $1.64 | $2.02 | $2.39 |
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• | $2.25, multiplied by | |
• | the aggregate number of shares of the Company’s common stock subject to such restricted stock award immediately prior to the Company merger effective time. |
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Number of Outstanding | ||||||||||||
Shares Held in Respect | ||||||||||||
of Previously Granted | Resulting | |||||||||||
Name | Restricted Stock Awards | Consideration | ||||||||||
Vested | Unvested | |||||||||||
Executives: | ||||||||||||
Thomas F. Hewitt | 195,654 | 262,911 | $ | 1,031,771 | ||||||||
Bruce A. Riggins | 91,353 | 180,443 | $ | 611,541 | ||||||||
Leslie Ng | 97,565 | 124,285 | $ | 499,163 | ||||||||
Samuel E. Knighton | 44,241 | 143,650 | $ | 422,755 | ||||||||
Christopher L. Bennett | 53,820 | 114,867 | $ | 379,546 | ||||||||
Directors: | ||||||||||||
Ronald W. Allen | 2,304 | 4,388 | $ | 15,057 | ||||||||
H. Eric Bolton | 2,304 | 4,388 | $ | 15,057 | ||||||||
James F. Dannhauser | 2,304 | 4,388 | $ | 15,057 | ||||||||
Leslie R. Doggett | 2,304 | 4,388 | $ | 15,057 | ||||||||
James B. McCurry | 2,304 | 4,388 | $ | 15,057 | ||||||||
John J. Russell, Jr. | 2,304 | 4,388 | $ | 15,057 |
• | Assignment of duties materially inconsistent with Mr. Hewitt’s positions, provided that Mr. Hewitt provides written notice and the Company fails to cure within thirty days of the receipt of such notice; | |
• | Any significant diminution in Mr. Hewitt’s duties or responsibilities, provided that Mr. Hewitt provides written notice and the Company fails to cure within thirty days of the receipt of such notice; | |
• | Any continuing material breach of Mr. Hewitt’s employment agreement, provided that Mr. Hewitt provides written notice and the Company fails to cure within thirty days of the receipt of such notice; |
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• | A change in the location of the Company’s main executive offices or of Mr. Hewitt’s principal place of employment to outside the Washington D.C. metropolitan area, provided that Mr. Hewitt provides written notice and the Company fails to cure within thirty days of the receipt of such notice; | |
• | A failure of the Company to nominate Mr. Hewitt to the Board, Mr. Hewitt’s removal from the Board, or Mr. Hewitt’s failure to be elected to the Board, provided that Mr. Hewitt provides written notice and the Company fails to cure within thirty days of the receipt of such notice; and | |
• | A change in control if (i) the Company terminates Mr. Hewitt’s employment within two years following such change in control or (ii) Mr. Hewitt terminates his employment within twelve months following such change in control; provided, that if Mr. Hewitt terminates his employment within twelve months following a change in control solely by reason of the change in control, he will only be entitled to receive reimbursement for the cost of COBRA coverage as described at the beginning of this section, and he will not be entitled to receive any other cash severance payments. |
• | Assignment to an executive of duties materially inconsistent with the executive’s positions, provided that the executive provides written notice and the Company fails to cure within thirty days of the receipt of such notice; | |
• | Any significant diminution in the executive’s duties or responsibilities, provided that the executive provides written notice and the Company fails to cure within thirty days of the receipt of such notice; | |
• | Any continuing material breach of the executive’s employment agreement by the Company, provided that the executive provides written notice and the Company fails to cure within thirty days of the receipt of such notice; | |
• | (Except in the case of Leslie Ng), a change in the location of the Company’s main executive offices or of an executive’s principal place of employment to outside the Washington D.C. metropolitan area; and | |
• | A change in control if within eighteen months following such change in control, the Company (i) terminates the executive or (ii) changes the executive’s job title, responsibilities, decreases the executive’s compensation or changes the location of the Company’s main offices or the executive’s principal place of business to outside the Washington D.C. metropolitan area, and such executive terminates his employment within the earlier of six months after such changes or eighteen months following the change in control. |
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Amount of Potential | ||||
Executive Officer | Cash Severance Payment | |||
Thomas F. Hewitt | $ | 1,000,000 | ||
Bruce A. Riggins | $ | 750,000 | ||
Leslie Ng | $ | 700,000 | ||
Samuel E. Knighton | $ | 700,000 | ||
Christopher L. Bennett | $ | 590,000 |
• | maintain in effect, for a period of at least six years after the partnership merger effective time, our current directors’ and officers’ liability insurance policies (for which the surviving company or the surviving partnership may substitute policies of at least the same coverage containing terms and conditions which are no less advantageous); or | |
• | obtain as of the Company merger effective time “tail” insurance policies with a claims period of at least six years from the Company merger effective time with at least the same coverage and amounts containing terms and conditions which are no less advantageous for claims arising out of or relating to events that occurred on or prior to the Company merger effective time, subject to a maximum annual premium of 250% of the last annual premium we paid for such insurance prior to December 18, 2009. If HAC, the surviving company or the surviving partnership is unable to obtain the insurance as described above for an amount less than or equal to the maximum annual amount, HAC, the surviving company and the surviving partnership must instead obtain as much comparable insurance as possible for an annual premium equal to the maximum annual amount. |
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2009E | 2010E | 2011E | 2012E | 2013E | ||||||||||||||||
(In millions, except per unit data) | ||||||||||||||||||||
Adjusted Recurring EBITDA | $ | 20.9 | $ | 19.2 | $ | 26.0 | $ | 31.9 | $ | 40.7 | ||||||||||
Adjusted Net Income (Loss) | $ | (8.1 | ) | $ | (14.5 | ) | $ | (12.8 | ) | $ | (11.7 | ) | $ | (3.1 | ) | |||||
Diluted Share Count | 32.2 | 32.6 | 33.2 | 33.8 | 34.3 | |||||||||||||||
Adjusted Earnings Per Share | $ | (0.25 | ) | $ | (0.45 | ) | $ | (0.39 | ) | $ | (0.35 | ) | $ | (0.09 | ) | |||||
Free Cash Flow Before Debt Issuance / Repayment and Asset Sales | $ | (6.6 | ) | $ | 0.6 | $ | 0.6 | $ | 0.7 | $ | 12.3 |
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2009E | 2010E | 2011E | 2012E | 2013E | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Net Income (Loss) | $ | (30,900 | ) | $ | (14,500 | ) | $ | (12,800 | ) | $ | (11,700 | ) | $ | (3,100 | ) | |||||
Adjustments: | ||||||||||||||||||||
Depreciation and amortization | 15,500 | 15,100 | 15,100 | 12,900 | 12,900 | |||||||||||||||
Interest expense, net | 16,300 | 19,000 | 21,700 | 24,700 | 25,300 | |||||||||||||||
Depreciation and amortization from unconsolidated entities | 4,900 | 4,900 | 5,000 | 5,000 | 5,000 | |||||||||||||||
Interest expense, net from unconsolidated entities | 4,200 | 4,200 | 4,300 | 4,300 | 4,400 | |||||||||||||||
Income tax expense | 12,400 | (200 | ) | (200 | ) | (100 | ) | — | ||||||||||||
EBITDA | 22,400 | 28,500 | 33,100 | 35,100 | 44,500 | |||||||||||||||
Restructuring costs | 900 | — | — | — | — | |||||||||||||||
Asset impairments and write-offs | 5,100 | — | — | — | — | |||||||||||||||
Other expense | 200 | — | — | — | — | |||||||||||||||
Start-up costs from unconsolidated entities | 700 | — | — | — | — | |||||||||||||||
Investment in unconsolidated entities impairments | 3,000 | — | — | — | — | |||||||||||||||
Adjusted EBITDA | $ | 32,300 | $ | 28,500 | $ | 33,100 | $ | 35,100 | $ | 44,500 | ||||||||||
Contract Termination Fees | (5,100 | ) | (4,900 | ) | (2,100 | ) | — | — | ||||||||||||
Operations related to assets sold | (1,500 | ) | — | — | — | — | ||||||||||||||
Consolidated Hotel with estimated negative equity value | (1,800 | ) | (1,900 | ) | (2,200 | ) | — | — | ||||||||||||
Unconsolidated Entities with estimated negative equity value | (3,000 | ) | (2,500 | ) | (2,800 | ) | (3,200 | ) | (3,800 | ) | ||||||||||
Adjusted Recurring EBITDA | $ | 20,900 | $ | 19,200 | $ | 26,000 | $ | 31,900 | $ | 40,700 | ||||||||||
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2009E | 2010E | 2011E | 2012E | 2013E | ||||||||||||||||
(In thousands, except per unit data) | ||||||||||||||||||||
Net Income (Loss) | $ | (30,900 | ) | $ | (14,500 | ) | $ | (12,800 | ) | $ | (11,700 | ) | $ | (3,100 | ) | |||||
Adjustments: | ||||||||||||||||||||
Restructuring costs | 900 | — | — | — | — | |||||||||||||||
Asset impairments and write-offs | 5,100 | — | — | — | — | |||||||||||||||
Deferred financing costs write-off | 600 | — | — | — | — | |||||||||||||||
Other expense | 200 | — | — | — | — | |||||||||||||||
Start-up costs from unconsolidated entities | 700 | — | — | — | — | |||||||||||||||
Investment in unconsolidated entities impairments | 3,000 | — | — | — | — | |||||||||||||||
Income tax rate adjustment | 12,300 | — | — | — | — | |||||||||||||||
Adjusted Net Income (Loss) | $ | (8,100 | ) | $ | (14,500 | ) | $ | (12,800 | ) | $ | (11,700 | ) | $ | (3,100 | ) | |||||
Adjusted Earnings Per Share (basic and diluted) | $ | (0.25 | ) | $ | (0.45 | ) | $ | (0.39 | ) | $ | (0.35 | ) | $ | (0.09 | ) | |||||
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2009E | 2010E | 2011E | 2012E | 2013E | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Net Income (Loss) | $ | (30,900 | ) | $ | (14,500 | ) | $ | (12,800 | ) | $ | (11,700 | ) | $ | (3,100 | ) | |||||
Adjustments: | ||||||||||||||||||||
Depreciation and amortization | 15,500 | 15,100 | 15,100 | 12,900 | 12,900 | |||||||||||||||
Interest expense, net | 16,300 | 19,000 | 21,700 | 24,700 | 25,300 | |||||||||||||||
Equity in Losses from Unconsolidated Entities | 7,000 | 3,900 | 3,500 | 2,800 | 1,600 | |||||||||||||||
Income tax expense | 12,400 | (200 | ) | (200 | ) | (100 | ) | — | ||||||||||||
Restructuring costs | 900 | — | — | — | — | |||||||||||||||
Asset impairments and write-offs | 5,100 | — | — | — | — | |||||||||||||||
Deferred financing costs write-off | 600 | — | — | — | — | |||||||||||||||
Other expense | 200 | — | — | — | — | |||||||||||||||
Adjusted EBITDA excluding unconsolidated entities | $ | 27,100 | $ | 23,300 | $ | 27,300 | $ | 28,600 | $ | 36,700 | ||||||||||
Cash Interest | (13,000 | ) | (14,200 | ) | (15,800 | ) | (18,500 | ) | (19,000 | ) | ||||||||||
Refinancing/Extension Fees | (6,100 | ) | (700 | ) | (3,600 | ) | (700 | ) | (500 | ) | ||||||||||
Capital Expenditures | (7,900 | ) | (5,400 | ) | (6,300 | ) | (7,700 | ) | (3,900 | ) | ||||||||||
Investments | (4,300 | ) | (800 | ) | ||||||||||||||||
Cash Taxes | (1,700 | ) | (1,000 | ) | (1,000 | ) | (1,000 | ) | (1,000 | ) | ||||||||||
Other | (700 | ) | (600 | ) | ||||||||||||||||
Free Cash Flow Before Debt Issuance/ Repayment and Asset Sales | $ | (6,600 | ) | $ | 600 | $ | 600 | $ | 700 | $ | 12,300 | |||||||||
• | owned by any of our wholly-owned, directly or indirectly, subsidiaries immediately prior to the Company merger effective time; or | |
• | owned by HAC or any of its wholly-owned, directly or indirectly, subsidiaries immediately prior to the Company merger effective time. |
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• | owned by us or any of our wholly-owned, directly or indirectly, subsidiaries immediately prior to the partnership merger effective time; or | |
• | owned by HAC or any of its wholly-owned, directly or indirectly, subsidiaries immediately prior to the partnership merger effective time. |
• | $2.25; multiplied by | |
• | the aggregate number of shares of the Company’s common stock subject to such restricted stock award immediately prior to the Company merger effective time. |
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• | in favor of the merger, the merger agreement and the transactions contemplated by the merger agreement; | |
• | against approval of any action or proposal made in opposition to, or in competition with, consummation of the merger or the transactions contemplated by the merger agreement; | |
