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EXHIBIT 2.1
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SPIN-OFF AGREEMENT
BY AND AMONG
BRISTOL HOTEL COMPANY
BRISTOL HOTEL MANAGEMENT CORPORATION
AND
BRISTOL HOTELS & RESORTS, INC.
DATED AS OF MARCH 23, 1998
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TABLE OF CONTENTS
(Not a part of the Agreement)
PAGE
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I. DEFINITIONS ..................................................... 2
1.1. Certain Defined Terms ..................................... 2
1.2. Certain References ........................................ 9
II. THE SUBSIDIARY MERGERS, THE REORGANIZATION
AND THE CONTRIBUTION ............................................ 8
2.1. The Subsidiary Mergers .................................... 8
2.2. The Reorganization ........................................ 9
2.3. The Contribution .......................................... 9
2.4. Further Assurances; Transfer Not
Effected Prior to the Contribution Time ................... 10
2.5. No Representations or Warranties; Consents ................ 11
2.6. Post-Closing .............................................. 12
2.7. Pre-Closing Taxes and Tax Returns ......................... 13
2.8. Other Taxes and Tax Returns ............................... 14
III. SPIN-OFF AND RELATED TRANSACTIONS ............................... 15
3.1. Actions Prior to the Spin-Off ............................. 15
3.2. Consummation of Spin-Off .................................. 16
3.3. No Fractional Shares ...................................... 17
3.4. Redemption of Excess Shares ............................... 17
3.5. Unclaimed Stock ........................................... 18
IV. CERTAIN COVENANTS ............................................... 18
4.1. Access to Corporate Records and Personnel ................. 18
4.2. Confidentiality ........................................... 20
4.3. Employee Matters .......................................... 20
V. INDEMNIFICATION ................................................. 23
5.1. Indemnification by the Bristol Group ...................... 23
5.2. Indemnification by the BHR Group .......................... 23
5.3. Limitations on Indemnification Obligations ................ 23
5.4. Procedure for Indemnification ............................. 24
5.5. Survival .................................................. 25
VI. CONDITIONS PRECEDENT; CLOSINGS .................................. 26
6.1. Conditions Precedent ...................................... 26
6.2. Closings .................................................. 26
VII. MISCELLANEOUS ................................................... 30
7.1. Termination ............................................... 30
7.2. Complete Agreement; Construction .......................... 30
7.3. Survival of Agreements .................................... 30
7.4. Governing Law ............................................. 30
7.5. Notices ................................................... 30
7.6. Transaction Costs ......................................... 31
7.7. Amendments ................................................ 32
7.8. Successors and Assigns .................................... 32
7.9. No Third-Party Beneficiaries .............................. 32
7.10. Title and Headings ........................................ 32
7.11. Legal Enforceability ...................................... 32
7.12. Counterparts .............................................. 32
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LIST OF SCHEDULES
(Not a part of the Agreement)
SCHEDULE
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Bristol Hotels ....................................................... 1.1(i)
Bristol Merger Subsidiaries .......................................... 1.1(j)
Bristol Spin Subsidiaries ............................................ 1.1(k)
Bristol Organization Structure
(Pre-Spin and Pre-Merger) ................................... 2.1(a)
Subsidiary Mergers ................................................... 2.1(b)
Reorganization Steps ................................................. 2.2
Contribution Steps ................................................... 2.3
Bristol Organization Structure
(Post-Spin and Pre-Merger) .................................. 3.2
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INDEX OF DEFINED TERMS
(Not a part of the Agreement)
PAGE
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Accountants .......................................................... 13
Action ............................................................... 2
Actual Net Worth ..................................................... 13
Affiliate ............................................................ 2
Agent ................................................................ 2
Agreement ............................................................ 1
Amended Bristol Option ............................................... 22
Assets ............................................................... 2
Attribution Rules .................................................... 19
BHMC ................................................................. 1
BHR .................................................................. 1
BHR Common Shares .................................................... 2
BHR Group ............................................................ 2
BHR Indemnitees ...................................................... 24
BHR Option ........................................................... 22
Bristol .............................................................. 1
Bristol Benefit Plans ................................................ 3
Bristol Board ........................................................ 1
Bristol Director Plan ................................................ 22
Bristol Group ........................................................ 3
Bristol Hotel ........................................................ 3
Bristol Incentive Plan ............................................... 22
Bristol Indemnitees .................................................. 25
Bristol Merger Subsidiary ............................................ 3
Bristol Spin Subsidiary .............................................. 3
Code ................................................................. 3
Confidential Information ............................................. 21
Contribution ......................................................... 10
Contribution Time .................................................... 10
Disclosing Party ..................................................... 22
Effective Time ....................................................... 3
Excess Personal Property ............................................. 3
Excess Shares ........................................................ 19
Excess Shares Redemption ............................................. 19
Excess Shares Redemption Amount ...................................... 19
Excess Shares Stockholders ........................................... 19
Exchange Act ......................................................... 3
FelCor ............................................................... 1
Final Post-Closing Balance Sheet ..................................... 13
Fractional Shares .................................................... 18
Front Office Equipment ............................................... 3
Holdings ............................................................. 19
Holdings Distribution ................................................ 19
Hotel Properties Agreement ........................................... 31
Indemnifying Party ................................................... 25
Indemnitee ........................................................... 25
Indemnitee Notice .................................................... 26
IRS .................................................................. 4
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Liabilities .......................................................... 4
Losses ............................................................... 4
Management Tenant Corp ............................................... 4
Merger ............................................................... 1
Merger Agreement ..................................................... 1
Merger Assets ........................................................ 4
Merger Employees ..................................................... 4
Merger Liabilities ................................................... 4
New Leases ........................................................... 5
Original Bristol Option .............................................. 22
Partnerships ......................................................... 19
Post Closing Settlement Amount ....................................... 6
Post-Closing Balance Sheet ........................................... 5
Post-Closing Settlement Date ......................................... 13
Pre-Closing Tax Return ............................................... 6
Pre-Closing Taxes .................................................... 6
Prime Rate ........................................................... 6
Property Reserves .................................................... 6
Providing Party ...................................................... 22
Registration Statement ............................................... 6
Reorganization ....................................................... 10
Representatives ...................................................... 21
SEC .................................................................. 6
Securities Act ....................................................... 7
Spin-Off ............................................................. 1
Spin-Off Assets ...................................................... 7
Spin-Off Conversion Ratio ............................................ 17
Spin-Off Date ........................................................ 7
Spin-Off Liabilities ................................................. 7
Spin-Off Names ....................................................... 23
Spin-Off Record Date ................................................. 9
Spin-Off Time ........................................................ 17
Subsidiary Mergers ................................................... 9
Surviving Corporation ................................................ 1
Third-Party Claim .................................................... 25
Transfer ............................................................. 9
Union Contracts ...................................................... 9
Valuation Ratio ...................................................... 23
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SPIN-OFF AGREEMENT
This SPIN-OFF AGREEMENT (this "Agreement"), dated as of March 23, 1998,
is by and among Bristol Hotel Company, a Delaware corporation (together with any
successor entity, "Bristol"), Bristol Hotel Management Corporation, a Delaware
corporation (together with any successor entity, "BHMC"), and Bristol Hotels &
Resorts, Inc., a Delaware corporation (together with any successor entity,
"BHR").
RECITALS:
A. Bristol and FelCor Suite Hotels, Inc., a Maryland corporation
(together with any successor entity, "FelCor"), have entered into an Agreement
and Plan of Merger, dated the date hereof (the "Merger Agreement"), providing
for the merger of Bristol with and into FelCor (the "Merger"), with FelCor
continuing as the surviving corporation in the Merger (the "Surviving
Corporation"), on the terms and subject to the conditions set forth in the
Merger Agreement;
B. The Board of Directors of Bristol (the "Bristol Board") has deemed
it advisable and in the best interests of Bristol to consummate the Merger;
C. FelCor has informed Bristol that, in order for FelCor to maintain
its status as a real estate investment trust following the Merger, FelCor must
not acquire in the Merger certain assets and liabilities of the hotel and
management operation business of Bristol and its Subsidiaries;
D. The parties hereto have determined that it is necessary and
desirable in order to accomplish the objectives of the Merger (i) to restructure
certain Subsidiaries of Bristol, (ii) to allocate certain assets and liabilities
of Bristol between the Bristol Group and the BHR Group, (iii) to distribute pro
rata to the holders of Bristol Common Shares as of the Spin-Off Record Date all
of the outstanding BHR Common Shares in a transaction that is expected to be
treated for federal income tax purposes as a taxable dividend (the "Spin-Off"),
(iv) to set forth the transactions required to effect the Subsidiary Mergers,
the Reorganization, the Contribution, the Holdings Distribution, the Excess
Shares Redemption, the Leasing Transactions, the Spin-Off and certain other
matters that are required to be completed prior to the Effective Time, and (v)
to set forth their agreement as to certain matters between the Bristol Group and
the BHR Group following the Spin-Off; and
E. The completion of the Subsidiary Mergers, the Reorganization, the
Contribution, the Holdings Distribution, the Excess Shares Redemption, the
Leasing Transactions and the Spin-Off
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is a condition to FelCor's obligation to consummate the Merger.
