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Exhibit 10.4
AMENDMENT NO. 3
INCORPORATION AND
REGISTRATION RIGHTS AGREEMENT
This Third Amendment to Incorporation and Registration Rights
Agreement (this "Third Amendment") dated as of November 8, 1996 is made by and
among Doubletree Corporation, a Delaware corporation (the "Company"), GE
Investment Hotel Partners I, Limited Partnership, a Delaware limited
partnership ("GEHOP"), MetPark Funding, Inc., a Delaware corporation ("Met
Sub"), The Ueberroth Family Trust ("Ueberroth"), Ueberroth Investment Trust
("Investment"), Mr. Richard J. Ferris ("Ferris"), Ridge Partners, L.P., a
Delaware limited partnership ("Ridge"), Mr. Robert M. Solmson (the
"Representative"), for himself and as attorney-in-fact for the RFS Shareholders
(as defined in the Second Amendment referred to below), Canadian Pacific Hotels
Holdings (U.S.) Inc., a Delaware corporation ("CPPHUS"), and Red Lion, a
California Limited Partnership (the "RL Partnership").
This Third Amendment amends the Incorporation and Registration
Rights Agreement dated as of December 16, 1993 (the "Original Agreement"), by
and among Doubletree Partners, a Delaware general partnership, GQ Owners, L.P.,
a Delaware limited partnership, Canadian Pacific Hotels (U.S.) Inc., a Delaware
corporation ("CPHUS"), Met Sub, Ueberroth and Ferris, as first amended by
Amendment No. 1 to Incorporation and Registration Rights Agreement dated as of
June 30, 1994 (the "First
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Amendment"), by and among the parties to the Original Agreement, the Company,
GEHOP, Investment and Ridge, and as further amended by Amendment No. 2 to
Incorporation and Registration Rights Agreement dated as of February 27, 1996
(the "Second Amendment"), by and among CPPHUS, as successor in interest to
CPHUS under the Original Agreement and the First Amendment, and the parties
hereto other than the RL Partnership. Capitalized terms used and not otherwise
defined herein shall have the respective meanings assigned to such terms in the
Original Agreement, as amended by the First Amendment and the Second Amendment
(as so amended, the "Existing Agreement").
BACKGROUND
A. CPPHUS has sold all Eligible Securities beneficially
owned by it.
B. The RL Partnership owns of record and beneficially
20,900,000 shares of common stock, par value $.01 per share, of Red Lion
Hotels, Inc., a Delaware corporation ("Red Lion"). Pursuant to the Agreement
and Plan of Merger dated as of September 12, 1996 (the "Merger Agreement"), by
and among the Company, RLH Acquisition Corp., a Delaware corporation and a
wholly owned subsidiary of the Company, and Red Lion, at the Effective Time (as
defined in the Merger Agreement), such shares of Red Lion stock will be
converted into the right to receive, among other things, an aggregate of
4,836,260 shares (together with any additional shares issued as a result of any
stock split, stock dividend or subdivision or reclassification of such shares,
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the "Exchange Shares") of the Company's Common Stock. In order to induce the
RL Partnership, as a majority stockholder of Red Lion, to vote for approval and
adoption of the Merger Agreement and the Merger (as defined in the Merger
Agreement), the Parties wish to amend the Existing Agreement to include the RL
Partnership as a Party and to specify the relative rights and privileges of the
Partnership with respect to the subject matter thereof.
C. In connection with the Merger, an affiliate of GEHOP
will purchase from the Company 2,627,534 newly-issued shares of Common Stock
(the "New GEI Shares") and warrants to purchase up to 262,753 additional shares
of Common Stock, subject to adjustment (such additional shares of Common Stock
issuable upon exercise of such warrants, the "GEI Warrant Shares"). In order
to induce such affiliate of GEHOP to make such purchase, the Parties wish to
amend the Existing Agreement to include the New GEI Shares and, upon issuance,
the GEI Warrant Shares as Eligible Securities.
NOW THEREFORE, in consideration of the foregoing and intending
to be legally bound, the Parties agree as follows:
1. The RL Partnership. All references to "Holders" and
the "Parties" in the Existing Agreement shall be deemed to include the RL
Partnership, including, without limitation, references granting to Holders
certain "piggyback" registration rights pursuant to Section 3 of the Original
Agreement.