• | against any action, proposal, transaction or agreement that would result in a breach of any representation, warranty, covenant or obligation of the Company in the merger agreement; and | |
• | against any other action, proposal, transaction or agreement that would compete with or serve to interfere with, delay, discourage, adversely affect or inhibit the timely consummation of the merger or the transactions contemplated by the merger agreement. |
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• | you must hold shares of the Company’s common stock in the Company as of the date you make your demand for appraisal rights and continue to hold shares of the Company’s common stock in the Company through the Company merger effective time; | |
• | you must deliver to the Company a written notice of your demand for appraisal of your shares of the Company’s common stock prior to the taking of the vote at the special meeting, which must be in addition to and separate from any proxy or vote abstaining from or voting against the adoption of the merger agreement and the approval of the merger; and | |
• | you must not have voted your shares of the Company’s common stock in favor of the adoption of the merger agreement and approval of the merger, as a vote in favor of the adoption of the merger agreement and approval of the merger, whether by proxy or in person, will constitute a waiver of your appraisal rights in respect of the shares of the Company’s common stock so voted and will nullify any previously filed written demands for appraisal; because a proxy which does not contain voting instructions will, unless revoked, be voted in favor of the adoption of the merger agreement and approval of the merger, a stockholder who votes by proxy and who wishes to exercise appraisal rights must vote against or abstain from voting on the adoption of the merger agreement and the approval of the merger. |
4501 N. Fairfax Drive, Suite 500
Arlington, Virginia 22203
Attention: General Counsel
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• | banks and other financial institutions; | |
• | insurance companies; | |
• | tax-exempt entities; | |
• | mutual funds; | |
• | subchapter S corporations; | |
• | dealers in securities or currencies; | |
• | traders in securities that elect to use amark-to-market method of accounting for their securities holdings; | |
• | persons whose functional currency is not the United States dollar; | |
• | persons holding shares of the Company’s common stock as part of a hedging or conversion transaction or as part of a “straddle” or a constructive sale; | |
• | U.S. expatriates; | |
• | persons subject to the alternative minimum tax; | |
• | holders who acquired the Company’s common stock through the exercise of employee stock options or warrants or otherwise as compensation; | |
• | holders that are properly classified as a partnership or otherwise as a pass-through entity under the Code; | |
• | holders that hold 5% or more of the Company’s common stock; and | |
• | non-U.S. holders, as defined below, except to the extent discussed below. |
• | a citizen or resident of the United States; | |
• | a corporation or other entity treated as a corporation created or organized in or under the laws of the United States or any political subdivision thereof, including the States and the District of Columbia; |
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• | a trust (A) the administration of which is subject to the primary supervision of a United States court and which has one or more United States persons who have the authority to control all substantial decisions of the trust, or (B) that was in existence on August 20, 1996, was treated as a United States person on the previous day, and elected to continue to be so treated; or | |
• | an estate the income of which is subject to United States federal income taxation regardless of its source. |
• | the amount of cash received in exchange for that the Company’s common stock; and | |
• | the U.S. holder’s adjusted tax basis in the Company’s common stock. |
• | the shares of the Company’s common stock constitute a “United States real property interest,” within the meaning of the Foreign Investment in Real Property Tax Act of 1980 (“FIRPTA”) with respect to suchnon-U.S. holder, as described below; | |
• | the gain from the exchange is effectively connected with the conduct of a United States trade or business of thenon-U.S. holder, or, if an applicable income tax treaty applies, the gain is attributable to a permanent establishment maintained by thenon-U.S. holder in the United States; or | |
• | thenon-U.S. holder is an individual who is present in the United States for 183 days or more in the taxable year of disposition, and certain other conditions are satisfied. |
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• | in the case of a U.S. holder, furnishes a correct taxpayer identification number and certifies that it is not subject to backup withholding on IRSForm W-9 or successor form, | |
• | in the case of anon-U.S. holder, furnishes an applicable IRSForm W-8 or successor form, or | |
• | is otherwise exempt from backup withholding and complies with other applicable rules and certification requirements. |
• | the filing of the Company merger certificate and the partnership merger certificate with the Secretary of State of the State of Delaware; | |
• | the filing with the SEC of (i) this proxy statement and (ii) any other filings and reports that may be required in connection with the merger agreement and the transactions contemplated by the merger agreement under the Exchange Act; |
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• | compliance with the NYSE rules and regulations; and | |
• | compliance with any applicable state, federal or foreign laws governing the sale of liquor. |
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• | owned by any of our wholly-owned, direct or indirect, subsidiaries immediately prior to the Company merger effective time; or | |
• | owned by HAC or any of its wholly-owned, direct or indirect, subsidiaries immediately prior to the Company merger effective time. |
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• | owned by us or any of our wholly-owned, direct or indirect, subsidiaries immediately prior to the partnership merger effective time; or | |
• | owned by HAC or any of its wholly-owned, direct or indirect, subsidiaries immediately prior to the partnership merger effective time. |
• | $2.25; multiplied by | |
• | the aggregate number of shares of the Company’s common stock subject to such restricted stock award immediately prior to the Company merger effective time. |
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• | each of our and our subsidiaries’ (including the Operating Partnership) due organization, valid existence, good standing and power and authority to operate its businesses; | |
• | each of our and our subsidiaries’ (including the Operating Partnership) due qualification or license to do business as a foreign legal entity and good standing in each jurisdiction wherever necessary (except for failures to be so qualified or licensed or in good standing which would not have a material adverse effect on us); | |
• | our and the Operating Partnership’s power and authority to enter into, and perform our and the Operating Partnership’s obligations under, the merger agreement and to consummate the transactions contemplated by the merger agreement; | |
• | the enforceability of the merger agreement against us and the Operating Partnership; | |
• | our charter and bylaws and the similar organizational documents of our subsidiaries; | |
• | our and our subsidiaries’ minutes of meetings of the stockholders, partners, members, the boards of directors and all committees of the boards of directors held since January 1, 2007 (excluding any minutes relating to any potential sale of the Company, any of its subsidiaries or any of their respective material assets or otherwise related to deliberations by the Board with respect to the consideration of strategic alternatives); | |
• | entities in which we own equity interests, their jurisdictions of organization, the percentage of the outstanding equity interests that is held by us or any of our subsidiaries and the absence of any encumbrances on our ownership of the equity interests of such subsidiaries; | |
• | consents and approvals of governmental entities required as a result of the mergers; | |
• | the absence of conflicts with, breaches or violations of or defaults under, or the creation of termination or other rights under or imposition of liens on our assets under, our or the Operating Partnership’s organizational documents, applicable laws, orders, permits or certain contracts as a result of entering into the merger agreement or consummating the mergers; | |
• | our capitalization (including our stock award plans), the Operating Partnership’s capitalization and the capitalization of our subsidiaries; | |
• | the vote of our stockholders required in connection with the approval of the mergers and the other transactions contemplated by the merger agreement and voting agreements or restrictions with respect to our or our subsidiaries’ shares of capital stock or other equity interests; | |
• | our and the Operating Partnership’s SEC filings since January 1, 2007 and the financial statements contained therein and our and our subsidiaries’ material correspondence with the SEC since January 1, 2007, and our compliance with applicable SEC and NYSE rules and regulations; | |
• | our and our consolidated subsidiaries’ audited and unaudited consolidated financial statements, books, other financial records and internal accounting controls; |
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• | the absence of liabilities required to be recorded on a balance sheet under GAAP, other than as set forth on our consolidated September 30, 2009 balance sheet included in our Form10-Q filing for the quarter then ended, and ordinary-course liabilities incurred since September 30, 2009; | |
• | the absence of any material adverse effect and the absence of certain changes to our benefit plans or changes to the compensation or benefits for our employees since September 30, 2009; | |
• | any legal actions or outstanding court orders against us or our subsidiaries, other than those that would not have a material adverse effect on us, and any indemnification agreements between us or any of our subsidiaries and any current or former director or officer of ours or of the Operating Partnership; | |
• | our and our subsidiaries’ material contracts, the absence of any breach or violation of, or default under, any material contract and financial term sheets for borrowing or refinancing; | |
• | employment matters affecting us and our subsidiaries, including matters relating to our employee benefit plans; | |
• | the absence of outstanding loans to executive officers and the absence of loans made by us or our subsidiaries to executive officers or directors since the enactment of the Sarbanes-Oxley Act of 2002; | |
• | labor matters affecting us and our subsidiaries; | |
• | tax matters affecting us and our subsidiaries; | |
• | environmental matters affecting us and our subsidiaries; | |
• | our and our subsidiaries’ intellectual property; | |
• | real property owned and leased by us and our subsidiaries, our and our subsidiaries’ property management agreements, improvements, zoning permits and hotel permits; | |
• | possession of all licenses and permits necessary to operate our and our subsidiaries’ properties and carry on our and our subsidiaries’ business and the absence of any conflict with, or default or violation of, applicable laws or such permits; | |
• | joint ventures owning or operating real estate assets in which we own interests, the names of the parties and percentage ownership of such parties in such joint ventures, the operating and formation documents and any financing and debt documents of such joint venture, capital contributions made or remaining to be made to such joint ventures by us and our subsidiaries, the absence of any encumbrances on our ownership of such joint ventures and all material properties or assets owned by such joint ventures; | |
• | personal property owned and leased by us and our subsidiaries and title to assets; | |
• | our and our subsidiaries’ required permits and compliance with laws; | |
• | our and our subsidiaries’ insurance policies; | |