Now, therefore, in consideration of the foregoing and the mutual
covenants contained in this Agreement, the parties hereto agree as follows:
I. DEFINITIONS
1.1. Certain Defined Terms. As used in this Agreement, the following
terms have the meanings when used herein with initial capital letters.
Capitalized terms used herein and not defined herein have the meanings set forth
in the Merger Agreement.
(a) "Action" means any suit, action, inquiry, proceeding or
investigation by or before any Governmental Entity, commission or arbitration
tribunal.
(b) "Affiliate" (or words of similar import) has the same meaning as
such term is defined in Rule 405 promulgated under the Securities Act.
(c) "Agent" means the distribution agent to be appointed by Bristol to
distribute the BHR Common Shares in the Spin-Off.
(d) "Assets" means all assets, real property, personal property,
leasehold interests, insurance, computer hardware, software, supplies, parts,
inventory, contracts, agreements, instruments, licenses, franchises, Permits,
notes, bonds, mortgages, indentures, prepaid expenses, goodwill, cash, cash
equivalents, securities, causes of action, claims, lawsuits, judgments,
insurance proceeds (including proceeds of casualty insurance and business
interruption insurance), trademarks, trade names (including restaurant trade
names), corporate names, patents, copyrights and other intellectual property
rights, books, records, documents and any other properties or interests that
would be reflected as an "asset" on a balance sheet prepared in accordance with
GAAP.
(e) "BHR Common Shares" means the common stock, par value of $.01 per
share, of BHR.
(f) "BHR Group" means, collectively, BHR, BHMC and the Bristol Spin
Subsidiaries.
(g) "Bristol Benefit Plans" means the plans described in Section 3.10
of the Merger Agreement or Schedule 3.10 to the Bristol Disclosure Letter to the
Merger Agreement.
(h) "Bristol Group" means, collectively, Bristol and the
Bristol Merger Subsidiaries.
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(i) "Bristol Hotel" means each of the hotels listed on Schedule 1.1(i)
hereto and any other real property interest of Bristol in a hotel (other than by
virtue of the New Leases) acquired between the date hereof and the Contribution
Time that is permitted pursuant to the Merger Agreement.
(j) "Bristol Merger Subsidiary" means each of the Bristol Subsidiaries
that is listed on Schedule 1.1(j) hereto and that will own only Merger Assets
after the Reorganization, including the Non-Corporate Bristol Hotel Subsidiaries
that following the Subsidiary Mergers will be the successor entities of the
Bristol Merger Subsidiaries that on the date hereof are taxable as corporations
under the Code.
(k) "Bristol Spin Subsidiary" means each of the Bristol Subsidiaries
(including BHMC and BHR) that is listed on Schedule 1.1(k) hereto and that will
own only Spin-Off Assets after the Reorganization.
(l) "Code" means the Internal Revenue Code of 1986, as amended, and the
Treasury regulations promulgated thereunder, including any successor
legislation.
(m) "Effective Time" means the effective time of the Merger, which will
be the later of (i) 9:00 a.m. on the Trading Day immediately following the
Spin-Off Date and (ii) the later of the time specified in or the time the
Department accepts the Articles of Merger for recording and the Secretary of
State of Delaware accepts the Certificate of Merger for filing.
(n) "Excess Personal Property" means the items of personal property at
one or more Bristol Hotels that are subject to a particular New Lease that would
cause the adjusted tax basis of all of the personal property of such Bristol
Hotel(s) to exceed 15% of the aggregate adjusted tax basis of the real and
personal property located at such Bristol Hotel(s) on the Spin-Off Date.
(o) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder, including any successor
legislation.
(p) "Front Office Equipment" means the computers, photocopier, postage
machine, facsimile machines, typewriters and other office equipment used by the
manager of a Bristol Hotel at the front desk or in the manager's offices in
connection with the management of the Bristol Hotel.
(q) "IRS" means the Internal Revenue Service or any successor entity.
(r) "Liabilities" means any and all debts, liabilities and obligations,
absolute or contingent, matured or unmatured, liquidated or unliquidated,
accrued or unaccrued, known or unknown, whenever arising, including without
limitation debts, liabilities and obligations for Taxes or arising under any
Law,
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Action, threatened Action, order or consent decree of any Governmental Entity or
any award of any arbitration tribunal, and those arising under the Bristol
Benefit Plans, the Union Contracts or any other contract, commitment, guaranty
or undertaking and all costs, expenses and fees related thereto.
(s) "Losses" mean any and all losses, charges, Liabilities, claims,
damages, penalties, costs and expenses (including without limitation
consequential, punitive or special damages, attorney's fees and charges and any
and all other expenses incurred in investigating, preparing or defending against
any Actions or threatened Actions).
(t) "Management Tenant Corp." means, collectively, any wholly owned
subsidiary of BHR that will be a tenant under one of the New Leases.
(u) "Merger Assets" means all the Assets (including Front Office
Equipment), tangible or intangible, of Bristol and its Subsidiaries, other than
the Spin-Off Assets. The term "Merger Assets" will also include or exclude such
other Assets as the parties hereto and FelCor agree prior to the Spin-Off Date.
(v) "Merger Employees" means all employees employed by the Bristol
Group and the BHR Group at the Contribution Time, and all former employees of
the Bristol Group and the BHR Group with respect to which either the Bristol
Group or the BHR Group have Liabilities accruing or incurred at the time of or
after the Contribution Time.
(w) "Merger Liabilities" means all Liabilities (other than Spin-Off
Liabilities) of Bristol and its Subsidiaries, regardless of whether any such
Liability arises or is first asserted prior to, on or after the Contribution
Time, including without limitation:
(i) all Liabilities (other than Spin-Off Liabilities) of the
Bristol Group that accrued or were incurred prior to, on or after the
Contribution Time (including without limitation all Liabilities with
respect to the ownership of the Merger Assets and any contracts with
respect to such ownership);
(ii) all Liabilities (other than Spin-Off Liabilities) of the
BHR Group that accrued or were incurred prior to the Contribution Time;
(iii) all Liabilities (other than Spin-Off Liabilities) that
(A) result from or arise out of the vesting of the Merger Assets in the
Bristol Group or the Surviving Corporation by virtue of the Merger, the
Reorganization or the Contribution or (B) arise immediately upon and by
virtue of the effectiveness of the Reorganization, the Contribution,
the Subsidiary Mergers or the Spin-Off;
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(iv) all Liabilities of Bristol or any of its Subsidiaries for
the indemnification of the directors and officers of Bristol or any of
the Bristol Subsidiaries arising under the charter, bylaws or
indemnification contracts of Bristol or such Bristol Subsidiaries as a
result of their service in such capacities prior to the Effective Time;
(v) all Liabilities (other than Spin-Off Liabilities)
for Pre-Closing Taxes; and
(vi) all Liabilities of Bristol for breach of its covenants in
this Agreement.
The term "Merger Liabilities" will also include or exclude such other
Liabilities as the parties hereto and FelCor agree prior to the Effective Time.
(x) "New Leases" means the leases to be entered into between members
of the Bristol Group and Management Tenant Corp., substantially in the form
attached as Exhibit B to the Agreement Regarding Master Hotel Agreement, dated
the date hereof, among BHR, FelCor and the FelCor Operating Partnership, or as
may otherwise be agreed to among such parties. Each New Lease will cover one
Bristol Hotel, except that where desirable to minimize any adverse tax effects
to FelCor from any Excess Personal Property at a Bristol Hotel, a New Lease may
cover more than one Bristol Hotel, as may be agreed to by the parties to this
Agreement, and the New Lease Form shall be revised as necessary to cover
multiple Bristol Hotels.
(y) "Post-Closing Balance Sheet" means the estimated balance sheet
based on prior month-end balances of the BHR Group as of the Spin-Off Date,
giving effect to the Subsidiary Mergers, the Reorganization, the Contribution,
the Excess Shares Redemption and the Spin-Off, and prepared in accordance with
GAAP consistent with the accounting practices and policies of Bristol prior to
the date hereof. The Post-Closing Balance Sheet will (i) be prepared by Bristol
prior to the Spin-Off Date and be subject to the approval of FelCor, (ii)
provide an estimated net worth of the BHR Group of $30 million, (iii) contain
only Spin-Off Assets and Spin-Off Liabilities, and (iv) assign no value to any
Excess Personal Property.
(z) "Post Closing Settlement Amount" means the amount that the Bristol
Group or the BHR Group, as appropriate, will be obligated to pay the other on
the Post-Closing Settlement Date such that the BHR Group would have had,
immediately after the Spin-Off and the Excess Shares Redemption and giving
effect to such payment and assigning no value to any Excess Personal Property,
a net worth of $30 million.
(aa) "Pre-Closing Tax Return" means any and all reports and returns
required to be filed with respect to Pre-Closing Taxes, including all reports
and returns with respect to Pre-Closing Taxes and other Taxes.