2. Additional Eligible Securities. All references to
"Eligible Securities" in the Existing Agreement shall be deemed
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to include, without limitation, all Exchange Shares and all New GEI Shares and,
upon issuance, all GEI Warrant Shares. For purposes of the Existing Agreement,
as amended hereby, but for no other purpose whatsoever (whether express or
implied), the New GEI Shares and the GEI Warrant Shares will be aggregated
together with shares of Common Stock owned by GEHOP in order to determine the
amount of Eligible Securities or shares of Common Stock which relate to GEHOP.
3. Demand Rights. (a) Section 2(a) of the Existing
Agreement is hereby amended to provide that in addition to the rights granted
therein to GEHOP, Met Sub and the Representative, the RL Partnership may, at
any time after the date which is 180 days following the date on which the
Effective Time occurs, deliver up to four Registration Requests to the Company,
subject to Section 2(b)(i) of the Existing Agreement as amended hereby. After
receipt of a Registration Request, the Company shall file and use its best
efforts to cause to become effective a registration statement under the
Securities Act with respect to the number of Exchange Shares specified in such
request, all within the time and in the manner specified in Section 2 of the
Original Agreement.
(b) Section 2(a) of the Existing Agreement is hereby
amended to replace the term "The Partner", which begins the fifth sentence of
such Section 2(a), with the term "The Holder."
(c) The first paragraph of Section 2(b)(i) of the Existing
Agreement is hereby amended and restated to read as follows:
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"(i) if the Requesting Holder shall be GEHOP and the
Registration Request is not the last to which such Holder is entitled
under Section 2(a) and this Section 2(b)(i), or if the Requesting
Holder shall be the Representative and the Registration Request is
made pursuant to Section 2(c) of Amendment No. 2 to this Agreement, or
if the Requesting Holder shall be the RL Partnership and the
Registration Request is made pursuant to Section 3(a) of Amendment No.
3 to this Agreement and is not the first or last such request to which
the RL Partnership is entitled pursuant to such Section 3(a):
(A) the number of shares of Eligible Securities to be
registered on behalf of each Holder shall be reduced
(to zero, if necesssary) pro rata according to the
number of shares requested to be registered by each
Holder; provided, however, that in the case of the
first Registration Request made by GQ Owners, any
Registration Request made by the RL Partnership
pursuant to Section 3(a) of Amendment No. 3 to this
Agreement (other than its first or last such
Registration Request) and the Registration Request
made by the Representative pursuant to Section 2(c)
of Amendment No. 2 to this Agreement, if the number
of shares of Eligible Securities requested to be
registered by GQ Owners, the RL Partnership or the
Representative, as the case may be, shall be
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reduced as a result of this Section 2(b)(i) by 20% or more, such
Requesting Holder shall be entitled to request one registration in
addition to (i) in the case of GQ Owners, the two registration
requests GQ Owners is entitled to under Section 2(a) of this
Agreement, (ii) in the case of the RL Partnership, the four
registration requests the RL Partnership is entitled to under Section
3(a) of Amendment No. 3 to this Agreement and (iii) in the case of the
Representative, the one registration request the Representative is
entitled to under Section 2(c) of Amendment No. 2 to this Agreement;
and"
(d) The first paragraph of Section 2(b)(ii) of the Existing
Agreement is hereby amended and restated to read as follows:
"(ii) if the Requesting Holder shall be Met Sub, or if the
Requesting Holder shall be GEHOP exercising the last Registration
Request to which it is entitled under Section 2(a) and Section 2(b)(i)
of the Existing Agreement, or if the Requesting Holder shall be the RL
Partnership exercising the first or last Registration Request to which
it is entitled under Section 3(a) of Amendment No. 3 to this
Agreement:"
(e) Section 2(b)(ii)(C) of the Existing Agreement is
hereby amended to replace the term "Common Stock" used therein with the term
"Eligible Securities."
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(f) Section 2 of the Existing Agreement is hereby amended
to include the following subsection (e):
"(e) A Holder shall be deemed not to have
exercised a Registration Request to which it is entitled under Section
2 if (i) the registration statement relating to such Registration
Request does not become effective, or after it has become effective,
is interfered with by any stop order, injunction or other order or
requirement of the Commission or other governmental agency or court,
in each case by reason of an act or omission by the Company, or (ii)
the conditions to closing specified in the purchase agreement, or
underwriting agreement entered into in connection with such
registration statement are not satisfied, and the offering and sale of
Eligible Securities to which such Registration Request relates is not
consummated, because of an act or omission by the Company (other than
a failure of the Company or any of its representatives to execute or
deliver any closing certificate by reason of facts or circumstances
not within the control of the Company or such representatives) or
(iii) at any time after a Party delivers a Registration Request and
prior to the effectiveness of the registration statement relating
thereto, the preparation of such registration statement is
discontinued or such registration statement is withdrawn or abandoned,
in each case at the request of the Requesting Holder, and such
Requesting Holder has elected to pay and has paid to the Company in
full all of the
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registration expenses (including, without limitation, Company
registration expenses) referenced in Section 5 in connection with such
registration statement."