• | action taken by our Board to ensure the non-application of the restrictions on business combinations and control share acquisitions contained in Section 203 of the DGCL to the mergers and other transactions contemplated by the merger agreement; | |
• | the receipt by us of a fairness opinion and the authorization to enclose such fairness opinion in the proxy statement from Barclays Capital; | |
• | outstanding loans to us or our subsidiaries, existing financing documents relating to those loans and the absence of defaults under any existing financing document; | |
• | the absence of any undisclosed broker’s or finder’s fees; | |
• | the accuracy and completeness of information we have supplied for inclusion in this proxy statement; | |
• | loans we or our subsidiaries have made to third parties; |
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• | lack of requirements on us or any of our subsidiaries to be registered as an investment company under the Investment Company Act of 1940, as amended; | |
• | absence of any unlawful relationships between us or any of our subsidiaries and governments or governments officials, employees or political parties or any violations of applicable export control, money laundering, anti-terrorism law or the Foreign Corrupt Practices Act of 1977, as amended; | |
• | our insurance operations and our subsidiaries through which we conduct such insurance operations; | |
• | absence of any violations of the Patriot Act by us or any of our subsidiaries; and | |
• | our tax benefit preservation plan dated September 24, 2009, as amended. |
• | is or is likely to become materially adverse to our and our subsidiaries’ (including the Operating Partnership’s) business, operations, assets, or financial condition taken as a whole; or | |
• | would reasonably be expected to prevent or materially delay to a date beyond June 30, 2010 the consummation of the mergers and the other transactions contemplated by the merger agreement. |
• | a change in general political, economic or financial market conditions; | |
• | changes affecting the industries generally in which we and our subsidiaries conduct business (except to the extent that such change has had a disproportionate effect on us and our subsidiaries as compared to other persons in the industry in which we and our subsidiaries conduct business); | |
• | seasonal fluctuations in our or our subsidiaries’ business; | |
• | changes in laws applicable to us or any of our subsidiaries or any of our respective properties, assets or liabilities, or in GAAP; | |
• | any acts of terrorism or war, any outbreak or escalation of hostilities, whether or not pursuant to the declaration of an emergency or war, any earthquakes, floods, hurricanes, tropical storms, fires or other natural disasters; | |
• | any failure to meet internal or published projections, forecasts, budgets or revenue or earning predictions for any period (except to the extent that the facts or occurrences giving rise to or contributing to such failure may be deemed to constitute, or be taken into account in determining whether there has been or would reasonably be expected to be, a material adverse effect); | |
• | any change in the market price or trading volume of any our securities (except to the extent that the facts or occurrences giving rise to or contributing to any change in the market price or trading volume of any our securities may be deemed to constitute, or be taken into account in determining whether there has been or would reasonably be expected to be, a material adverse effect); | |
• | the announcement, performance or existence of the merger agreement, the identity of the merger parties or any of their respective affiliates, representatives or financing sources, the taking or not taking of any action to the extent required by the merger agreement or by applicable laws, or the pendency or contemplated consummation of the transactions contemplated by the merger agreement, including the loss of any current or prospective clients, customers, employees, officers, financing sources, investors, landlords, partners, suppliers or vendors of ours or any of our subsidiaries due to any of the foregoing (these exceptions, however, will not apply to references to a material adverse effect in the representations and warranties relating to the absence of conflicts with, or breaches or violations of, our or the Operating Partnership’s organizational documents, applicable laws, orders, permits or certain contracts as a result of entering into the merger agreement or consummating the mergers); or |
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• | any actions taken, or not taken, with the consent or at the request of HAC. |
• | their due organization, valid existence, good standing and corporate power to operate their businesses; | |
• | their power and authority to enter into the merger agreement and to consummate the transactions contemplated by the merger agreement; | |
• | the enforceability of the merger agreement against them; | |
• | required consents and approvals of governmental entities as a result of the mergers; | |
• | the absence of conflicts, breaches or violations of their organizational documents, applicable laws or orders, or certain contracts as a result of entering into the merger agreement or consummating the mergers; | |
• | interim operations of Merger Sub and Merger Partnership; | |
• | the equity commitment letters, pursuant to which THI V Inca and Capital Gathering have each committed to provide equity financing to HAC in the amounts set forth in the equity commitment letters; | |
• | the limited guarantees by Thayer and Jin Jiang; | |
• | the absence of litigation or outstanding court orders against them that would materially delay or prevent the consummation of the mergers; | |
• | clarification that we will not pay for any broker’s or finder’s fees based upon arrangements made by or on behalf of HAC, Merger Sub or Merger Partnership; | |
• | the accuracy and completeness of information supplied by HAC for inclusion in this proxy statement; and | |
• | the absence of any direct or indirect ownership of shares of our common stock by them or their affiliates or any agreements, arrangements or understanding for voting, acquiring, holding or disposing any shares of our common stock between them or their affiliates and any other persons or the officers, directors, employees or affiliate of ours or our subsidiaries, other than the voting agreements described under “The Merger Proposal — Voting Agreements” on page 50 above. |
• | conduct our business only in the ordinary course of business consistent with past practice; and | |
• | use reasonable commercial efforts to conduct operations in compliance with applicable laws and to maintain and preserve intact our business organization, to preserve our assets and properties in good repair and condition and to preserve the goodwill of our customers, suppliers and other persons with whom we have business relationships. |
• | amend our organizational documents; | |
• | make, declare, pay or set aside for payment any dividends, other than dividends paid by our wholly-owned subsidiaries; |
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• | adjust, split, combine or reclassify, redeem, purchase or otherwise acquire or agree to subject to a lien, grant any right or option to acquire, or issue, deliver or sell, any of our or our subsidiaries’ capital stock or other equity interests or any securities convertible into such capital stock or equity interests; | |
• | increase compensation or benefits, grant equity or equity-based awards, retention, severance or termination pay; | |
• | enter into new employment, bonus, change of control, consulting or severance agreements; | |
• | establish, adopt, enter into, terminate, amend or take any action to accelerate rights under any benefit plans or any plan, agreement, program, policy, trust, fund or other arrangement that would be a benefit plan if it were in existence as of the date of the merger agreement, or grant any equity or equity based awards to any employee, except to the extent required by applicable laws, for increases in salary, wages and benefits of employees (other than executive officers) in the ordinary course of business consistent with past practice, in conjunction with new hires, promotions or other changes in job status occurring in the ordinary course of business consistent with past practice or pursuant to existing collective bargaining agreements; | |
• | effectuate a “mass layoff” or similar triggering event without complying with applicable laws or enter into, terminate or materially amend any collective bargaining, works council or other similar agreements, or terminate any our executive officers other than for cause; | |
• | acquire any business or assets, acquire, enter into or extend any option to acquire, or exercise an option to acquire, any real property or commence construction of, or enter into any contract to develop or construct, any real estate projects (excluding construction or renovation required under any franchise agreements or other agreement or by laws or necessary or advisable in our or any of our subsidiaries’ judgment in order to prevent injury to persons or property), or enter into any joint ventures or joint venture documents or any new line of business; | |
• | dispose of, license or encumber any of our or our subsidiaries’ material assets (including the capital stock or other equity interests of our subsidiaries and any joint venture interests), other than the sale of inventory or the disposition of used or excess equipment; | |
• | terminate, amend or enter into any material contracts or any interested party transactions or enter into any non-compete contracts; | |
• | incur, assume, guarantee or prepay any of our debt or intentionally or voluntarily assume or otherwise agree to become responsible for debts of any persons (other than tax liabilities incurred in the ordinary course of business) other than indebtedness, not to exceed $1 million in the aggregate, which may be incurred in the ordinary course of business consistent with past practice to fund working capital needs; | |
• | make any loans, advances or capital contributions to, or investments in, any person other than wholly-owned subsidiaries or to existing joint ventures in the ordinary course of business in amounts less than $500,000 individually or $1 million in the aggregate, or make any loans to our directors or officers; | |
• | make any capital expenditure other than (1) required under any franchise agreements or other agreement or by laws or necessary or advisable in our (or our subsidiaries’, as applicable) judgment in order to prevent injury to persons or property or to replace failed equipment in order to continue the operations of our business in the ordinary course or (2) otherwise disclosed by us and agreed to by HAC; | |
• | change our financial accounting policies or procedures, except as required by GAAP, make or change any material tax elections except to the extent required by applicable laws, enter into any material closing, settlement, or other agreement with any governmental entity relating to or which could have an effect on material taxes, agree to extend or waive any period of adjustment, assessment, or collection of material taxes, or issue an power of attorney with respect to material taxes, apply for or request any written ruling from a governmental entity relating to taxes, or file any tax return (including any material tax return) except in a manner consistent with relevant provisions in the merger agreement; |
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• | waive, release or settle material legal actions or any material claims (including insurance claims) or liabilities relating to us or any of our subsidiaries, or certain securities-related legal actions; | |
• | fail to use commercially reasonable efforts to maintain in full force and effect all of our existing insurance policies or reasonable replacement insurance policies; | |
• | initiate or consent to any material zoning reclassification of any owned real property or material leased property or any material change to any approved site plan or other land use entitlement affecting any owned real property or material leased property; | |
