Exhibit 99.1
November 5, 1993
Mr. J. Peter Grace, III
303 Lexington Avenue
New York, New York 10016
PURCHASE OF STOCK OF GRACE HOTEL SERVICES CORPORATION
Dear Peter:
This letter confirms the agreement in principle between W. R. Grace &
Co., a New York corporation ("Grace"), and you concerning the proposed
acquisition ("Acquisition") of all the capital stock of Grace Hotel Services
Corporation, a Delaware corporation (the "Company"), by a company newly formed
by you ("Newco").
1. Prior to the Acquisition, Grace would exchange certain shares of its
common stock in the Company for shares of a new class of preferred stock of the
Company (the "Preferred Stock"). At the closing of the Acquisition, Grace would
sell to Newco all of the capital stock of the Company (i.e. all of its
remaining common stock in the Company and all of the Preferred Stock) in
exchange for a 7.00% Senior Secured Note (the "Note") of Newco. The principal
amount of the Note would be [$1,350,000]. After the Closing, the principal
amount of the Note would be increased or decreased by an amount equal to the
difference between the [$1,350,000] and the net worth of the Company (as
adjusted to eliminate certain intercompany accounts between the Company and
Grace) as at the date of the Closing. The Note would be subject to mandatory
prepayment, commencing on the anniversary of the date of the Closing in the year
1997, in the following amounts:
1997 one-third of the adjusted principal amount of the Note,
1998 one-third of the adjusted principal amount of the Note,
1999 one-third of the adjusted principal amount of the Note,
2000 balance,
Interest on the Note would accrue and be payable along with each principal
payment. The Note would be nonrecourse and would be secured by a pledge of all
of the Preferred Stock. The Preferred Stock would have an aggregate liquidation
preference,
J. Peter Grace, III
November 5, 1993
Page -2-
redemption terms and accumulate cash dividends in amounts sufficient to fully
secure and to pay all amounts due on the Note. Preferred Stock redeemed in
connection with payments under the Note will not be subject to such pledge.
2. The definitive purchase agreement with respect to the Acquisition
(the "Purchase Agreement") would contain representations and warranties of Grace
concerning the ownership, free and clear of all security interests, of the
capital stock of the Company; the corporate existence, good standing, right to
do business and capital stock of the Company; and other representations to the
knowledge of certain officers and employees of Grace as to litigation, claims
and certain tax matters.
3. The Purchase Agreement would also provide that the conditions to the
parties' obligations to consummate the Acquisition (the "Closing") would
include, without limitation, the following:
(a) With respect to Newco, the successful private placement by Newco
of equity securities ("New Securities") with you and a group of investors (you
together with such investors being the "Investors") and the payment therefor by
the Investors to Newco of no less than $2,500,000.00. With respect to Grace,
the successful private placement by Newco of New Securities with the Investors
and the payment therefor by the Investors to Newco of no less than $1,500,000.
(b) Compliance by Grace and Newco with their respective obligations
under the Purchase Agreement, and the representations and warranties being true
and correct as of the date of the Closing (the "Closing Date").
(c) No material adverse change having occurred in the business,
properties, operations or financial condition of the Company as of the Closing
Date.
(d) The approval of all legal proceedings and matters by counsel for
Grace and Newco.
4. The Purchase Agreement would provide that prior to the Closing, the
Company would be prohibited, among other things, from entering into any
transaction other than in the ordinary course of business or taking any actions
to be specified in the Purchase Agreement, without the written consent of Newco.
All amounts payable by the Company to Grace or amounts receivable by the Company
from Grace shall be cancelled on the Closing Date, except for accounts arising
from the purchase of goods and services in the regular course of business
transactions between the Company and Grace (including transactions with Grace's
subsidiaries). All obligations of the Com-
J. Peter Grace, III
November 5, 1993
Page -3-
pany to reimburse Grace for checks written by the Company in the ordinary course
of business prior to the Closing Date, and honored by Grace shall be deemed paid
and discharged effective as of the Closing Date. To the extent the New
Securities include securities other than Newco common stock, then the terms of
such New Securities would be subject to the approval of Grace.