(g) Section 13(a) of the Existing Agreement is hereby
amended to provide that one or more transferees of Eligible Securities owned by
the RL Partnership may deliver a Registration Request pursuant to Section 2 if
(i) such transferees have received such Eligible Securities in compliance with
applicable Federal and state securities laws, (ii) such transferees have agreed
in a writing, in form and substance reasonably satisfactory to the Company, to
be bound by the Existing Agreement, as amended by this Third Amendment and as
amended or modified hereafter, with the same duties and obligations as a Holder
thereunder, and (iii) the transferee or transferees that so deliver such
Registration Request hold at least a majority of the then outstanding Exchange
Shares which have not been sold pursuant to a registered public offering. In
addition, Section 13(a) is amended so that the references to "permitted
assign(s)" or "permitted transferee" shall mean any assignee or transferee of a
Holder.
4. Piggyback Rights. The RL Partnership hereby agrees
that in the event that shares of Eligible Securities requested by the
Partnership to be registered pursuant to Section 3 of the Existing Agreement
are unable to be included in a registration pursuant to market conditions then
existing, as provided in the Existing Agreement, the shares to be registered
for the RL Partnership shall be reduced by a pro rata amount with
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respect to the number of shares requested to be registered by the RL
Partnership.
5. Notices. Section 13(b) of the Existing Agreement is
hereby amended to add subsection (viii) as follows:
"(viii) if to the RL Partnership to Red Lion, a California
Limited Partnership, c/o Kohlberg Kravis Roberts & Co., 2800
Sand Hill Road, Suite 200, Menlo Park, California 94025;
telephone (415) 233-6560; telecopier (415) 233-6561.
6. Amendments. The first sentence of Section 13(d) of
the Existing Agreement is hereby amended and restated in its entirety to read
as follows:
"This Agreement may not be amended or modified, and no
provision hereof may be waived, except in writing, and such
writing shall only be effective with respect to a Party who
has executed such writing; provided, however, that any such
amendment, modification or waiver shall only be required to be
so executed by a Party the rights of which under this
Agreement would be adversely affected in any material respect
by such amendment, modification or waiver."
7. Counterparts. This Third Amendment may be executed
in counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the Parties hereto have executed this
Third Amendment as of the date first written above.
DOUBLETREE CORPORATION METPARK FUNDING, INC.
By: /s/ David L. Stivers By: /s/ Thomas C. Hoi
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Name: David L. Stivers Name: Thomas C. Hoi
Title: Sr. V.P., Gen. Title: Vice-President
Counsel & Sec'y
RIDGE PARTNERS, L.P GE INVESTMENT HOTEL PARTNERS I,
LIMITED PARTNERSHIP
By: Kelrick, Inc., its general
partner By: GE Investment Management
Incorporated, its general
partner
By: /s/ Richard Ferris
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Name: Richard Ferris
Title: President By: /s/ Michael M. Pastore
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Name: Michael M. Pastore
Title: Vice President
THE UEBERROTH FAMILY TRUST THE REPRESENTATIVE
By: /s/ Peter V. Ueberroth /s/ Robert M. Solmson
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Peter V. Ueberroth Robert M. Solmson
Trustee
/s/ Robert M. Solmson
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Robert M. Solmson, as attorney-in-
fact for the RFS Shareholders
UEBERROTH INVESTMENT TRUST RED LION, a California Limited
Partnership
By: RLA-GP Inc., its general partner
By: /s/ Alice J. Saviez
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Alice J. Saviez
By: /s/ Beth A. Ugoretz
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Not individually, but solely as Name: Beth A. Ugoretz
Trustee Title: V.P. and Sec'y
/s/ Richard J. Ferris
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Richard J. Ferris
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CANADIAN PACIFIC HOTELS
HOLDINGS (U.S.) INC.
By: /s/ William R. Fatt
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Name: William R. Fatt
Title:
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