• | alter or amend in any material respect our or our subsidiaries’ existing underwriting, claim handling, loss control, investment, actuarial, financial reporting or accounting practices, guidelines or policies or any material assumption underlying an actuarial practice or policy, except as may be required by law, GAAP or applicable insurance regulatory authority or the local equivalent in the applicable jurisdictions; | |
• | alter, terminate, amend, waive any provision of any of the existing financing documents or make any payment, or agree to make any payment, in connection with the waiver by any other party of any provision of any of the existing financing documents; or | |
• | agree or commit to do any of the foregoing. |
• | solicit, initiate, facilitate or knowingly encourage any inquiries, offers or proposals relating to a takeover proposal; | |
• | engage in discussions or negotiations with, or furnish or disclose any non-public information relating to us or any of our subsidiaries to, any person regarding a takeover proposal; | |
• | withdraw, modify or amend our Board’s recommendation with respect to the merger agreement in any manner adverse to HAC; | |
• | approve, endorse or recommend any takeover proposal; or | |
• | enter into any agreement in principle, arrangement, understanding or contract relating to a takeover proposal other than an acceptable confidentiality agreement as defined in the merger agreement. |
• | a merger, consolidation, share exchange or business combination involving us or any of our subsidiaries representing 20% or more of our and our subsidiaries’ assets, taken as a whole (other than a merger involving only us and one or more of our wholly-owned subsidiaries); | |
• | a sale, lease, exchange, mortgage, transfer or other disposition, in a single transaction or series of related transactions, of 20% or more of our and our subsidiaries’ assets, taken as a whole; | |
• | a purchase or sale of shares of capital stock or other securities, in a single transaction or a series of related transactions, representing 20% or more of the voting power of our or any of our subsidiaries’ capital stock, including by way of a tender offer or exchange offer; | |
• | a liquidation or dissolution of the Company; | |
• | a reorganization or recapitalization of the Company, other than any transaction that does not involve a transfer of 20% or more of our and our subsidiaries’ assets, taken as a whole, or 20% or more of the voting power of our capital stock; or |
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• | any other transaction having a similar effect to those described above. |
• | engage in discussions with a third party in connection with an unsolicited written takeover proposal |
• | to clarify the terms of such takeover proposal; or | |
• | if, after consultation with our advisors, our Board determines in good faith that such takeover proposal is reasonably likely to result in a superior proposal and determines in good faith, after consultation with our outside legal counsel, that failure to engage in discussions with the third party would be reasonably likely to be inconsistent with the fiduciary duties to our stockholders under applicable laws; |
• | provide non-public information to a third party who made an unsolicited written takeover proposal, if |
• | we have caused the third party to enter into a confidentiality agreement with us containing terms that are substantially the same as those contained in the confidentiality agreement we signed with an affiliate of HAC and we concurrently disclose the same non-public information to HAC if not previously disclosed; and | |
• | after consultation with our advisors, our Board determines in good faith that such takeover proposal is reasonably likely to result in a superior proposal and determines in good faith, after consultation with our outside legal counsel, that failure to provide information to the third party would be reasonably likely to be inconsistent with the fiduciary duties to our stockholders under applicable laws; |
• | in response to a material event, development, state of affairs or change in our circumstances arising after December 18, 2009 (other than a takeover proposal), withdraw, modify or amend our Board’s recommendation with respect to the merger agreement in a manner adverse to HAC, if |
• | our Board determines in good faith, after consultation with our outside legal counsel, that failure to take such action would be reasonably likely to be inconsistent with the fiduciary duties to our stockholders under applicable laws; and | |
• | we have provided to HAC five business days’ prior written notice of intending to make such action and specifying its reasons and, if requested by HAC, during the five business day period we must engage in good faith negotiations with HAC to amend the merger agreement in a manner that obviates the need for such action; |
• | in response to receipt of an unsolicited written takeover proposal not received as a result of our violation of any of the above provisions, approve, endorse or recommend an unsolicited written takeover proposal and withdraw, modify or amend our Board’s recommendation with respect to the merger agreement in a manner adverse to HAC, if |
• | our Board has determined in good faith, after consultation with a nationally-recognized and independent financial advisor, that such takeover proposal constitutes a superior proposal and has determined in good faith, after consultation with our outside legal counsel, that failure to take such actions would be reasonably likely to be inconsistent with the fiduciary duties to our stockholders under applicable laws; | |
• | we have provided to HAC five business days’ prior written notice of intending to make such action and specifying the terms and conditions of the superior proposal (additionally, any amendment to the financial terms or other material terms of such superior proposal will require a new notice and a new five business day period); and | |
• | our Board (or any committee authorized by the Board) has taken into account any changes to the terms of the merger agreement proposed by HAC (in response to our prior written notice or otherwise) in determining whether such third party takeover proposal continues to constitute a superior proposal; or |
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• | subject to the termination of the merger agreement in compliance with the provisions of the merger agreement, enter into an agreement providing for the implementation of a superior proposal. |
• | that relates to more than 50% of the voting power of our capital stock or more than 50% of our and our subsidiaries’ assets, taken as a whole; and | |
• | which our Board (or any authorized committee of the Board) determines, in its good faith judgment, after receiving the advice of our financial advisor and after taking into account all the terms and conditions of the takeover proposal, is on terms and conditions more favorable from a financial point of view to our stockholders (in their capacities as stockholders) than those contemplated by the merger agreement. |
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• | provide each of our active employees with credit for service with us, our subsidiaries and our affiliates with respect to any of HAC’s employee benefit plans under which our active employees may be eligible to participate after the Company merger effective time (“new plans”), to the same extent as such active employee was entitled to credit for such service under any similar or comparable benefit plans we now maintain, provided that such crediting of service shall not operate to duplicate any benefits; | |
• | provide active employees immediate participation in all new plans to the extent coverage under such new plans replaces coverage under similar or comparable benefit plans we now maintain in which such active employee participated immediately before the Company merger effective time; and | |
• | for purposes of each new plan providing medical, dental, pharmaceuticaland/or vision benefits to any active employee, cause all pre-existing condition exclusions and actively-at-work requirements to be waived for such active employee and his or her covered dependents and cause such active employee to receive credit for all eligible expenses incurred by such active employee and his or her covered dependents for purposes of satisfying all deductible, coinsurance and maximumout-of-pocket requirements applicable to such active employee and his or her covered dependents for the applicable plan year. |
• | agree or otherwise become subject to any restrictions, conditions, limitations, licensing requirements, or other understandings on or with respect to the assets or the operation of HAC’s, our, or any of our subsidiaries’ business; or | |
• | agree or otherwise be required to sell or otherwise dispose of, hold separate (through the establishment or a trust or otherwise), or divest of all or any portion of HAC’s, our, or any of our subsidiaries’ business, assets, or operations, except to the extent any such foregoing action would not have a material adverse effect on us. |
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• | without the prior written consent of HAC, which will not be unreasonably withheld, delayed or conditioned, neither we nor any of our subsidiaries will pay or commit to pay to such person whose approval or consent is being solicited any material amount of cash or other consideration, make any material commitment or incur any material liability or other material obligation due to such person; and | |
• | none of the parties or any of their respective affiliates will be required to pay or commit to pay to the person whose approval or consent is being solicited or whose relationship is being preserved any cash or other consideration, make any commitment or incur any liability or other obligation. |
• | HAC paying, at the closing of the merger, (i) a principal reduction of $20 million to our lenders to permanently reduce the principal amount of borrowings under the credit facility pursuant to the credit agreement amendment and (ii) a principal reduction of $5 million to our Columbia lenders to permanently reduce the principal amount of borrowings under the Columbia loan agreement pursuant to the Columbia loan amendment; | |
• | HAC committing to contribute, on or prior to the first anniversary of the closing of the merger, cash equity to the Operating Partnership in an aggregate amount equal to at least $12 million to be used for the sole purposes of consummating certain permitted new investments (as defined in the amendments to our debt instruments), working capital and capital expenditures; | |
• | we providing to HAC and its representatives access to our and our subsidiaries’ officers, employees, agents, properties, books and records and furnishing other information concerning us and our subsidiaries as HAC or its representatives may reasonably request (subject to the confidentiality agreement between us and HAC); | |
• | HAC, Merger Sub, Merger Partnership and each of their respective affiliates taking all action necessary to perform obligations under the merger agreement and to consummate the mergers upon the terms and subject to the conditions in the merger agreement and not conducting any business or make any investments other than as specifically contemplated by the merger agreement; | |
• | HAC, Merger Sub, Merger Partnership and each of their respective affiliates complying with all of the terms and conditions in the equity commitment letter and taking all actions necessary to cause the proceeds of the financing to be available on the closing date (such financing, however, not being a condition to transactions contemplated by the merger agreement); | |
• | filing of the proxy statement and cooperation of parties on responding to comments or requests or providing more information; | |
• | we calling and holding our stockholders meeting as promptly as practicable following December 18, 2009 for the purpose of obtaining the requisite stockholder vote to adopt the merger agreement; |
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• | HAC and we consulting each other before issuing any press release or otherwise making public announcements about the merger agreement or any of the transactions contemplated by the merger agreement; | |
• | HAC and we using our commercially reasonable efforts to cause our common stock and our company rights to be de-listed from the NYSE and de-registered under the Exchange Act promptly following the Company merger effective time; | |