(bb) "Pre-Closing Taxes" means any and all Taxes that have been or will
be imposed upon any member of the Bristol Group or the BHR Group which have
accrued or are properly attributable to
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any Taxable period (or portion of such period) ending on or before the Spin-Off
Date. For purposes of determining what portion of any Tax that is imposed with
respect to a Taxable period beginning before the Spin-Off Date but ending after
the Spin-Off Date is attributable to the portion of such period ending on the
Spin-Off Date, the total amount of the Tax will be allocated between the period
prior to and after the Spin-Off Date in accordance with the percentage of total
days in the Taxable period that end on or before or that follow the date of the
Spin-Off Date, respectively.
(cc) "Prime Rate" means a rate equal to The Chase Manhattan Bank N.A.'s
prime rate, as publicly announced and in effect from time to time during such
period, calculated on the basis of the actual number of days elapsed for the
applicable period over 360 days.
(dd) "Property Reserves" means all funded reserves and escrow deposits
for property Taxes and assessments, ground lease rents, capital expenditures,
FF&E replacements and insurance and any other reserves held by third parties
pursuant to requirements of any of the Merger Liabilities, insofar as they
relate to the Bristol Hotels.
(ee) "Registration Statement" means the registration statement on Form
10 and/or S-1 (or other applicable form) to be filed with the SEC by BHR in
connection with the Spin-Off.
(ff) "SEC" means the Securities and Exchange Commission.
(gg) "Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations thereunder, and any
successor legislation.
(hh) "Spin-Off Assets" means the following Assets:
(i) all trade accounts receivable;
(ii) all inventory consisting of goods that do not constitute
depreciable assets, including but not limited to goods held for resale,
consumable supplies, cleaning supplies, linens, china, glass and
silverware and "Inventories of Merchandise" and "Inventories of
Supplies" as defined in the Uniform System, and any other property of a
type described in Section 1221(i) of the Code;
(iii) all operating agreements and personal property held
under operating leases;
(iv) all third party management agreements;
(v) all franchise licenses, liquor and business licenses and
Permits related to the operation of the Bristol Hotels;
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(vi) all trademarks, trade names and intellectual property;
(vii) all Excess Personal Property;
(viii) cash and cash equivalents of up to $15 million;
(ix) all stock or other equity interests in all of the Bristol
Spin Subsidiaries (following completion of the Reorganization); and
(x) the home office lease for the premises located at 14295
Midway Road, Dallas, Texas 75244, and all personal property, inventory
and office equipment located thereon.
(ii) "Spin-Off Date" means the date on which the Spin-Off is effective,
which Bristol and FelCor presently intend will occur on the Trading Day
immediately preceding the date of the Effective Time.
(jj) "Spin-Off Liabilities" means the following Liabilities, regardless
of whether any such Liability arises or is first asserted prior to, on or after
the Contribution Time:
(i) all Liabilities of the Bristol Group and the BHR Group,
whether accrued or incurred prior to, on or after the Contribution
Time, that would be borne by the "Lessee" under the form of the New
Leases (assuming for such purpose that the member of the Bristol Group
or the BHR Group was the "Lessee" under a New Lease that was in effect
with respect to each of the Bristol Hotels at the time such Liability
accrued or was incurred);
(ii) all Liabilities (other than indemnification Liabilities
described in clause (iv) of the definition of "Merger Liabilities") to
Merger Employees accruing or incurred prior to, on or after the
Contribution Time, including without limitation Liabilities arising
under the Bristol Benefit Plans, Union Contracts and the BHR Options
and any other Liabilities to the Merger Employees for wages, salaries,
bonus, vacation, severance, employee benefits and any other employment
compensation;
(iii) all Liabilities of the BHR Group that are reflected on
the Post-Closing Balance Sheet, including all trade accounts payable;
(iv) all Liabilities of the BHR Group incurred after
the Contribution Time;
(v) all Liabilities of Bristol and its Subsidiaries arising
under contracts comprising the Spin-Off Assets, except (i) for any
Liabilities that arise from a breach of a contract that constitutes a
Spin-Off Asset by virtue of the
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occurrence of the Reorganization, the Contribution, the Subsidiary
Mergers, the Leasing Transactions or the Spin-Off and (ii) to the
extent such Liabilities would be the responsibility of the "Lessor"
under the form of New Lease;
(vi) all Liabilities to Holiday Hospitality Corporation for
which notice has been given to Bristol pursuant to Section 2.11 of the
Hotel Properties Agreement;
(vii) all Liabilities of BHR under Section 7.2(d) of the
Merger Agreement; and
(viii) all Liabilities of BHR and BHMC for any breach of their
respective covenants in this Agreement.
The term "Spin-Off Liabilities" will also include or exclude such other
Liabilities as the parties hereto and FelCor agree prior to the Spin-Off Date.
(kk) "Spin-Off Record Date" means the record date for determining the
holders of Bristol Common Shares who as of the close of business on such date
will be entitled to receive the BHR Common Shares in the Spin-Off, which Bristol
and FelCor presently intend will be the Trading Day immediately preceding the
date of the Effective Time.
(ll) "Transfer" means to assign, transfer, convey and deliver.
(mm) "Union Contracts" means, collectively, all collective bargaining
agreements relating to Merger Employees.
1.2. Certain References. References to a "Schedule" or "Exhibit" are,
unless otherwise specified, to one of the Schedules or Exhibits attached to this
Agreement and are incorporated herein by reference, and references to an
"Article" or "Section" are, unless otherwise specified, to one of the Articles
or Sections of this Agreement.
II. THE SUBSIDIARY MERGERS, THE REORGANIZATION
AND THE CONTRIBUTION
2.1. The Subsidiary Mergers. As of the date hereof, the direct and
indirect Subsidiaries of Bristol are as set forth in Schedule 2.1(a). Subject to
the terms and conditions of this Agreement, prior to the Reorganization, the
Contribution and the Spin-Off, Bristol will cause, and will cause each Bristol
Subsidiary to cause, each Bristol Merger Subsidiary that is taxable as a
corporation under the Code to merge with and into one or more Non-Corporate
Bristol Hotel Subsidiaries in accordance with the steps set forth in Schedule
2.1(b) (such
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transactions, collectively, the "Subsidiary Mergers"). The Non-Corporate Bristol
Hotel Subsidiaries will, upon formation and following the Subsidiary Mergers,
take such actions, if any, necessary to cause such entities to be disregarded as
an entity or to be treated as a partnership for federal income Tax purposes.
2.2. The Reorganization. (a) Subject to the terms and conditions of
this Agreement, prior to the Contribution and the Spin-Off but following the
Subsidiary Mergers, Bristol will cause (i) Bristol Hotel Asset Company to
Transfer to Bristol as a distribution all of the capital stock of BHMC, (ii)
each of its Subsidiaries that owns any Merger Assets or that receives from one
of its Subsidiaries any of such Merger Assets and that is not a member of the
Bristol Group to Transfer as a distribution, directly or indirectly through a
series of distributions by such Subsidiaries, such Merger Assets to a member of
the Bristol Group, and (iii) each of its Subsidiaries that owns any Spin-Off
Assets or that receives from one of its Subsidiaries any of such Spin-Off Assets
and that is not a member of the BHR Group, to Transfer as a distribution,
directly or indirectly through a series of distributions by such Subsidiaries,
such Spin-Off Assets to Bristol or a member of the BHR Group. The foregoing
transactions will be effected in accordance with the steps specified in Schedule
2.2 (such transactions, collectively, the "Reorganization").
(b) At the closing of the Reorganization, each member of the Bristol
Group and the BHR Group will execute each of the agreements, certificates,
instruments and other documents set forth in Section 6.2(a) to which it is a
party and that are required to be executed and/or delivered at the closing of
the Reorganization.
2.3. The Contribution. (a) Subject to the terms and conditions of this
Agreement, prior to the Spin-Off but following the Subsidiary Mergers and the
Reorganization (the "Contribution Time"), Bristol will, without any
representations or warranties, express or implied, (i) Transfer to BHR or BHMC
as a capital contribution all of Bristol's right, title and interest in and to
the Spin-Off Assets, (ii) make to BHR an unsecured loan payable by BHR on the
Post-Closing Settlement Date, with interest computed thereon at the Prime Rate
and on other commercially reasonable terms acceptable to FelCor, in an amount in
cash, if required, such that BHR will have, as of the Spin-Off Date and after
giving effect to the Excess Shares Redemption, cash and cash equivalents of at
least $15.0 million, and (iii) Transfer to BHR as a capital contribution all of
Bristol's right, title and interest in and to all of the outstanding capital
stock of BHMC. On the Spin-Off Date, BHR or Bristol, as the case may be, will
execute a promissory note in favor of the other party in the amount of the
estimated Post Closing Settlement Amount, payable on the Post-Closing Settlement
Date, together with interest thereon at the Prime Rate. The foregoing
transactions will be
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effected in accordance with the steps specified in Schedule 2.3 (such
transactions, collectively, the "Contribution").
(b) At the Contribution Time, each member of the Bristol Group and the
BHR Group will execute each of the agreements, certificates, instruments and
other documents set forth in Section 6.2(b) to which it is a party and that are
required to be executed and/or delivered as of the Contribution Time.