5. It is the intention of the parties that the Closing would occur on or
about January 4, 1994. The Purchase Agreement would be subject to termination
prior to the Closing Date (i) by mutual consent, (ii) by any party if the
conditions to the obligations of such party have not been met or waived by
February 28, 1994, (iii) if there is any actual or threatened litigation to
restrain or invalidate the transactions contemplated by the Purchase Agreement,
which in the good faith judgment of Newco or Grace, makes it inadvisable to
proceed with the Closing, or (iv) by Newco if there shall have been any material
adverse change in the condition, business or prospects of the Company.
6. Each of Grace, on the one hand, and Newco and the Investors, on the
other hand, will pay all of their expenses and costs, including counsel fees and
expenses, incurred in connection with the Purchase Agreement and the
consummation of the transactions contemplated thereby. All costs and expenses
relating to the issuance and sale of the New Securities will be paid by Newco
and the Investors. Except as otherwise agreed, none of the expenses and/or
costs of Grace, Newco or the Investors will be paid out of the assets or profits
of the Company. Any stock transfer and similar taxes payable with respect to
the exchange of the common stock of the Company for the Preferred Stock and the
issuance of the New Securities will be paid by the parties designated in the
Purchase Agreement. Any agreement by Grace to pay Newco expenses in the event
the transaction does not proceed will be set forth in a separate letter.
7. Upon reasonable notice and during normal business hours, Newco, the
Investors and their agents shall have reasonable access to the Company and shall
be permitted to contact and make reasonable inquiry of the Company's executive
officers and employees regarding the operations and business of the Company.
Except for the details of trade secrets and sensitive intellectual property (if
any), Grace shall make available to Newco copies of all books, records, relevant
purchasing and other financial data and files of the Company, to the extent
reasonably requested by Newco. All Confidential Information shall be held in
strict confidence by Newco, the Investors and the offerees of the New Securities
and will not be disclosed to any other party except affiliates and persons and
entities assisting Newco in connection with the proposed private placement
(i.e., lenders, attorneys, accountants, investment bankers, etc.), and all of
them shall also hold all Confidential Information in strict confidence. If the
J. Peter Grace, III
November 5, 1993
Page -4-
transactions contemplated hereby do not close for any reason, all data,
information, files, records, copies of documents, worksheets and other materials
used and/or obtained by such offerees, Newco and/or the Investors in connection
therewith shall be returned to the Company, and all Confidential Information and
such materials shall not be used or disclosed to any other party. As used
herein, "Confidential Information" means information about the Company,
furnished to you pursuant to this agreement by or on behalf of Grace, but in any
event does not include information which (1) was available to the public prior
to the time of disclosure, (2) becomes available to the public through no act or
omission of yours, or (3) becomes available to you from a third party not known
by you to be under any obligation of confidentiality to Grace with respect
thereto.
8. Grace recognizes and acknowledges that you and other officers of the
Company will be acting on behalf of Newco in the private placement of the New
Securities while you are also continuing to perform your duties for the Company.
You agree that you will advise all potential investors and lenders that you are
working in an independent capacity in connection with the private placement of
the New Securities and that you are not acting on behalf of Grace or the
Company. All proposed investors and/or lenders shall additionally be advised
that any business plans and projections prepared with respect to the Company
have been prepared by you or on your behalf and not by Grace or the Company.
9. The existing employment arrangements and/or termination agreements
between Grace and certain of the executive officers of the Company will not in
any manner be affected or impaired as a result of the transactions set forth
herein, except as specifically provided in the Purchase Agreement.
10. During the period between the date hereof and the Closing, the Company
will be operated in the ordinary course of business.
11. Upon receipt of evidence (satisfactory to Grace) of firm commitments
from Investors to purchase not less than $1,500,000 of New Securities, each of
the parties agrees to use its best reasonable efforts to negotiate and execute,
as soon as practicable, definitive agreements (in form and substance
satisfactory to each of the parties) with respect to the transactions
contemplated by this letter of intent.
12. All of the rights and obligations of the parties under this letter of
intent shall be governed by the laws of the State of New York.