• | fees, expenses and transfer taxes incurred in connection with the merger agreement and the transactions contemplated by the merger agreement; | |
• | actions necessary to eliminate or minimize the effects of any takeover statutes to ensure the transactions contemplated by the merger agreement may be consummated as promptly as practicable upon terms and conditions in the merger agreement; | |
• | actions necessary to comply with all tax laws; | |
• | actions reasonably required to cause dispositions of our equity securities (including derivative securities) pursuant to the transactions contemplated by the merger agreement by each individual who is our director or officer to be exempt underRule 16b-3 promulgated under the Exchange Act; and | |
• | resignations of those of our or our subsidiaries’ officers and directors designated by HAC. |
• | approval of the merger agreement by the requisite stockholder vote; | |
• | the expiry of the waiting period applicable to the consummation of the mergers under the HSR Act, if applicable; and | |
• | no effective injunction, writ or preliminary restraining order or any order of any nature issued by a governmental entity of competent jurisdiction to the effect that the mergers may not be consummated, no proceeding or lawsuit pending by any governmental entity for the purpose of obtaining any such injunction, writ or preliminary restraining order and no written notice received from any governmental entity indicating an intent to restrain, prevent, materially impair or delay or restructure the transactions contemplated by the merger agreement. |
• | our and the Operating Partnership’s representations and warranties being true and correct in all respects without regard to any materiality or material adverse effect qualifications as of the closing as though made as of the closing (except for representations and warranties made as of a specified date, which must be true and correct in all respects as of that specified date), except where the failure of our and the Operating Partnership’s representations and warranties to be true and correct in all respects would not, in the aggregate, have a material adverse effect. Certain of our and the Operating Partnership’s representations and warranties pertaining to authorization, enforceability, capitalization, voting, the opinion of the financial advisor, brokers and finders and our tax preservation plan must be true and correct in all material respects (except for representations and warranties made as of a specified date, which must be true and correct in all material respects as of that specified date). In addition, our and the Operating Partnership’s representations and warranties pertaining the to absence of a material adverse effect on us must be true and correct in all respects as of the closing; | |
• | the performance, in all material respects, by us and the Operating Partnership of our obligations under the merger agreement; | |
• | the receipt by HAC of a certificate signed by our chief executive officer or chief financial officer with respect to the truth and correctness of our and the Operating Partnership’s representations and |
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warranties and the performance of our and the Operating Partnership’s obligations under the merger agreement; and |
• | no lender or agent of the lenders under any of our existing financing documents having provided valid written notice to us of any material default under any such existing financing document that is not capable of being cured or for which no remaining cure period exists, and the amendments to the existing financings remaining in full force and effect. |
• | HAC’s, Merger Sub’s and Merger Partnership’s representations and warranties being true and correct in all respects without regard to any materiality qualifications as of the closing as though made as of the closing (except for representations and warranties made as of a specified date, which must be true and correct in all respects as of that specified date), except where the failure of their representations and warranties to be true and correct in all respects would not, in the aggregate, have a material adverse effect on HAC, Merger Sub or Merger Partnership; | |
• | the performance, in all material respects, by HAC, Merger Sub and Merger Partnership of their obligations under the merger agreement; and | |
• | the receipt by us of an officer’s certificate with respect to the truth and correctness of the representations and warranties of HAC, Merger Sub and Merger Partnership and the performance of their obligations under the merger agreement. |
• | by mutual written consent of HAC and us; | |
• | by either HAC or us if: |
• | the closing has not occurred on or before June 30, 2010, except that this termination right will not be available to any party whose failure to fulfill any of its obligations has been a principal cause of, or resulted in, the failure to consummate the mergers by such date; | |
• | the merger agreement has been submitted to our stockholders for adoption at a duly convened stockholders meeting (or adjournment or postponement thereof) and the requisite vote of our stockholders to approve the merger and the other transactions contemplated by the merger agreement upon a vote being taken at a duly convened stockholders meeting is not obtained upon a vote taken thereon; | |
• | any law prohibits the consummation of the mergers; or | |
• | any order, judgment, injunction, award, decree or writ which issued by any governmental entity that restrains, enjoins or otherwise prohibits the consummation of the mergers has become final and non-appealable; |
• | by HAC if: |
• | our Board withdraws, modifies or amends its recommendation with respect to the merger agreement in any manner adverse to HAC solely in response to a material event, development, state of affairs or change in our circumstances arising after the date of the merger (other than a takeover proposal); | |
• | (i) our Board (or any authorized committee of the Board) approves, endorses or recommends a takeover proposal, (ii) our Board (or any authorized committee of the Board) withdraws, modifies or amends its recommendation with respect to the merger agreement or the mergers in any manner adverse to HAC in response to our receipt of a takeover proposal, (iii) a tender offer or exchange |
73
offer for any outstanding shares of our capital stock is commenced prior to obtaining the requisite vote of our stockholders to approve the mergers and our Board fails to recommend against acceptance of such tender offer or exchange offer by our stockholders (including by taking no position with respect to the acceptance of such tender offer or exchange offer by our stockholders) within ten business days after it is commenced, or (iv) we or our Board (or any authorized committee of the Board) publicly announces the intention to do any of the foregoing; or |
• | (i) we are in breach (or material breach in certain cases) of any of our covenants and agreements pertaining to solicitation and change of our Board’s recommendation or (ii) we are in breach of any of our other representations, warranties, covenants or agreements in the merger agreement such that the conditions pertaining to our representations and warranties and our obligations under the merger agreement would not be satisfied by June 30, 2010, and we have not cured such breach within twenty business days after our receipt of the written notice of such breach (provided that HAC may only exercise this termination right if neither it nor Merger Sub or Merger Partnership is then in material breach of its obligations under the merger agreement); |
• | by us if our Board (or any authorized committee of the Board) approves and authorizes us to enter into a definitive agreement to implement a superior proposal, so long as: |
• | the requisite stockholder vote has not yet been obtained; | |
• | we are not in or have not been in breach of our obligations under the merger agreement with regard to soliciting acquisitions proposals and changing our Board’s recommendation in any material respect; | |
• | our Board (or any authorized committee of the Board) has determined in good faith, after consulting with a nationally-recognized financial advisor, that such definitive agreement constitutes a superior proposal and has determined in good faith, after consultation with its outside legal counsel, that failure to take such actions would be reasonably likely to be inconsistent with its fiduciary obligations to our stockholders under applicable laws; | |
• | we have provided written notice to HAC regarding our intention to enter into such definitive agreement (attaching the most current version of such definitive agreement, including any amendments, supplements or modifications); | |
• | we have provided HAC with a five business day period, during which time we must negotiate in good faith with HAC to make adjustments to the terms and conditions of the merger agreement to enable the mergers and other transactions contemplated by the merger agreement to proceed and our Board (or the authorized committee of the Board) has determined in good faith, after the end of such five business day period, after considering the results of such negotiations and HAC’s revised proposals, if any, that the superior proposal giving rise to such notice continues to be a superior proposal; and | |
• | we simultaneously pay to HAC the termination fee and certain of HAC’s expenses in accordance with the merger agreement; and |
• | by us if we are not in material breach of our obligations under the merger agreement and if any of HAC, Merger Sub or Merger Partnership is in breach of any of its representations, warranties, covenants or agreements in the merger agreement such that the conditions pertaining to its representations and warranties and its obligations under the merger agreement would not be satisfied by June 30, 2010, and HAC, Merger Sub or Merger Partnership has not cured such breach within twenty business days after its receipt of the written notice of such breach. |
74
• | we terminate the merger agreement because our Board (or any authorized committee of the Board) approves and authorizes us to enter into a definitive agreement to implement a superior proposal in accordance with the terms of the merger agreement, in which case payment will be made concurrently with such termination and shall be a condition to the effectiveness of such termination; | |
• | the merger agreement is terminated by HAC because our Board withdraws, modifies or amends its recommendation with respect to the merger agreement or the mergers in any manner adverse to HAC solely in response to a material event, development, state of affairs or change in circumstances arising after the date of the merger (other than a takeover proposal); in which case payment will be made within 18 months of such termination but not later than the earlier of (x) a date within two business days following the date we enter into a contract providing for the implementation of, or consummates, a takeover proposal, or (y) the date that is 18 months following the date of such termination; or | |
• | the merger agreement is terminated by HAC because (i) we are in breach (or material breach in certain cases) of any of our covenants and agreements pertaining to solicitation and change of our Board’s recommendation or (ii) we are in breach of any of our other representations, warranties, covenants or agreements in the merger agreement such that the conditions pertaining to our representations and warranties and our obligations under the merger agreement would not be satisfied by June 30, 2010, and we have not cured such breach within twenty business days after our receipt of the written notice of such breach (provided that HAC may only exercise this termination right if neither it nor Merger Sub or Merger Partnership is then in material breach of its obligations under the merger agreement); in which case payment shall be made within two business days of such termination. |
• | a takeover proposal has been made or proposed to us or otherwise publicly announced (which has not been withdrawn); | |