(c) Prior to the Contribution Time, Bristol will cause all intercompany
accounts receivable or payable (whether or not currently due or payable) between
any member of the Bristol Group, on the one hand, and any member of the BHR
Group, on the other hand, to be offset against each other and settled in full,
other than (i) Liabilities of the BHR Group to the Bristol Group that are Merger
Liabilities or (ii) Liabilities of the Bristol Group to the BHR Group that are
Spin-Off Liabilities.
(d) Subject to the terms and conditions of this Agreement, at the
Contribution Time (i) BHR and BHMC will assume and agree to pay, perform and
discharge when due all the Spin-Off Liabilities and (ii) Bristol will assume and
agree to pay, perform and discharge when due all the Merger Liabilities.
2.4. Further Assurances; Transfer Not Effected Prior to the
Contribution Time. (a) To the extent that any Transfer of any Spin-Off Asset or
Merger Asset pursuant to this Agreement shall not have been effectively
consummated on or prior to the Contribution Time, the parties will cooperate to
effect the Transfer as promptly following the Contribution Time as may be
practicable. The parties also agree to cooperate to restructure the transactions
contemplated by this Agreement in such a manner so as to preserve FelCor's
status as a "real estate investment trust" under the Code following consummation
of the Merger, provided that no such actions could reasonably be expected to
have a material adverse economic effect on Bristol or its stockholders if the
Merger is not consummated or the BHR Group or its stockholders following the
Spin-Off. Each of the parties hereto will use its reasonable efforts, before and
after the Contribution Time, to take or cause to be taken, all actions, and to
do, or cause to be done, all things necessary, proper or desirable under
applicable laws and regulations (i) to carry out the purposes of this Agreement,
(ii) to vest in the BHR Group full title to all Spin-Off Assets as of the
Contribution Time, and (iii) to vest in the Bristol Group full title to all
Merger Assets as of the Contribution Time, including without limitation
obtaining all consents and approvals, entering into all amendatory agreements
and making all filings and applications which may be required for the
consummation of the transactions contemplated by this Agreement; provided that,
except as set forth in Section 6.1, the failure to obtain all consents and
approvals that may be required to consummate all of the transactions
contemplated by this Agreement will not excuse any
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party hereto from its obligations under this Agreement to consummate the
transactions contemplated hereby.
(b) In the event that any Transfer of a Merger Asset has not been
properly consummated, from and after the Contribution Time the BHR Group will
hold such Merger Asset in trust for the use and benefit of the Bristol Group,
and will take such other actions as may be reasonably requested by Bristol in
order to place the Bristol Group, insofar as is reasonably possible, in the same
position as would have existed had such Merger Asset been Transferred as
contemplated by this Article II. As and when any such Merger Asset is able to be
Transferred, such Transfer will be effected forthwith. The parties agree that,
as of the Contribution Time, (i) the Bristol Group will be deemed to have
acquired complete and sole beneficial ownership over all of the Merger Assets,
together with all rights, powers and privileges incident thereto and all the
Merger Liabilities incident thereto, and (ii) the BHR Group will be deemed to
have acquired complete and sole beneficial ownership over all of the Spin-Off
Assets, together with all rights, powers and privileges incident thereto and all
the Spin-Off Liabilities.
(c) Notwithstanding anything in this Agreement to the contrary, the
Transfer of the Spin-Off Assets and the Merger Assets will be deemed effective
as of the Contribution Time for all purposes, and ownership vested in the BHR
Group and the Bristol Group, respectively, for all purposes as of the
Contribution Time, notwithstanding that certain actions may be taken or required
to be taken after the Contribution Time in connection with such Transfers.
2.5. No Representations or Warranties; Consents. Each of the parties
hereto agrees that no party hereto is in this Agreement or in any other document
delivered pursuant to this Agreement representing or warranting in any way as to
the value or freedom from Encumbrance of, the legal sufficiency to convey title
to, or any other matter concerning any Spin-Off Asset or Merger Asset. IT IS
ALSO AGREED THAT THERE ARE NO WARRANTIES, EXPRESS OR IMPLIED, AS TO THE
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF ANY OF THE SPIN-OFF
ASSETS OR THE MERGER ASSETS, AND ALL SUCH ASSETS ARE BEING TRANSFERRED "AS IS,
WHERE IS" AND "WITH ALL FAULTS"; PROVIDED, HOWEVER, THAT THE ABSENCE OF
WARRANTIES WILL HAVE NO EFFECT UPON THE ALLOCATION OF LIABILITIES UNDER THIS
AGREEMENT OR THE MERGER AGREEMENT. Each party hereto understands and agrees that
no party hereto is in this Agreement or in any other document delivered pursuant
to this Agreement representing or warranting in any way that any consents or
approvals required to effect the transactions described herein will be obtained
or that the obtaining of any consents or approvals, the execution and delivery
of any amendatory agreements or the making of any filings or applications
contemplated by this Agreement will satisfy the provisions of any
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applicable Laws, judgments, instruments or agreements relating to the Spin-Off
Assets or the Merger Assets.
2.6. Post-Closing. (a) To the extent that the Actual Net Worth
determined as provided in this Section 2.6 is more or less than $30.0 million,
then (i) BHR will pay to Bristol the amount, if any, by which Actual Net Worth
exceeds $30.0 million or (ii) Bristol will pay to BHR the amount, if any, by
which Actual Net Worth is less than $30.0 million, as applicable, in each case,
within ten calendar days after the final determination of the Actual Net Worth
as provided in this Section 2.6 (such date, the "Post-Closing Settlement Date"),
by wire transfer of immediately available funds of the amount of such
difference, together with interest thereon from the Spin-Off Date to the date of
payment at the Prime Rate, to such account as has been designated by BHR or
Bristol, as applicable. The amount determined in the preceding sentence will
offset or be added to, as the case may be, the estimated Post Closing Settlement
Amount. For purposes of this Agreement, the "Actual Net Worth" means the actual
net worth of the BHR Group as reflected on a balance sheet for the BHR Group as
of the close of business on the Spin-Off Date prepared in accordance with this
Section 2.6 and on a basis consistent with, and using the same accounting
principles, policies, practices and procedures used in preparing, the
Post-Closing Balance Sheet and giving effect to the payment of the estimated
Post Closing Settlement Amount (the "Final Post-Closing Balance Sheet").
(b) Within 60 calendar days after the Spin-Off Date, BHR will prepare,
or cause to be prepared, and deliver to Bristol the Final Post-Closing Balance
Sheet setting forth the Actual Net Worth. BHR will provide Bristol and its
representatives reasonable access, during normal business hours, to the
facilities, personnel and accounting and other records of the BHR Group to the
extent reasonably determined by Bristol to be necessary to permit Bristol to
review the Final Post-Closing Balance Sheet; provided, however, that Bristol
will conduct any such review in a manner that does not unreasonably interfere
with the conduct of the business by the BHR Group after the Spin-Off Date.
(c) If, within 60 calendar days after the date of BHR's delivery of its
computation of the Actual Net Worth, Bristol determines in good faith that such
computation is inaccurate, Bristol will give written notice to BHR within such
60 calendar day period (i) setting forth Bristol's computation of Actual Net
Worth as of the Spin-Off Date and (ii) specifying in reasonable detail Bristol's
basis for its disagreement with BHR's computation. The failure by Bristol so to
express its disagreement or provide such specification within such 60 calendar
day period will constitute Bristol's acceptance of BHR's computation of the
Actual Net Worth. If BHR and Bristol are unable to resolve any disagreement
between them within ten calendar days after the giving of notice of such
disagreement, the items in dispute will be referred for determination to the
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office of a nationally recognized independent "Big 6" accounting firm, other
than Arthur Andersen LLP or Coopers & Lybrand L.L.P. (the "Accountants"), as
promptly as practicable. BHR and Bristol will use reasonable efforts to cause
the Accountants to render their decision as soon as practicable, including
without limitation by promptly complying with all reasonable requests by the
Accountants for information, books, records and similar items. The Accountants
will make a determination as to each of the items in dispute, which
determination will be (A) in writing, (B) furnished to each of the parties
hereto as promptly as practicable after the items in dispute have been referred
to the Accountants, (C) made in accordance with this Agreement, and (D)
conclusive and binding upon each of the parties hereto. In connection with the
Accountants' determination of the disputed items, (x) the Accountants will be
entitled, but not obligated, to rely on the workpapers, trial balances and
similar materials prepared by Arthur Andersen LLP in accordance with such firm's
examination of the financial statements of BHR and its Subsidiaries, (y) the
Accountants will not consider or make any adjustment in respect of any matter
which is not in dispute, other than an adjustment resulting from any other
adjustment in respect of a matter which is in dispute, and (z) the fees and
expenses of the Accountants will be shared equally by BHR and Bristol.
2.7. Pre-Closing Taxes and Tax Returns. (a) Payments and Returns.
Bristol will have the exclusive authority to file all Pre-Closing Tax Returns.