J. Peter Grace, III
November 5, 1993
Page -5-
13. Notwithstanding the foregoing or any past, present or future approvals
by the management, Board of Directors or stockholders of any party to the
proposed transaction (or any related person or entity), or any other past,
present or future written or oral indications of assent or indications of
results of negotiation or agreement to some or all matters then under
negotiation, it is agreed that no party to the proposed transaction (and no
person or entity related to any such party) will be under any legal obligation
with respect to the proposed transaction or any similar transaction (except for
the obligations set forth in paragraphs 6, 7, 8 and 9 above), and no offer,
commitment, estoppel, undertaking or obligation of any nature whatsoever shall
be implied in fact, law or equity, unless and until a formal agreement providing
for the transaction in detailed legal form has been executed and delivered by
all parties intended to be bound. This paragraph sets forth the entire
understanding and agreement of the parties (and all related persons and
entities) with regard to the subject matter of this paragraph and supersedes all
prior and contemporaneous agreements, arrangements and understandings related
thereto. The provisions of this paragraph may be amended, superseded or
canceled only be a written instrument which specifically states that it amends,
supersedes or cancels this paragraph, executed and delivered by an authorized
officer of each entity to be bound by such amendment.
If the foregoing correctly sets forth our agreement in principle,
please confirm by signing this letter in the space provided below.
Very truly yours,
W. R. GRACE & CO.
By:___________________________
Name: James P. Neeves
Title: Executive Vice President
Confirmed:
--------------------------------
J. Peter Grace, III
acting on behalf of Newco
February 28, 1994
Mr. J. Peter Grace, III
303 Lexington Avenue
New York, New York 10016
PURCHASE OF STOCK OF GRACE HOTEL SERVICES CORPORATION
Dear Peter:
This letter amends the agreement in principle, as set forth in letter
dated November 5, 1993 (the "Letter of Intent"), between W. R. Grace & Co., a
New York corporation ("Grace"), and you concerning the proposed acquisition of
all the capital stock of Grace Hotel Services Corporation, a Delaware
corporation (the "Company"), by a company newly formed by you ("Newco").
Capitalized terms not defined herein shall have the meaning assigned such terms
in the Letter of Intent.
Paragraph 5 of the Letter of Intent is amended to read as follows:
"5. It is the intention of the parties that the Closing would occur
on or about March 31, 1994. The Purchase Agreement would be subject to
termination prior to the Closing Date (i) by mutual consent, (ii) by any
party if the conditions to the obligations of such party have not been met
or waived by April 15, 1994, (iii) if there is any actual or threatened
litigation to restrain or invalidate the transactions contemplated by the
Purchase Agreement, which in the good faith judgment of Newco or Grace,
makes it inadvisable to proceed with the Closing, or (iv) by Newco if there
shall have been any material adverse change in the condition, business or
prospects of the Company."
All of the rights and obligations of the parties under this letter of
intent shall be governed by the laws of the State of New York.
Notwithstanding the foregoing or any past, present or future approvals
by the management, Board of Directors or stockholders of any party to the
proposed transaction (or any related person or entity), or any other past,
present or future written or oral indications of assent or indications of
results of negotiation or agreement to
J. Peter Grace, III
February 28, 1994
Page -2-
some or all matters then under negotiation, it is agreed that no party to the
proposed transaction (and no person or entity related to any such party) will be
under any legal obligation with respect to the proposed transaction or any
similar transaction (except for the obligations set forth in paragraphs 6, 7, 8
and 9 of the Letter of Intent), and no offer, commitment, estoppel, undertaking
or obligation of any nature whatsoever shall be implied in fact, law or equity,
unless and until a formal agreement providing for the transaction in detailed
legal form has been executed and delivered by all parties intended to be bound.
This paragraph sets forth the entire understanding and agreement of the parties
(and all related persons and entities) with regard to the subject matter of this
paragraph and supersedes all prior and contemporaneous agreements, arrangements
and understandings related thereto. The provisions of this paragraph may be
amended, superseded or canceled only be a written instrument which specifically
states that it amends, supersedes or cancels this paragraph, executed and
delivered by an authorized officer of each entity to be bound by such amendment.
If the foregoing correctly sets forth our agreement in principle,
please confirm by signing this letter in the space provided below.
Very truly yours,
W. R. GRACE & CO.
By:
---------------------------
Name: James P. Neeves
Title: Executive Vice President
Confirmed:
--------------------------------
J. Peter Grace, III
acting on behalf of HSC Holding Co., Inc.