• | the merger agreement is terminated by either HAC or us because (i) the closing has not occurred on or before June 30, 2010, except that this termination right will not be available to any party whose failure to fulfill any of its obligations has been a principal cause of, or resulted in, the failure to consummate the mergers by such date or (ii) the merger agreement has been submitted to our stockholders for adoption at a duly convened stockholders meeting (or adjournment or postponement thereof) and the requisite vote of our stockholders to approve the merger and the other transactions contemplated by the merger agreement upon a vote being taken at a duly convened stockholders meeting is not obtained; and | |
• | within 12 months following the date of such termination, we enter into a contract providing for the implementation of a takeover proposal or consummate any takeover proposal (which takeover proposal relates to 50% or more of our and our 50% owned or controlled subsidiaries’ assets, taken as a whole); |
• | a takeover proposal has been made or proposed to the Company or otherwise publicly announced (which has not been withdrawn); | |
• | the merger agreement is terminated by HAC because (i) our Board (or any authorized committee of the Board) approves, endorses or recommends a takeover proposal, (ii) our Board (or any authorized committee of the Board) withdraws, modifies or amends its recommendation with respect to the merger agreement or the mergers in any manner adverse to HAC in response to our receipt of a takeover proposal, (iii) a tender offer or exchange offer for any outstanding shares of our capital stock is commenced prior to obtaining the requisite vote of our stockholders to approve the mergers and our |
75
Board fails to recommend against acceptance of such tender offer or exchange offer by our stockholders (including by taking no position with respect to the acceptance of such tender offer or exchange offer by our stockholders) within ten business days after commencement, or (iv) we or our Board (or any authorized committee of the Board) publicly announces the intention to do any of the foregoing; and |
• | within 18 months following the date of such termination, we enter into a contract providing for the implementation of a takeover proposal or consummate any takeover proposal. |
• | $1.5 million, if the merger agreement is terminated by either HAC or us because the merger agreement has been submitted to our stockholders for adoption at a duly convened stockholders meeting (or adjournment or postponement thereof) and the requisite vote of our stockholders to approve the merger and the other transactions contemplated by the merger agreement upon a vote being taken at a duly convened stockholders meeting is not obtained; | |
• | $1.5 million, if the merger agreement is terminated by HAC because |
• | our Board withdraws, modifies or amends its recommendation with respect to the merger agreement or the mergers in any manner adverse to HAC solely in response to a material event, development, state of affairs or change in circumstances arising after the date of the merger (other than a takeover proposal); however, we have agreed to reimburse up to an additional $2.0 million of parent expenses within 18 months of such termination but no later than the earlier of (x) a date within two business days following the date we enter into a contract providing for the implementation of, or consummates, a takeover proposal, or (y) the date that is 18 months following the date of such termination; or | |
• | (i) our Board (or any authorized committee of the Board) approves, endorses or recommends a takeover proposal, (ii) our Board (or any authorized committee of the Board) withdraws, modifies or amends its recommendation with respect to the merger agreement or the mergers in any manner adverse to HAC in response to our receipt of a takeover proposal, (iii) a tender offer or exchange offer for any outstanding shares of our capital stock is commenced prior to obtaining the requisite vote of our stockholders to approve the mergers and our Board fails to recommend against acceptance of such tender offer or exchange offer by our stockholders (including by taking no position with respect to the acceptance of such tender offer or exchange offer by our stockholders) within ten business days after commencement, or (iv) we or our Board (or any authorized committee of the Board) publicly announces the intention to do any of the foregoing; however, we have agreed to reimburse up to an additional $2.0 million of parent expenses concurrently with any termination fee payment in respect of the entry into a contract providing for the implementation of a takeover proposal or the consummation of a takeover proposal within 18 months following termination by HAC for any of the foregoing; |
• | $3.5 million if the merger agreement is terminated by HAC because (i) we are in breach (or material breach in certain cases) of any of our covenants and agreements pertaining to solicitation and change of our Board’s recommendation or (ii) we are in breach of any of our other representations, warranties, covenants or agreements in the merger agreement such that the conditions pertaining to our representations and warranties and our obligations under the merger agreement would not be satisfied by June 30, 2010, and we have not cured such breach within twenty business days after our receipt of the written notice of such breach (provided that HAC may only exercise this termination right if neither it nor Merger Sub or Merger Partnership is then in material breach of its obligations under the merger agreement); or |
76
• | $3.5 million if the merger agreement is terminated by us because our Board (or any authorized committee of the Board) approves and authorizes us to enter into a definitive agreement to implement a superior proposal in accordance with the terms of the merger agreement. |
77
78
Market Price Range | ||||||||
High | Low | |||||||
Fiscal Year Ending December 31, 2010: | ||||||||
First Quarter (through February 4, 2010) | $ | 2.25 | $ | 2.18 | ||||
Fiscal Year Ending December 31, 2009: | ||||||||
Fourth Quarter | $ | 2.21 | $ | 1.13 | ||||
Third Quarter | 1.67 | 0.63 | ||||||
Second Quarter | 0.96 | 0.33 | ||||||
First Quarter | 0.80 | 0.21 | ||||||
Fiscal Year Ended December 31, 2008: | ||||||||
Fourth Quarter | $ | 2.13 | $ | 0.52 | ||||
Third Quarter | 2.92 | 2.04 | ||||||
Second Quarter | 4.90 | 2.59 | ||||||
First Quarter | 5.30 | 3.39 | ||||||
Fiscal Year Ended December 31, 2007: | ||||||||
Fourth Quarter | $ | 5.27 | $ | 3.67 | ||||
Third Quarter | 5.02 | 3.57 | ||||||
Second Quarter | 6.15 | 5.17 | ||||||
First Quarter | 7.85 | 5.94 |
79
• | each person who is known by us to be the beneficial owner of more than 5% of the outstanding shares of our common stock; | |
• | each director who is a stockholder and each of our named executive officers; and | |
• | all our directors and executive officers as a group. |
Shares Beneficially Owned | ||||||||
Name and Address of Beneficial Owner | Number | Percentage | ||||||
Holders of 5% or more of our Common Stock: | ||||||||
Coliseum Capital Management, LLC, Coliseum Capital, LLC, Coliseum Capital, Partners, LP, Adam Gray and Christopher Shackelton(1) | 3,740,743 | 11.21 | % | |||||
Renaissance Technologies LLC and James H. Simons(2) | 2,362,400 | 7.08 | % | |||||
Horacio Rozenblum(3) | 2,220,624 | 6.65 | % | |||||
Keeley Asset Management Corp. and Keeley Small Cap Value Fund, a series of Keeley Funds, Inc.(4) | 2,229,000 | 6.68 | % | |||||
TLG Partners, LP, TLP Capital Investment, LLC and Timothy Griffith(5) | 2,036,700 | 6.10 | % | |||||
Dimensional Fund Advisors LP(6) | 2,043,872 | 6.12 | % | |||||
DUMAC, LLC, Blackwell Partners, LLC, Duke University and The Duke Endowment(7) | 1,671,000 | 5.01 | % | |||||
Executive Officers and Directors: | ||||||||
Ronald W. Allen(8) | 24,192 | * | ||||||
Christopher L. Bennett(9) | 173,059 | * | ||||||
H. Eric Bolton(10) | 11,692 | * | ||||||
James F. Dannhauser(11) | 19,192 | * | ||||||
Leslie R. Doggett(12) | 35,692 | * | ||||||
Thomas F. Hewitt(13) | 607,124 | 1.82 | % | |||||
Samuel E. Knighton(14) | 172,108 | * | ||||||
James B. McCurry(15) | 36,192 | * | ||||||
Leslie Ng(16) | 555,888 | 1.66 | % | |||||
Bruce A. Riggins(17) | 286,796 | * | ||||||
John J. Russell, Jr.(18) | 34,192 | * | ||||||
Christopher S. Shackelton(1) | 3,740,743 | 11.21 | % | |||||
Executive officers and directors as a group (12 persons) | 5,696,870 | 16.96 | % |
* | Represents less than 1% of the class. | |
(1) | Beneficial ownership information is based on the Schedule 13D/A filed by Coliseum Capital Management, LLC, Coliseum Capital, LLC, Coliseum Capital Partners, LP, Adam Gray and Christopher Shackelton (located at 825 Third Avenue, 36th Floor, New York, NY 10022) on December 24, 2009. |
80
(2) | Beneficial ownership information is based on the Schedule 13G/A filed by Renaissance Technologies LLC and James H. Simons (located at 800 Third Avenue, New York, NY 10022) on February 13, 2009. | |
(3) | Beneficial ownership information is based on the Schedule 13G filed by Horacio Rozenblum (located at San Martin 140, 4th Floor, Buenos Aires, Argentina 1004) on March 20, 2009. | |
(4) | Beneficial ownership information is based on the Schedule 13G/A filed by Keeley Asset Management Corp. and Keeley Small Cap Value Fund, a series of Keeley Funds, Inc. (located at 401 LaSalle Street, Chicago, IL 60605) on February 13, 2009. Keeley Asset Management Corp. and Keeley Small Cap Value Fund share beneficial ownership over the same 2,225,000 shares, and Keeley Asset Management Corp. beneficially owns an additional 4,000 shares. | |
(5) | Beneficial ownership information is based on the Schedule 13G filed by TLG Partners, LP, TLP Capital Investment, LLC and Timothy Griffith (located at 4131 North Central Expressway, Suite 800, Dallas, TX 75204) on February 12, 2009. TLG Partners, LP, TLP Capital Investment, LLC and Timothy Griffith share beneficial ownership over the same 2,036,700 shares, and Timothy Griffith beneficially owns an additional 29,750 shares. | |
(6) | Beneficial ownership information is based on the Schedule 13G/A filed by Dimensional Fund Advisors LP (located at Palisades West, Building One, 6300 Bee Cave Road, Austin, TX 78746) on February 5, 2009. | |
(7) | Beneficial ownership information is based on the Schedule 13G filed by DUMAC, LLC, Blackwell Partners, LLC, Duke University and The Duke Endowment (located at 406 Blackwell Street, Suite 300, Durham, NC 27701) on January 26, 2009. | |
(8) | Beneficial ownership includes 7,500 vested options and 4,388 shares of unvested restricted stock. | |
(9) | Beneficial ownership includes 114,867 shares of unvested restricted stock. | |
(10) | Beneficial ownership includes 5,000 vested options and 4,388 shares of unvested restricted stock. | |
(11) | Beneficial ownership includes 12,500 vested options and 4,388 shares of unvested restricted stock. | |
(12) | Beneficial ownership includes 29,000 vested options and 4,388 shares of unvested restricted stock. | |
(13) | Beneficial ownership includes 17,000 vested options and 262,911 shares of unvested restricted stock. | |
(14) | Beneficial ownership includes 143,650 shares of unvested restricted stock. | |
(15) | Beneficial ownership includes 29,500 vested options and 4,388 shares of unvested restricted stock. |
(16) | Beneficial ownership includes 66,667 vested options, 8,333 options scheduled to vest on March 26, 2010 and 124,285 shares of unvested restricted stock. This amount does not include the 25,000 shares indirectly held by Blue Cougar Investments, LLC, of which Mr. Ng beneficially owns 50%, and as disclosed in the Form 4 filed by Mr. Ng on May 21, 2008. |
(17) | Beneficial ownership includes 180,443 shares of unvested restricted stock. | |
(18) | Beneficial ownership includes 27,500 vested options and 4,388 shares of unvested restricted stock. |
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82
100 F Street, N.E., Room 1580
Washington, D.C. 20549
New York, New York 10005
83
A-1-1
Page | ||||
Article I THE MERGERS | A-1-10 | |||
Section 1.1 | The Mergers | A-1-10 | ||
Section 1.2 | Closing | A-1-10 | ||
Section 1.3 | Company Merger Effective Time; Partnership Merger Effective Time | A-1-10 | ||
Section 1.4 | Effects of the Mergers | A-1-10 | ||
Section 1.5 | Company Matters | A-1-11 | ||
Section 1.6 | Partnership Matters | A-1-11 | ||
Article II EFFECT OF THE MERGERS ON CAPITAL STOCK AND PARTNERSHIP INTERESTS | A-1-11 | |||
Section 2.1 | Conversion of Capital Stock | A-1-11 | ||
Section 2.2 | Conversion of Operating Partnership Interests | A-1-12 | ||