Bristol will timely file all Pre- Closing Tax Returns and timely pay in full all
amounts shown to be due thereon, provided, however, that the BHR Group will (i)
timely pay to Bristol all Taxes (other than Pre-Closing Taxes) required to be
included and paid on any Pre-Closing Tax Return and (ii) provide Bristol with
all information reasonably required by Bristol with respect to the income,
operations and assets of each BHR Group member, so as to permit Bristol to
prepare and file such Pre-Closing Tax Returns and to make payments of the Tax
shown to be due thereon, including estimated payments, on a timely basis.
Bristol will pay all Pre-Closing Taxes, including any estimated Taxes and any
alternative minimum Tax or similar Taxes. Nothing in this Section 2.7 will,
however, give any member of the BHR Group any right to a refund of any
Pre-Closing Taxes paid to Bristol or any other member of the Bristol Group by
any Taxing authority. Bristol will indemnify the BHR Group for any penalties or
other damages attributable to the failure by Bristol to make timely filings of
Pre-Closing Tax Returns or timely payment of all Pre-Closing Taxes.
(b) Controversies. Bristol will have exclusive authority to represent
the BHR Group before the IRS or any other Governmental Entity regarding all
Pre-Closing Tax Returns, including without limitation (i) the exclusive control
of any response to any examination by the IRS or any other Taxing authority and
(ii) the exclusive control over any contest of any issue through a final
determination including without limitation
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whether and in what forum to conduct such contest and whether and on what basis
to settle such contest.
(c) Subsequent Adjustments. Bristol (i) will pay and indemnify each
member of the BHR Group for all increases in Pre-Closing Taxes and (ii) will be
entitled to any refund or credit attributable to any and all decreases in such
Taxes, provided that such increases or decreases have been determined pursuant
to a final determination.
2.8. Other Taxes and Tax Returns.
(a) Payments. Bristol will pay all Taxes (other than Pre-Closing Taxes)
and will have exclusive authority to file all Tax Returns (other than
Pre-Closing Tax Returns) with respect to the income, operations or assets of the
members of the Bristol Group, and BHR will pay all Taxes that are not
Pre-Closing Taxes and will have exclusive authority to file all Tax Returns that
are not Pre-Closing Tax Returns with respect to the income, operations or assets
of the members of the BHR Group.
(b) Controversies. Each of Bristol and BHR, at its own expense, will
have exclusive authority to represent itself and the members of its respective
Group before the IRS or any other Taxing authority or any court regarding all
Tax matters (other than Pre-Closing Tax matters).
(c) Subsequent Adjustments. Each of Bristol and BHR will be liable, and
indemnify the other, for all increases in Taxes allocable to itself or any
member of its Group that are not Pre-Closing Taxes, and will be entitled to any
refund or credit attributable to all decreases in such Taxes, provided that such
increases or decreases have been determined pursuant to a final determination.
(d) Tax Attributes. If, on the Spin-Off Date, any Tax attribute of any
member of the BHR Group (including without limitation any Tax credit, net
operating loss or net capital loss) is available for use by any member of the
Bristol Group, Bristol will be entitled to apply such attributes to reduce the
Taxes of the Bristol Group in accordance with applicable law.
(e) Power of Attorney. In order to carry out the purposes and intent of
this Agreement, BHR hereby grants, and agrees that it will cause each BHR Group
member to grant, to Bristol and to appropriate officers of Bristol a power of
attorney to undertake in the name of the appropriate BHR Group members any
action contemplated herein, including without limitation the filing of returns
and claims for refund, making of elections, handling controversies and receipt
of refunds, provided that such power of attorney will relate only to Pre-Closing
Taxes. To the extent that such power of attorney is not recognized or respected,
BHR agrees to take, and to cause each BHR Group member to take, such further
actions, including grants to Bristol of additional powers
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of attorney or execution of returns or other documents, as may be reasonably
requested by Bristol to carry out the provisions of this Agreement.
(f) Payments. Amounts owed by either party hereto in respect of Tax
refunds or credits received by such party to which the other party is entitled
hereunder will be paid by the party receiving the refund to the other party
within five calendar days after the receipt or credit for such refund, and
amounts owed by either party hereto in respect of Tax increases will be paid by
such party to the other party within five calendar days after the final
determination with respect thereto.
(g) Return Preparation and Defense. Each party hereto agrees that it
will cooperate with the other and its representatives in a prompt and timely
manner in connection with the preparation and filing of any administrative or
judicial proceeding involving any Pre-Closing Tax Return filed or required to be
filed by Bristol or any members of the Bristol Group. Bristol will furnish to
BHR the portions of such Tax Returns reporting the operations of BHR and any BHR
Group member and the relevant portions of all reports relating to the
examination by the IRS or any other Governmental Entity of such Tax Returns.
(h) Term. Section 2.7 and Section 2.8 will apply to all Taxable years
(or portions thereof) commencing after December 31, 1997 and to all Taxable
years (or portions thereof) of any Bristol Group member or any BHR Group member
with respect to which the statutory period for assessments or refunds under
applicable law remains unexpired on the date hereof. Unless otherwise agreed in
writing by the parties, Section 2.7 and Section 2.8 will remain in force and be
binding so long as the statutory period for assessments or refunds under
applicable law remains unexpired for any Taxable period as to which either party
may have a claim against the other under this Agreement.
III. SPIN-OFF AND RELATED TRANSACTIONS
3.1. Actions Prior to the Spin-Off. (a) Prior to the Spin-Off, Bristol
will cause BHR to declare and issue a stock dividend or declare a stock split
such that Bristol will hold, after giving effect to such stock dividend or stock
split, an aggregate number of BHR Common Shares sufficient to permit Bristol to
distribute in the Spin-Off one BHR Common Share for every two outstanding
Bristol Common Shares held as of the Spin-Off Record Date (the ratio of the
total number of BHR Common Shares to Bristol Common Shares immediately after
giving effect to such stock split or stock dividend, the "Spin-Off Conversion
Ratio").
(b) The Bristol Board (or a duly authorized committee thereof) will (i)
declare a special dividend of all the BHR Common Shares held by Bristol, (ii)
authorize the delivery at the
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Spin-Off Time of all of the outstanding BHR Common Shares held by Bristol to the
Agent for distribution pro rata to the holders of all outstanding Bristol Common
Shares as of the Spin-Off Record Date, (iii) establish (A) the close of business
on the Trading Day immediately preceding the expected Effective Time as the
Spin-Off Record Date and (B) 5:00 p.m. (Dallas time) on the Spin-Off Record Date
as the "Spin-Off Time," and (iv) take any other actions necessary or appropriate
to effect the Spin-Off, but in no event may the Spin-Off occur prior to such
time as the Subsidiary Mergers, the Reorganization and the Contribution shall
have been effected and the conditions set forth in Section 6.1 of this Agreement
shall have been satisfied or waived.
(c) Prior to the Spin-Off Time, Bristol will prepare and mail to the
holders of Bristol Common Shares such information concerning the BHR Group, its
business, operations and management, the Spin-Off and such other matters as
Bristol reasonably determines are necessary or may be required to be disclosed
under the Securities Act or the Exchange Act. As soon as practicable following
the date of this Agreement, the BHR Group will prepare, and to the extent
required under applicable Law, file with the SEC, the Registration Statement and
any other documentation which is necessary to effectuate the Spin-Off in
compliance with applicable Laws. The Bristol Group and the BHR Group will use
reasonable efforts (i) to obtain as soon as practicable all required approvals
from the SEC and any other Governmental Entity in connection with the Spin-Off
and (ii) to have the Registration Statement declared effective under the
Securities Act as promptly as practicable after such filing.
(d) The Bristol Group and the BHR Group will take all reasonable steps
as may be necessary or appropriate under the securities or blue sky laws of any
State of the United States and of any foreign jurisdiction in which holders of
Bristol Common Shares reside in connection with the Spin-Off.
(e) The Bristol Group and the BHR Group will take all reasonable steps
necessary and appropriate to cause the conditions set forth in Section 6.1 of
this Agreement to be satisfied and to effect the Spin-Off at the Spin-Off Time.
(f) BHR will prepare and file, and will use its reasonable efforts to
have approved on or prior to the Spin-Off Time, an application for the listing
of the BHR Common Shares to be distributed in the Spin-Off on the NYSE, The
Nasdaq Stock Market or another national securities exchange or quotation system,
subject to official notice of issuance.
3.2. Consummation of Spin-Off. Subject to the conditions and rights of
termination set forth in this Agreement, on or prior to the Spin-Off Time,
Bristol will (i) irrevocably deliver to the Agent for the benefit of the Persons
entitled to receive BHR Common Shares in the Spin-Off a single stock certificate
representing all the BHR Common Shares, endorsed by Bristol in
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blank, and (ii) deliver to the Agent written instructions regarding the
distribution of such BHR Common Shares to such Persons in the Spin-Off.
Following the Spin-Off, the direct and indirect Subsidiaries of Bristol will be
as set forth on Schedule 3.2.
3.3. No Fractional Shares. (a) No certificate or scrip representing
fractional BHR Common Shares will be issued in the Spin-Off, and such fractional
share interests will not entitle the owner thereof to receive dividends, to vote
or to any other rights of a stockholder of BHR, except the right to receive the
amount of cash provided in Section 3.3(b) or Section 3.3(c).
(b) As soon as practicable after the Spin-Off Time, the Agent will
determine the aggregate number of fractional BHR Common Shares that will not be
delivered to holders of Bristol Common Shares (the "Fractional Shares"). Bristol
will instruct the Agent (i) to sell the Fractional Shares at then-prevailing
prices on the securities exchange on which the BHR Common Shares are listed and
(ii) to use reasonable efforts to complete the sale of the Fractional Shares as
promptly following the Spin-Off Time as, in the Agent's sole judgment, is
practicable consistent with obtaining the best execution of such sales in light
of prevailing market conditions, and in any event, within 90 calendar days
following the Spin-Off Time. The Agent will hold such proceeds in trust for the
holders of Bristol Common Shares who would otherwise be entitled to receive a
fraction of a BHR Common Share, and will determine the portion of the proceeds
to which each such holder is entitled, if any, by multiplying the amount of the
aggregate net proceeds of such sale by a fraction, the numerator of which is the
amount of the Fractional Shares to which such holder is entitled, and the
denominator of which is the aggregate number of Fractional Shares to which all
such holders of Bristol Common Shares are entitled. BHR will pay all
commissions, transfer taxes, Agent's fees and other out-of-pocket transaction
costs incurred in connection with the sale of such Fractional Shares.
(c) Notwithstanding the provisions of Section 3.3(b), Bristol may elect
at its option, exercised prior to the Spin-Off Time, in lieu of the issuance and
sale of Fractional Shares and the making of payments pursuant to Section 3.3(b),
to pay each holder of Bristol Common Shares who would otherwise be entitled to
receive a fraction of a Fractional Share, an amount in cash equal to the closing
trading price for a BHR Common Share on the Spin-Off Date multiplied by the
fraction of a BHR Common Share to which such holder would otherwise be entitled.
3.4. Redemption of Excess Shares. Immediately after the Spin-Off Time
and prior to the Effective Time, BHR will redeem that number of BHR Common
Shares of Bass America Inc., Holiday Corporation and their respective Affiliates
(the "Excess Shares Stockholders") equal to the excess of (i) the aggregate
number of BHR Common Shares that the Excess Shares Stockholders may be
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deemed to own immediately following the Spin-Off by virtue of the attribution
provisions of Section 544 of the Code (as modified by Section 856(h)(i)(B) of
the Code) (assuming that BHR is a REIT for such purposes) and/or Section 318 of
the Code (as modified by Section 856(d)(5) of the Code) (together, the
"Attribution Rules") over (ii) the number of shares that represent 9.9% of the
total number of outstanding BHR Common Shares as of the Spin-Off Time, after
giving effect to the redemption herein contemplated (such shares, the "Excess
Shares"), in consideration for payment by BHR to the Excess Shares Stockholders
by wire transfer of cash in the aggregate amount of $25,814,200 (the "Excess
Shares Redemption Amount") (such transaction, the "Excess Shares Redemption").
Each of Holiday Corp. and Bass America Inc. will tender for redemption to BHR a
pro rata portion of the Excess Shares based on the number of BHR Common Shares
held by it as compared to the aggregate number of BHR Common Shares held by
them.
3.5. Unclaimed Stock. Any BHR Common Shares that remain unclaimed by
any Person 180 calendar days after the consummation of the Spin-Off will be
returned to BHR, and any such stockholder may look only to BHR for such BHR
Common Shares, subject in each case to applicable escheat or other abandoned
property Laws.
3.6. Distribution of Bristol Common Shares. Immediately after the
Spin-Off and prior to the Effective Time, United/Harvey Holdings, L.P.
("Holdings") will distribute all of the Bristol Common Shares it owns to two
limited partnerships to be organized by Holdings and its partners of which an
affiliate of Holdings will be the general partner (the "Partnerships") in such
proportion as Holdings deems appropriate and as FelCor approves, such approval
not to be unreasonably withheld or delayed (such transaction, the "Holdings
Distribution"). The distribution of Bristol Common Shares pursuant to this
Section 3.6 will be effected in such a manner such that none of Holdings, the
Partnerships or any direct or indirect partners of Holdings or the Partnerships
will be deemed to own, by virtue of the Attribution Rules, in excess of 9.9% of
the outstanding FelCor Common Shares (after giving effect to the Merger).
IV. CERTAIN COVENANTS
4.1. Access to Corporate Records and Personnel. (a) As soon as
practicable following the Spin-Off, (i) the Bristol Group will deliver to the
BHR Group all original agreements, documents, books, records and files relating
to the Spin-Off Assets, the Bristol Spin Subsidiaries or the Spin-Off
Liabilities, to the extent such items are not already
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in the possession of the BHR Group, and (ii) the BHR Group will deliver to the
Bristol Group all original agreements, documents, books, records and files
relating to the Merger Assets, the Bristol Merger Subsidiaries or the Merger
Liabilities, to the extent such items are not already in the possession of the
Bristol Group. Notwithstanding the foregoing, Bristol may retain any Tax
returns, reports, forms or work papers relating to the Spin-Off Assets, the
Bristol Spin Subsidiaries or the Spin-Off Liabilities with respect to periods
prior to the Spin-Off Date provided that the Bristol Group provides the BHR
Group with copies of or reasonable access to such returns, reports, forms or
work papers as provided in Section 4.1(b) below.
(b) From and after the Spin-Off Date, to the extent reasonably required
in connection with any legitimate purpose specified in writing, each of the BHR
Group and the Bristol Group will (subject to applicable contractual and privacy
obligations) allow the other reasonable access to all business records and files
relating to the Spin-Off Assets, the Merger Assets, the Bristol Subsidiaries,
the Merger Liabilities or the Spin-Off Liabilities, in each case with respect to
periods prior to the Spin-Off Date, upon reasonable advance notice during normal
business hours. Each party will have the right, at its own expense, to make
copies of any such records and files. Any such access must not interfere with
the normal conduct of a party's business. Each party will preserve and maintain
and not destroy the records relating to the Spin-Off Assets, the Merger Assets,
the Bristol Subsidiaries, the Merger Liabilities and the Spin-Off Liabilities
for at least five years after the Spin-Off Date. Such retained information may
be destroyed or otherwise disposed of promptly after the business need therefor
has ended, provided that (i) the party proposing to destroy or otherwise dispose
of such information shall have provided at least 90 days prior written notice to
the other, specifying the category or type of information proposed to be
destroyed or disposed of, and (ii) if the recipient of such notice requests in
writing prior to the scheduled date for such destruction or disposal that any of
the information proposed to be destroyed or disposed of be delivered to such
requesting party, the party proposing the destruction or disposal shall promptly
arrange for the delivery of the information as is requested at the expense of
the party requesting such information.
(c) Any confidential, proprietary or trade secret information provided
under this Section 4.1 will be deemed "Confidential Information" for purposes of
Section 4.2 of this Agreement and will be held in accordance with the terms
thereof.
(d) From and after the Spin-Off Date, each of the BHR Group and the
Bristol Group will use its reasonable efforts to make available to the other,
upon written request, its officers, directors, employees and agents to the
extent that the same may reasonably be required in connection with any legal,
administrative or other proceedings in which the requesting party may from time
to time be involved. Such persons will be entitled to be reimbursed, upon the
presentation of appropriate invoices therefor, for all out-of-pocket expenses as
such persons may
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reasonably incur in satisfying their obligations under this Section 4.1(d).
4.2. Confidentiality. On and after the Spin-Off Date, each of the
Bristol Group and the BHR Group will, and will cause their respective directors,
officers, Affiliates, employees, agents, accountants, consultants and advisors
(collectively, "Representatives") to, hold in strict confidence all non-public
information relating to the other party (except information (a) in the public
domain through no fault of such party or any of its Representatives, including
without limitation information contained in the Registration Statements and
other statements and reports filed with the SEC, (b) that is or becomes
available to a party on a non-confidential basis from a source other than the
Providing Party, provided that the Disclosing Party did not know or should not
have reasonably known that the source of such information was bound by a
contractual, legal or fiduciary obligation not to disclose such information, or
(c) that is required to be disclosed pursuant to federal or state securities
laws or the requirements of any exchange on which the Bristol Common Shares or
BHR Common Shares are listed for trading, as appropriate)(collectively,
"Confidential Information"). Neither party may release or disclose, or permit
its Representatives to release or disclose, any Confidential Information to any
other Person except (i) if compelled to disclose such Confidential Information
by judicial or administrative process or, as advised by its counsel, by other
requirements of law, or (ii) to such party's auditors, attorneys, financial
advisors, prospective investors, bankers and other consultants and advisors who
need to know such information. In the event that either party or its
Representatives (a "Disclosing Party") is compelled to release or disclose, or
permit to be released or disclosed, any Confidential Information as provided in
the immediately preceding sentence, such Disclosing Party will (i) immediately
notify the other party (the "Providing Party") of the existence, terms and
circumstances surrounding such requirement, (ii) consult with the Providing
Party on the advisability of taking legally available steps to resist or narrow
such requirement, and (iii) if disclosure of such information is nevertheless
required, furnish only that portion of the Confidential Information which, in
the opinion of such Disclosing Party's counsel, such Disclosing Party is legally
compelled to disclose and cooperate with any action by the Providing Party to
obtain an appropriate protective order or other reliable assurance that
confidential treatment will be accorded the Confidential Information. The
Providing Party will reimburse the Disclosing Party for all reasonable
out-of-pocket expenses incurred by the Disclosing Party in connection with such
cooperation. Nothing herein will prohibit or restrict either party from
disclosing information with respect to its own business or operations.