Section 2.3 | Surrender of Certificates and Exchange of OP Units | A-1-12 | ||
Section 2.4 | Stock Options and Restricted Stock Awards | A-1-14 | ||
Section 2.5 | Dissenting Shares | A-1-15 | ||
Section 2.6 | Adjustments to Prevent Dilution | A-1-15 | ||
Article III REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND OPERATING PARTNERSHIP | A-1-15 | |||
Section 3.1 | Organization and Power | A-1-15 | ||
Section 3.2 | Foreign Qualifications | A-1-15 | ||
Section 3.3 | Authorization | A-1-16 | ||
Section 3.4 | Enforceability | A-1-16 | ||
Section 3.5 | Organizational Documents | A-1-16 | ||
Section 3.6 | Minute Books | A-1-16 | ||
Section 3.7 | Subsidiaries | A-1-16 | ||
Section 3.8 | Governmental Authorizations | A-1-17 | ||
Section 3.9 | Non-Contravention | A-1-17 | ||
Section 3.10 | Capitalization; Options | A-1-18 | ||
Section 3.11 | Voting | A-1-19 | ||
Section 3.12 | SEC Reports, Sarbanes-Oxley and NYSE Matters | A-1-19 | ||
Section 3.13 | Financial Statements | A-1-20 | ||
Section 3.14 | Liabilities | A-1-21 | ||
Section 3.15 | Absence of Certain Changes | A-1-21 | ||
Section 3.16 | Litigation | A-1-21 | ||
Section 3.17 | Contracts | A-1-22 | ||
Section 3.18 | Benefit Plans | A-1-23 | ||
Section 3.19 | Executive and Director Loans | A-1-26 | ||
Section 3.20 | Labor Relations | A-1-26 | ||
Section 3.21 | Taxes | A-1-27 | ||
Section 3.22 | Environmental Matters | A-1-28 | ||
Section 3.23 | Intellectual Property | A-1-29 | ||
Section 3.24 | Owned and Leased Real Property | A-1-30 | ||
Section 3.25 | Joint Ventures | A-1-32 | ||
Section 3.26 | Managed Real Property | A-1-33 |
A-1-2
Page | ||||
Section 3.27 | Personal Property | A-1-33 | ||
Section 3.28 | Permits; Compliance with Laws | A-1-33 | ||
Section 3.29 | Insurance | A-1-34 | ||
Section 3.30 | Takeover Statutes | A-1-34 | ||
Section 3.31 | Opinion of Financial Advisor | A-1-34 | ||
Section 3.32 | Existing Financings | A-1-34 | ||
Section 3.33 | Brokers and Finders | A-1-35 | ||
Section 3.34 | Information Supplied | A-1-35 | ||
Section 3.35 | Company Loans | A-1-35 | ||
Section 3.36 | Investment Company Act of 1940 | A-1-35 | ||
Section 3.37 | Relations with Governments | A-1-35 | ||
Section 3.38 | Company Insurance Subsidiaries | A-1-35 | ||
Section 3.39 | Patriot Act | A-1-37 | ||
Section 3.40 | Rights Agreement | A-1-38 | ||
Section 3.41 | No Other Representations | A-1-38 | ||
Article IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASER PARTIES | A-1-38 | |||
Section 4.1 | Organization and Power | A-1-38 | ||
Section 4.2 | Authorization | A-1-38 | ||
Section 4.3 | Enforceability | A-1-39 | ||
Section 4.4 | Governmental Authorizations | A-1-39 | ||
Section 4.5 | Non-Contravention | A-1-39 | ||
Section 4.6 | Interim Operations of Merger Sub and Merger Partnership | A-1-40 | ||
Section 4.7 | Financing | A-1-40 | ||
Section 4.8 | Limited Guarantees | A-1-40 | ||
Section 4.9 | Absence of Litigation | A-1-40 | ||
Section 4.10 | Brokers | A-1-40 | ||
Section 4.11 | Ownership | A-1-40 | ||
Section 4.12 | Proxy Statement | A-1-41 | ||
Section 4.13 | No Other Representations | A-1-41 | ||
Article V COVENANTS | A-1-41 | |||
Section 5.1 | Conduct of Business of the Company | A-1-41 | ||
Section 5.2 | Other Actions | A-1-44 | ||
Section 5.3 | Access to Information; Confidentiality | A-1-44 | ||
Section 5.4 | Solicitation; Change of Recommendation | A-1-44 | ||
Section 5.5 | Parent Guarantee; Equity Commitment Letter | A-1-46 | ||
Section 5.6 | Notices of Certain Events | A-1-47 | ||
Section 5.7 | Company Proxy Statement | A-1-47 | ||
Section 5.8 | Company Stockholders Meeting | A-1-48 | ||
Section 5.9 | Employees; Benefit Plans | A-1-48 | ||
Section 5.10 | Directors’ and Officers’ Indemnification and Insurance | A-1-49 | ||
Section 5.11 | Commercially Reasonable Efforts | A-1-50 | ||
Section 5.12 | Consents; Filings | A-1-50 | ||
Section 5.13 | Public Announcements | A-1-52 | ||
Section 5.14 | Stock Exchange De-listing | A-1-52 |
A-1-3
Page | ||||
Section 5.15 | Fees, Expenses and Conveyance Taxes | A-1-52 | ||
Section 5.16 | Takeover Statutes | A-1-52 | ||
Section 5.17 | Tax Matters | A-1-52 | ||
Section 5.18 | Section 16b-3 | A-1-52 | ||
Section 5.19 | Resignations | A-1-52 | ||
Section 5.20 | Voting of Executive Officer Common Stock | A-1-52 | ||
Article VI CONDITIONS | A-1-53 | |||
Section 6.1 | Conditions to the Parties’ Obligations to Effect the Mergers | A-1-53 | ||
Section 6.2 | Conditions to Obligations of the Purchaser Parties | A-1-53 | ||
Section 6.3 | Conditions to Obligations of the Company and Operating Partnership | A-1-54 | ||
Section 6.4 | Frustration of Closing Conditions | A-1-54 | ||
Article VII TERMINATION, AMENDMENT AND WAIVER | A-1-54 | |||
Section 7.1 | Termination by Mutual Consent | A-1-54 | ||
Section 7.2 | Termination by Either Parent or the Company | A-1-54 | ||
Section 7.3 | Termination by Parent | A-1-54 | ||
Section 7.4 | Termination by the Company | A-1-55 | ||
Section 7.5 | Effect of Termination | A-1-56 | ||
Section 7.6 | Expenses Following Termination | A-1-56 | ||
Section 7.7 | Amendment | A-1-57 | ||
Section 7.8 | Extension; Waiver | A-1-58 | ||
Section 7.9 | Procedure for Termination, Amendment, Extension or Waiver | A-1-58 | ||
Article VIII MISCELLANEOUS | A-1-58 | |||
Section 8.1 | Certain Definitions | A-1-58 | ||
Section 8.2 | Interpretation | A-1-62 | ||
Section 8.3 | Survival | A-1-62 | ||
Section 8.4 | Governing Law | A-1-62 | ||
Section 8.5 | Submission to Jurisdiction | A-1-62 | ||
Section 8.6 | Waiver of Jury Trial | A-1-62 | ||
Section 8.7 | Notices | A-1-62 | ||
Section 8.8 | Entire Agreement | A-1-63 | ||
Section 8.9 | No Third-Party Beneficiaries | A-1-63 | ||
Section 8.10 | Severability | A-1-63 | ||
Section 8.11 | Rules of Construction | A-1-63 | ||
Section 8.12 | Assignment | A-1-63 | ||
Section 8.13 | Remedies | A-1-64 | ||
Section 8.14 | Specific Performance | A-1-64 | ||
Section 8.15 | Counterparts; Effectiveness | A-1-64 |
A-1-4
Term | Section | |
Acceptable Confidentiality Agreement | 8.1(a) | |
Active Employees | 5.9(a) | |
Affiliate | 8.1(b) | |
Agreement | Preamble | |
Amendments | 6.2(d) | |
Authorized Committee | 8.1(c) | |
Business Day | 8.1(d) | |
Capitalization Date | 3.10(a) | |
Certificates | 8.1(e) | |
CG Commitment Letter | 4.7 | |
CG Financing | 4.7 | |
CG Investor | 4.7 | |
Closing | 1.2 | |
Closing Date | 1.2 | |
COBRA | 3.18(g) | |
Code | 8.1(f) | |
Common Share Merger Consideration | 2.1(c) | |
Common Stock | 3.10(a) | |
Company | Preamble | |
Company Actuarial Analyses | 3.38(d)(3) | |
Company Adverse Recommendation Change | 5.4(a)(3) | |
Company Adverse Recommendation Notice | 5.4(d)(4) | |
Company Assets | 3.9(b) | |
Company Benefit Plans | 3.18(a) | |
Company Board Recommendation | 3.3 | |
Company Contracts | 3.9(c) | |
Company Disclosure Letter | III | |
Company Employee | 3.18(a) | |
Company Financial Advisor | 3.31 | |
Company Insurance Subsidiaries | 3.38(a) | |
Company Marks | 8.1(g) | |
Company Material Adverse Effect | 8.1(h) | |
Company Merger | Recitals | |
Company Merger Certificate | 1.3(a) | |
Company Merger Effective Time | 1.3(a) | |
Company Officer | 3.15(b) | |
Company Options | 3.10(a) | |
Company Organizational Documents | 3.5 | |
Company Parties | 7.6(f) | |
Company Permits | 3.28(a) | |
Company Proxy Statement | 3.8(b) | |
Company Rights | 3.10(a) | |
Company SAP Statements | 3.38(b) | |
Company SEC Reports | 3.12(a) | |
Company Stock Award | 2.4 | |
Company Stock Award Plans | 3.10(e) |
A-1-5
Term | Section | |
Company Stockholders Meeting | 3.8(b) | |
Company Termination Fee | 7.6(b) | |
Confidentiality Agreement | 5.3(b) | |
Continuation Period | 5.9(a) | |
Contracts | 8.1(i) | |
DGCL | Recitals | |
Dissenting Shares | 2.5(a) | |
DRULPA | Recitals | |
Effect | 8.1(h) | |
End Date | 7.2(a) | |
Executive Order | 3.39(a) | |
Environmental Claims | 8.1(j) | |
Environmental Laws | 8.1(k) | |
Environmental Permits | 8.1(l) | |
Equity Commitment Letters | 4.7 | |
Equity Investors | 4.7 | |
ERISA | 3.18(a) | |
ERISA Affiliate | 3.18(d) | |
Exchange Act | 3.8(b) | |
Excluded Shares | 2.1(b) | |
Excluded Units | 2.2(b) | |
Existing Financings | 3.32 | |
Existing Financing Documents | 3.32 | |
Expenses | 5.15 | |
Financing | 4.7 | |
Financing Term Sheets | 3.17(c) | |
GAAP | 3.13(a)(2) | |
Governmental Entity | 3.8 | |
Guarantors | Recitals | |
Hazardous Materials | 8.1(m) | |
Hotel Permits | 3.24(g) | |
HSR Act | 3.8(d) | |
Improvements | 3.24(e) | |
Indebtedness | 3.17(a)(3) | |
Indemnified Parties | 5.10(a) | |
Insurance Laws | 3.38(c) | |
Intellectual Property | 3.23 | |
Intervening Event | 8.1(n) | |
IRS | 3.18(b) | |
Jin Jiang Guarantor | Recitals | |
Jin Jiang Limited Guarantee | Recitals | |
Joint Venture Assets | 3.25(e) | |
Joint Venture Documents | 3.25(a) | |
Joint Venture Interest Records | 3.25(a) | |
Joint Venture Interests | 3.25(a) | |
Joint Ventures | 3.25(a) | |
JV Debt Documents | 3.25(a) |
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Term | Section | |
JV Formation Documents | 3.25(a) | |
Knowledge | 8.1(o) | |
Laws | 8.1(p) | |
Lease Documents | 3.24(b) | |
Leased Properties | 3.24(b) | |
Legal Actions | 3.16 | |
Liabilities | 3.14 | |
Licensed Intellectual Property | 3.23 | |
Liens | 8.1(q) | |
Limited Guarantees | Recitals | |
Loan Documents | 3.35 | |
Loans | 3.35 | |
Managed Properties | 3.26(a) | |
Management Agreements | 3.26(a) | |
Material Contracts | 3.17(a)(13) | |
Maximum Premium | 5.10(c) | |
Mergers | Recitals | |
Merger Consideration | 2.2(b) | |
Merger Sub | Preamble | |
Merger Partnership | Preamble | |
New Plans | 5.9(c) | |
NYSE | 8.1(r) | |
Old Plans | 5.9(c) | |
OP Letter of Transmittal | 2.3(c)(3) | |
OP Units | 3.10(b) | |
OP Unit Merger Consideration | 2.2(b) | |
Operating Partnership | Preamble | |
Orders | 8.1(s) | |
Owned Hotels | 3.24(a) | |
Owned Intellectual Property | 3.23 | |
Owned Real Properties | 3.24(a) | |
Parent | Preamble | |
Parent Assets | 4.5(b) | |
Parent Contracts | 4.5(c) | |
Parent Expenses | 7.6(c) | |
Parent Material Adverse Effect | 8.1(t) | |
Partnership Merger | Recitals | |
Partnership Merger Certificate | 1.3(b) | |
Partnership Merger Effective Time | 1.3(b) | |
Patriot Act | 3.39(a) | |
Paying Agent | 2.3(a) | |
Payment Fund | 2.3(b) | |
Permits | 3.28(a) | |
Permitted Liens | 3.24(a) | |
Person | 8.1(u) | |
Post-Signing Returns | 5.17(a) | |
Preferred Stock | 3.10(a) |
A-1-7
Term | Section | |
Prohibited Person | 3.39(a) | |
Properties | 3.24(a) | |
Property | 3.24(a) | |
3.24(d) | ||
Property Management Agreements | 3.24(c) | |
Purchaser Parties | Preamble | |
Release | 8.1(v) | |
Remediation | 8.1(w) | |
Representatives | 8.1(x) | |
Requisite Company Vote | 8.1(y) | |
SAP | 3.38(b) | |
Sarbanes-Oxley Act | 3.12(b) | |
SEC | 3.8(b) | |
Securities Act | 3.12(a) | |
Settlement Agreement | 3.17(a)(10) | |
Stock Award Consideration | 2.4 | |
Subsidiary | 8.1(z) | |
Superior Proposal | 8.1(aa) | |
Surviving Bylaws | 1.5(b) | |
Surviving Charter | 1.5(a) | |
Surviving Corporation | 1.1(a) | |
Surviving Partnership | 1.1(b) | |
Takeover Proposal | 8.1(bb) | |
Tax Preservation Plan | 3.40 | |
Taxes | 8.1(cc) | |
Tax Returns | 8.1(dd) | |
Thayer Limited Guarantee | Recitals | |
Thayer Guarantor | Recitals | |
THI Commitment Letter | 4.7 | |
THI Financing | 4.7 | |
THI Investor | 4.7 | |
Treasury Regulations | 8.1(ee) | |
Utilities | 3.24(e) | |
Voting Agreements | Recitals | |
WARN | 3.20(d) | |
Zoning Permits | 3.24(f) |
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A-1-61
c/o Thayer Lodging Group, Inc.
1997 Annapolis Exchange Parkway,
Suite 550
Annapolis, Maryland 21403
Facsimile:(410) 268-1582
Attention: Bruce G. Wiles
555 13th Street, NW
A-1-62
Facsimile:(202) 637-5910
Attention: Carol Weld King, Esq.
4501 North Fairfax Drive, Suite 500
Arlington, VA 22203
Facsimile:(703) 542-0965
Attention: Christopher L. Bennett, Esq.
1285 Avenue of the Americas
New York, New York10019-6064
Facsimile:(212) 757-3990
Attention: Kelley D. Parker, Esq.
A-1-63
A-1-64
By: | /s/ Thomas F. Hewitt |
Title: | Chief Executive Officer |
By: | INTERSTATE HOTELS & RESORTS, INC., |
By: | /s/ Thomas F. Hewitt |
Title: | Chief Executive Officer |
By: | /s/ Bruce G. Wiles |
Title: | Chief Executive Officer |
By: | /s/ Yang Wei Min |
Title: | Board Member |
By: | /s/ Bruce G. Wiles |
Title: | President |
A-1-65
HAC MERGER PARTNERSHIP, L.P. |
By: | HAC MERGER SUB, INC., |
By: | /s/ Bruce G. Wiles |
Title: | President |
A-1-66
A-1-67
A-1-68
OF INTERSTATE HOTELS & RESORTS, INC.
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Name | Mailing Address |
A-1-70
A-1-71
A-1-72
By: |
Title: |
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A-1-74
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Page | ||||||||
1 | OFFICES | A-1-78 | ||||||
1.1. | Registered Office | A-1-78 | ||||||
1.2. | Other Offices | A-1-78 | ||||||
2 | MEETINGS OF STOCKHOLDERS | A-1-78 | ||||||
2.1. | Place of Meetings | A-1-78 | ||||||
2.2. | Annual Meetings | A-1-78 | ||||||
2.3. | Special Meetings | A-1-78 | ||||||
2.4. | Notice of Meetings | A-1-78 | ||||||
2.5. | Waivers of Notice | A-1-78 | ||||||
2.6. | Business at Special Meetings | A-1-79 | ||||||
2.7. | List of Stockholders | A-1-79 | ||||||
2.8. | Quorum at Meetings | A-1-79 | ||||||
2.9. | Voting and Proxies | A-1-79 | ||||||
2.10. | Required Vote | A-1-80 | ||||||
2.11. | Action Without a Meeting | A-1-80 | ||||||
3 | DIRECTORS | A-1-81 | ||||||
3.1. | Powers | A-1-81 | ||||||
3.2. | Number and Election | A-1-81 | ||||||
3.3. | Nomination of Directors | A-1-81 | ||||||
3.4. | Vacancies | A-1-81 | ||||||
3.5. | Meetings | A-1-81 | ||||||
3.5.1. | Regular Meetings | A-1-81 | ||||||
3.5.2. | Special Meetings | A-1-81 | ||||||
3.5.3. | Telephone Meetings | A-1-82 | ||||||
3.5.4. | Action Without Meeting | A-1-82 | ||||||
3.5.5. | Waiver of Notice of Meeting | A-1-82 | ||||||
3.6. | Quorum and Vote at Meetings | A-1-82 | ||||||
3.7. | Committees of Directors | A-1-82 | ||||||
3.8. | Compensation of Directors | A-1-83 | ||||||
4 | OFFICERS | A-1-83 | ||||||
4.1. | Designation | A-1-83 | ||||||
4.2. | Term of Office | A-1-83 | ||||||
4.3. | President | A-1-83 | ||||||
4.4. | Vice Presidents | A-1-83 | ||||||
4.5. | Secretary | A-1-83 | ||||||
4.6. | Treasurer | A-1-84 | ||||||
5 | CAPITAL STOCK | A-1-84 | ||||||
5.1. | Certificates of Stock; Uncertificated Shares | A-1-84 | ||||||
5.2. | Lost Certificates | A-1-84 | ||||||
5.3. | Record Date | A-1-84 | ||||||
5.3.1. | Actions by Stockholders | A-1-84 | ||||||
5.3.2. | Payments | A-1-85 | ||||||
5.4. | Stockholders of Record | A-1-85 |
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Page | ||||||||
6. | INDEMNIFICATION; INSURANCE | A-1-85 | ||||||
6.1. | Indemnity Undertaking | A-1-85 | ||||||
6.2. | Advancement of Expenses | A-1-85 | ||||||
6.3. | Rights Not Exclusive | A-1-86 | ||||||
6.4. | Continuation of Benefits | A-1-86 | ||||||
6.5. | Insurance | A-1-86 | ||||||
6.6. | Binding Effect | A-1-86 | ||||||
6.7. | Procedural Rights | A-1-86 | ||||||
6.8. | Service Deemed at Corporation’s Request | A-1-87 | ||||||
7. | GENERAL PROVISIONS | A-1-87 | ||||||
7.1. | Inspection of Books and Records | A-1-87 | ||||||
7.2. | Dividends | A-1-87 | ||||||
7.3. | Reserves | A-1-87 | ||||||
7.4. | Execution of Instruments | A-1-87 | ||||||
7.5. | Fiscal Year | A-1-87 | ||||||
7.6. | Seal | A-1-87 |
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1. | OFFICES |
2. | MEETINGS OF STOCKHOLDERS |
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3. | DIRECTORS |
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4. | OFFICERS |
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5. | CAPITAL STOCK |
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6. | INDEMNIFICATION; INSURANCE |
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7. | GENERAL PROVISIONS |
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Title: |
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FORMS OF LIMITED GUARANTEES
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4501 North Fairfax Drive, Suite 500
Arlington, VA 22203
Facsimile:(703) 542-0965
Attention: Christopher L. Bennett, Esq.
1285 Avenue of the Americas
New York, NY10019-6064
Facsimile:(212) 757-3990
Attention: Kelley D. Parker, Esq.
A-1-92
25/F, 100 Yan An East Road
Shanghai, China Post Code: 200002
Facsimile:(86-21) 6321 7720
Attention: Chen Hao
Unit 1601, Jin Mao Tower
88 Century Avenue
Pudong, Shanghai 200121
People’s Republic of China
Facsimile: (86 21) 5047 0020
Attention: Howard Wu, Esq.
A-1-93
A-1-94
By: |
Title: |
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By: |
Title: |
By: | Interstate Hotels & Resorts, Inc., its General Partner |
By: |
Title: |
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A-1-97
A-1-98
4501 North Fairfax Drive, Suite 500
Arlington, VA 22203
Facsimile:(703) 542-0965
Attention: Christopher L. Bennett, Esq.
1285 Avenue of the Americas
New York, NY10019-6064
Facsimile:(212) 757-3990
Attention: Kelley D. Parker, Esq.
A-1-99
c/o Thayer Lodging Group, Inc.
1997 Annapolis Exchange Parkway,
Suite 550
Annapolis, Maryland 21403
Facsimile:(410) 268-1582
Attention: Bruce G. Wiles
555 13th Street, NW
Washington, DC 20004
Facsimile:(202) 637-5910
Attention: Carol Weld King, Esq.
A-1-100
A-1-101
By: | Thayer Hotel Investments V LLC Its General Partner |
By: |
Title: |
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By: |
Title: |
By: | Interstate Hotels & Resorts, Inc., its General Partner | |
By: |
Title: |
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A-2-3
c/o Thayer Lodging Group, Inc.
1997 Annapolis Exchange Parkway,
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Annapolis, Maryland 21403
Facsimile:(410) 268-1582
Attention: Bruce G. Wiles
555 13th Street, NW
Washington, DC 20004
Facsimile:(202) 637-5910
Attention: Carol Weld King, Esq.
A-2-5
By: | /s/ Christopher Shackelton |
Title: | Manager |
By: | /s/ Adam Gray |
Title: | Manager |
By: | /s/ Adam Gray |
Title: | Manager |
By: | /s/ Bruce G. Wiles |
Title: | Chief Executive Officer |
A-2-6
Common Stock Held | ||||
of Record or | Additional Subject | |||
Beneficially Owned | Options and Exercise Prices | Securities Owned | ||
3,740,743 | 0 | 0 |
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A-2-8
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A-2-10
c/o Thayer Lodging Group, Inc.
1997 Annapolis Exchange Parkway,
Suite 550
A-2-11
Facsimile:(410) 268-1582
Attention: Bruce G. Wiles
555 13th Street, NW
Washington, DC 20004
Facsimile:(202) 637-5910
Attention: Carol Weld King, Esq.
A-2-12
By: | /s/ Bruce G. Wiles |
Title: | Chief Executive Officer |
A-2-13
Vienna, VA 22182
Common Stock Held of | ||||||||
Record or Beneficially | Additional Subject Securities | |||||||
Owned | Options and Exercise Prices | Owned | ||||||
173,059 | 0 | 0 |
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A-2-15
A-2-16
A-2-17
c/o Thayer Lodging Group, Inc.
1997 Annapolis Exchange Parkway,
Suite 550
A-2-18
Facsimile:(410) 268-1582
Attention: Bruce G. Wiles
555 13th Street, NW
Washington, DC 20004
Facsimile:(202) 637-5910
Attention: Carol Weld King, Esq.
A-2-19
By: | /s/ Bruce G. Wiles |
Title: | Chief Executive Officer |
A-2-20
Common Stock Held of | ||||||||
Record or Beneficially | Additional Subject Securities | |||||||
Owned | Options and Exercise Prices | Owned | ||||||
590,123 | 17,000 options at $ | 4.58 exercise price | 0 |
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By: | /s/ Bruce G. Wiles |
Title: | Chief Executive Officer |
A-2-27
Common Stock Held | ||||
of Record or | Additional Subject | |||
Beneficially Owned | Options and Exercise Prices | Securities Owned | ||
172,108 | 0 | 0 |
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By: | /s/ Bruce G. Wiles |
Title: | Chief Executive Officer |
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Common Stock Held | ||||
of Record or | Additional Subject | |||
Beneficially Owned | Options and Exercise Prices | Securities Owned | ||
505,888* | 25,000 options at $4.65 | 0 | ||
25,000 options at $5.48 25,000 options at $6.23 |
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By: | /s/ Bruce G. Wiles |
Title: | Chief Executive Officer |
A-2-41
Vienna, VA 22182
Common Stock Held | ||||
of Record or | Additional Subject | |||
Beneficially Owned | Options and Exercise Prices | Securities Owned | ||
286,796 | 0 | 0 |
A-2-42
B-1
B-2
/s/ Barclays Capital Inc. |
B-3
UNDER THE DELAWARE GENERAL CORPORATION LAW
C-1
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C-4
INTERSTATE HOTELS & RESORTS, INC. 4501 NORTH FAIRFAX DR. SUITE 500 ARLINGTON, VA 22203 | Internet and Telephone Voting Instructions You can vote by telephone OR Internet! Available 24 hours a day 7 days a week! Instead of mailing your proxy, you may choose one of the two voting methods outlined below to vote your proxy. VOTE BY INTERNET -www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. | |
VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided. |
M19308-S56161 | KEEP THIS PORTION FOR YOUR RECORDS |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. | DETACH AND RETURN THIS PORTION ONLY |
This proxy will be voted as directed. If no direction is indicated but the proxy card is signed and returned, it will be voted FOR the proposals below. | For | Against | Abstain | ||||||
1. | Adoption of the agreement and plan of merger (the “Merger Agreement”), dated as of December 18, 2009, by and among Hotel Acquisition Company, LLC, HAC Merger Sub, Inc., HAC Merger Partnership, L.P., Interstate Hotels & Resorts, Inc. and Interstate Operating Company, L.P. and approval of the merger of Interstate Hotels & Resorts, Inc. with HAC Merger Sub, Inc. and the other transactions contemplated by the merger agreement. | o | o | o | |||||
2. | Approval of any adjournment of the Special Meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the meeting to adopt the Merger Agreement. | o | o | o | |||||
In their discretion, the named proxies are authorized to vote upon such other business as may properly come before the Special Meeting or any adjournments or postponements thereof. |
Yes | No | ||||||
Please indicate if you plan to attend this meeting. | o | o | |||||
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer. |
Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date |
the shares are represented by promptly returning your signed proxy card in the enclosed
envelope. This proxy card must be signed and dated on the reverse side.