4.3. Employee Matters. After the Spin-Off, each outstanding option
(each, an "Original Bristol Option") to purchase Bristol Common Shares under
Bristol's Amended and Restated 1995 Equity
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Incentive Plan (the "Bristol Incentive Plan") or Stock Option Plan for
Non-Employee Directors (the "Bristol Director Plan"), whether or not then
exercisable or vested, all of which Original Bristol Options that are
outstanding as of the Measurement Date are listed in Section 3.3 to the Merger
Agreement or Schedule 3.3 to the Bristol Disclosure Letter to the Merger
Agreement, will continue to have, and be subject to, the same terms and
conditions as set forth in the Bristol Incentive Plan or the Bristol Director
Plan (as the case may be) and related option agreements pursuant to which the
Original Bristol Options were granted, provided that (i) each Original Bristol
Option will be redenominated into two options which will be continuations of the
Original Bristol Options, effected by action of the Compensation Committee of
Bristol so that each Original Bristol Option becomes an "Amended Bristol Option"
and a "BHR Option," each having identical terms and conditions to the Original
Bristol Options except: (i) the BHR Options will be an option to purchase that
number of BHR Common Shares equal to the product of the number of Bristol Common
Shares covered by such Original Bristol Option immediately prior to the Spin-Off
Date and the Spin-Off Conversion Ratio, rounded to the nearest whole number of
BHR Common Shares, (ii) service with either Bristol, BHR or their respective
Subsidiaries following the Effective Time will satisfy the vesting requirements
and termination terms thereof, (iii) the per share exercise price for each BHR
Option will be an amount equal to the quotient of (A) the product of (x)
0.11385, subject to adjustment if and to the extent necessary to ensure that no
additional compensation expense results as specified in accordance with Emerging
Issues Task Force 90-9 (the "Valuation Ratio") and (y) the exercise price for
the Original Bristol Options, and divided by (B) the Spin-Off Conversion Ratio,
(iv) the per share exercise price for the Amended Bristol Options will be the
product of (x) 1 minus the Valuation Ratio and (y) the exercise price for the
Original Bristol Options, and (v) all references to the Bristol Board or Bristol
will, with respect to the BHR Options, be deemed to be references to the Board
of Directors of BHR and to BHR, respectively; provided however, that all
decisions relating to the interpretation or amendment of the Bristol Incentive
Plan or the Bristol Director Plan as it relates to Amended Bristol Options will
require the concurrence of the Compensation Committee of BHR, except for
adjustments to the exercise price or the nature of security to be issued upon
the exercise of Amended Bristol Options in connection with a transaction in
which Amended Bristol Options are treated in the same manner as options of the
Bristol Group. Effective as of the Spin-Off Time, (A) BHR will assume all
obligations with respect to each BHR Option, (B) BHR will reserve for issuance
the number of BHR Common Shares that become issuable upon the exercise of such
BHR Options, and (C) Bristol will have no obligations with respect to any BHR
Options.
4.4. Names, Trademarks, Etc. After the Spin-Off, the Bristol Group may
not use the name or mark "Bristol" or "Harvey" or any derivatives or variations
thereof or any name
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substantially resembling or confusingly similar to the name "Bristol" or
"Harvey" (the "Spin-Off Names"). As promptly as practicable after the Spin-Off,
the Bristol Group will discontinue use of any of the Spin-Off Names; provided,
however, that for a period of 30 calendar days following the Spin-Off, the
Bristol Group may use stationery, business forms and other similar supplies and
property which contain any of the Spin-Off Names thereon, provided that such
items are overstamped or otherwise appropriately indicate that the Bristol Group
is no longer affiliated with the BHR Group. The Bristol Group will promptly file
with all applicable Governmental Entities all documents necessary to delete from
their corporate names, qualifications or filings any of the Spin-Off Names and
will do, or cause to be done, all other acts reasonably necessary to cause such
documents to become effective no later than 30 calendar days following the
Spin-Off.
4.5. Bonds, Letters of Credit and Guarantees. (a) Prior to the
Contribution Time, BHMC will deliver to Bristol copies of all outstanding
performance and surety bonds, letter of credit obligations and guarantees
provided by any member of the Bristol Group and relating to any of the Spin-Off
Assets or the Spin-Off Liabilities. Upon the expiration of the current term of
any such bonds, letters of credit and guarantees, BHMC will use its best efforts
to obtain and have issued replacements for each such bond, letter of credit and
guarantee which do not impose any Liability on any member of the Bristol Group.
(b) Prior to the Contribution Time, Bristol will deliver to BHMC copies
of all outstanding performance and surety bonds, letter of credit obligations
and guarantees provided by any member of the BHR Group and relating to any of
the Merger Assets or the Merger Liabilities. Upon the expiration of the current
term of any such bonds, letters of credit and guarantees, Bristol will use its
best efforts to obtain and have issued replacements for each such bond, letter
of credit and guarantee which do not impose any Liability on any member of the
BHR Group.
4.6. Ancillary Agreements. Prior to the Spin-Off, the parties hereto,
with FelCor's prior approval, may enter into additional agreements to evidence
certain of their respective rights, obligations and agreements. To the extent
that such ancillary agreements do not specifically provide otherwise, the
provisions of such ancillary agreements will be deemed to supplement the
provisions of this Agreement and this Agreement will be deemed to supplement the
provisions of such ancillary agreements.
4.7. Forwarding of Notices. The Bristol Group and the BHR Group will
use their reasonable efforts to forward promptly to the other party all notices,
claims, correspondence and other materials which are received and determined to
pertain to the other party.
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4.8. Subsidiaries. The parties hereto will cause to be performed, and
hereby guarantee the performance of, all actions, agreements and obligations set
forth herein to be performed by any Subsidiary of such party and will use all
reasonable efforts to cause to be performed all actions, agreements and
obligations set forth herein to be performed by any other Affiliate of such
party.
V. INDEMNIFICATION
5.1. Indemnification by the Bristol Group. The Bristol Group will
indemnify, defend and hold harmless the BHR Group and each of their respective
stockholders, directors, officers, employees and agents, each Affiliate of any
of the foregoing and each of the heirs, executors, successors and assigns of any
of the foregoing (collectively, the "BHR Indemnitees") from and against any and
all Losses of any of the BHR Indemnitees relating to, resulting from or arising
out of any Merger Liability; provided however, that except for Liabilities set
forth in clause (iv) of the definition of Merger Liabilities, the Bristol Group
will not be obligated to indemnify the BHR Indemnitees for Liabilities arising
out of the intentional misconduct or gross negligence of the BHR Indemnitees
unless the event giving rise to such liability has been disclosed to FelCor in
writing prior to the Spin-Off.
5.2. Indemnification by the BHR Group. The BHR Group will indemnify,
defend and hold harmless the Bristol Group and each of their respective
stockholders, directors, officers, employees and agents, each Affiliate of any
of the foregoing and each of the heirs, executors, successors and assigns of any
of the foregoing, specifically including the Surviving Corporation and each of
its Subsidiaries, stockholders, directors, officers, employees and agents, each
Affiliate of any of the foregoing and each of the heirs, executors, successors
and assigns of any of the foregoing following the Merger (collectively, the
"Bristol Indemnitees") from and against any and all Losses of any of the Bristol
Indemnitees relating to, resulting from or arising out of any Spin-Off
Liability.
5.3. Limitations on Indemnification Obligations. The amount which any
party (an "Indemnifying Party") is or may be required to pay to any other party
(an "Indemnitee") pursuant to Section 5.1 or Section 5.2 will be reduced
(retroactively or prospectively) by any insurance proceeds or other amounts
actually recovered by or on behalf of such Indemnitee, in reduction of the
related Loss, net of any costs related to the recovery of such insurance
proceeds. If an Indemnitee receives the payment required by this Agreement from
an Indemnifying Party in respect of a Loss and subsequently actually receives
insurance proceeds or other amounts in respect of such Loss, then such
Indemnitee will pay to such Indemnifying Party a sum equal to the amount of such
insurance proceeds or other amounts actually
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received, net of any costs related to the recovery of such insurance proceeds,
such net amount not to exceed the aggregate amount of any payments received from
such Indemnifying Party pursuant to this Agreement in respect of such Loss.
5.4. Procedure for Indemnification. (a) If an Indemnitee receives
notice or otherwise learns of the assertion by a Person (including without
limitation any Governmental Entity) who is not a party to this Agreement or the
Merger Agreement of any claim or of the commencement by any such Person of any
Action (a "Third-Party Claim") with respect to which an Indemnifying Party may
be obligated to provide indemnification pursuant to this Agreement, such
Indemnitee will give such Indemnifying Party written notice (the "Indemnitee
Notice") thereof promptly after becoming aware of such Third-Party Claim;
provided, however, that the failure of any Indemnitee to give notice as provided
in this Section 5.4 will not relieve the applicable Indemnifying Party of its
obligations under this Article V, except to the extent that such Indemnifying
Party is prejudiced by such failure to give notice. Such Indemnitee Notice will
describe the Third-Party Claim in reasonable detail and will indicate the amount
(estimated if necessary) of the Loss that has been or may be sustained by such
Indemnitee.
(b) The Indemnitee will provide to the Indemnifying Party on request
all information and documentation reasonably necessary to support and verify any
Losses which the Indemnitee believes give rise to a claim for indemnification
hereunder and will give the Indemnifying Party reasonable access to all books,
records and personnel in the possession or under the control of the Indemnitee
which would have a bearing on such claim.
(c) Upon receipt of the Indemnitee Notice required by Section 5.4(a),
the Indemnifying Party will be entitled, if it so elects, to take control of the
defense and investigation with respect to such claim and to employ and engage
attorneys of its own choice to handle and defend the same, at the Indemnifying
Party's cost, risk and expense, upon written notice to the Indemnitee of such
election within 30 calendar days of receipt of the Indemnitee Notice. The
Indemnifying Party may not settle any Third-Party Claim that is the subject of
indemnification without the written consent of the Indemnitee, which consent may
not be unreasonably withheld; provided, however, that the Indemnifying Party may
settle a claim without the Indemnitee's consent if such settlement (i) includes
a complete release of the Indemnitee and (ii) does not require the Indemnitee to
make any payment or take any action or otherwise materially adversely affect the
Indemnitee. After notice from an Indemnifying Party to an Indemnitee of its
election to assume the defense of a Third-Party Claim, such Indemnifying Party
will not be liable to such Indemnitee under this Article V for any legal or
other expenses subsequently incurred by such Indemnitee in connection with the
defense thereof; provided, that, if the defendants in any such claim include
both the Indemnifying Party and one or more
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Indemnitees and the Indemnitee receives a written opinion of counsel that a
conflict of interest between such Indemnitees and such Indemnifying Party exists
in respect of such claim, such Indemnitees will have the right to employ
separate counsel to represent such Indemnitees, and in that event the reasonable
fees and expenses of such separate counsel (but not more than one separate
counsel) will be paid by such Indemnifying Party.
(d) If an Indemnifying Party elects to defend or to seek to compromise
any Third-Party Claim, the appropriate Indemnitee will (i) cooperate in all
reasonable respects with the Indemnifying Party in connection with such defense
and (ii) not admit any liability with respect to, or settle, compromise or
discharge, such Third-Party Claim without the Indemnifying Party's prior written
consent.
(e) If the Indemnifying Party declines or fails to assume the defense
of any Third-Party Claim, or fails to notify the Indemnitee that it will defend
such claim within 30 calendar days after receipt of the Indemnitee Notice, the
Indemnitee may defend against such claim (provided that the Indemnitee may not
settle such claim without the consent of the Indemnifying Party). The expenses
of all proceedings, contests or lawsuits in respect of such claims will be borne
by the Indemnifying Party, but only if the Indemnifying Party is responsible
pursuant to this Article V to indemnify the Indemnitee in respect of the
Third-Party Claim.
(f) In the event of payment by an Indemnifying Party to any Indemnitee
in connection with any Third-Party Claim, such Indemnifying Party will be
subrogated to and will stand in the place of such Indemnitee as to any events or
circumstances with respect to which such Indemnitee may have any right or claim
relating to such Third-Party Claim against any claimant or plaintiff asserting
such Third-Party Claim. Such Indemnitee will cooperate with such Indemnifying
Party in a reasonable manner, and at the cost and expense of such Indemnifying
Party, in prosecuting any subrogated right or claim.
(g) With respect to any Third-Party Claim for which the Indemnifying
Party assumes responsibility for defense, the Indemnifying Party will inform the
Indemnitee, upon the reasonable written request of the Indemnitee, of the status
of efforts to resolve such Third-Party Claim. With respect to any Third-Party
Claim for which the Indemnifying Party does not assume such responsibility, the
Indemnitee will inform the Indemnifying Party, upon the reasonable written
request of the Indemnifying Party, of the status of efforts to resolve such
Third-Party Claim.
5.5. Survival. The obligations of each of the Bristol Group and the BHR
Group under Articles IV and V will survive the Merger and the sale or other
transfer by it of any of the Spin-Off Assets or the Merger Assets, the Spin-Off
Liabilities or the Merger Liabilities. Upon effectiveness of the Merger, the
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Surviving Corporation will be deemed to have assumed all of Bristol's
obligations and liabilities under this Agreement and to be entitled to all of
the rights and benefits of Bristol hereunder.
VI. CONDITIONS PRECEDENT; CLOSINGS
6.1. Conditions Precedent. The obligations of the parties to effect the
Subsidiary Mergers, the Reorganization, the Contribution, the Excess Shares
Redemption, the Leasing Transactions, the Holdings Distribution and the Spin-Off
are subject to the fulfillment or waiver of each of the following
conditions:
(a) The Registration Statement shall have been declared
effective by the SEC and shall not be the subject of any stop order or
proceeding by the SEC seeking a stop order;
(b) The consummation of the transactions contemplated by this
Agreement and the Merger Agreement shall not be prohibited by
applicable Law and no Governmental Entity of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, executive order, decree, injunction or other
order (whether temporary, preliminary or permanent) which is in effect
and which materially restricts, prevents or prohibits consummation of
the Subsidiary Mergers, the Reorganization, the Contribution, the
Leasing Transactions, the Spin-Off, the Merger or any transaction
contemplated by this Agreement or the Merger Agreement; and
(c) The conditions specified in Article VI of the Merger
Agreement (other than conditions covering the transactions required to
be accomplished under this Agreement) shall have been satisfied or
waived by all parties entitled to waive such conditions and the Merger
Agreement shall not have been terminated.
6.2. Closings. The closing of the Subsidiary Mergers, the
Reorganization, the Contribution, the Excess Shares Redemption, the Holdings
Distribution, the Leasing Transactions and the Spin-Off will take place at the
offices of Jones, Day, Reavis & Pogue, 2300 Trammell Crow Center, 2001 Ross
Avenue, Dallas, Texas at the times set forth below, at which times the
respective documents listed below will be executed and delivered by the parties
thereto.
(a) The Subsidiary Mergers Closing. The closing of the Subsidiary
Mergers will take place, and will be deemed effective for all purposes, at 9:00
a.m., Dallas time, on the Spin-Off
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Date. At such closing, the following documents will be delivered:
(1) Certified resolutions of the Boards of Directors
and stockholders (if necessary) of each of the Bristol Merger
Subsidiaries that is taxable as a corporation under the Code
authorizing the merger of each such Subsidiary with and into
the appropriate Non-Corporate Bristol Hotel Subsidiary as
contemplated by Schedule 2.1;
(2) Certified copies of the filing with the
appropriate Governmental Entity of such articles, agreements
and certificates of merger as may be required under applicable
law to effect the merger of each such Bristol Merger
Subsidiary with and into the appropriate Non-Corporate Bristol
Hotel Subsidiary as contemplated by Schedule 2.1;
(3) Certified copies of the certificate of formation
and other organizational documents of each Non-Corporate
Bristol Hotel Subsidiary; and
(4) Such other documents, instruments and
certificates that may be reasonably required to effect the
Subsidiary Mergers.
(b) The Reorganization Closing. The closing of the Reorganization will
take place, and will be deemed effective for all purposes at, 11:00 a.m., Dallas
time, on the Spin-Off Date. At such closing, the following documents will be
delivered:
(1) Certified resolutions of the Board of Directors
of Bristol Hotel Asset Company authorizing the distribution to
Bristol of all of the BHMC Common
Shares held by it;
(2) Certified resolutions of the Boards of Directors
of each Bristol Subsidiary, as appropriate, authorizing,
respectively, the distribution of all of the Merger Assets and
Spin-Off Assets held by such Subsidiary or received from
another Bristol Subsidiary as contemplated in Schedule 2.2;
and
(3) Such assignment agreements, bills of sale, stock
certificates, stock powers, stock transfer forms and other
instruments of conveyance that may be necessary to reflect the
distribution of the Spin-Off Assets and the Merger Assets as
contemplated in Schedule 2.2.
(c) The Contribution Closing. The closing of the Contribution will take
place, and will be deemed effective for
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all purposes, at 1:00 p.m., Dallas time, on the Spin-Off Date. At such closing,
the following documents will be delivered:
(1) Certified resolutions of the Board of Directors
of Bristol authorizing the contribution to the capital of BHR,
BHMC or any other member of the BHR Group of all of the
Spin-Off Assets;
(2) Certified resolutions of the Board of Directors
of Bristol authorizing the contribution to the capital of BHR
of all of the outstanding capital stock of BHMC; and
(3) Such assignment and assumption agreements, bills
of sale, stock certificates, stock powers, stock transfer
forms and other instruments of conveyance or assumption that
may be necessary to reflect the distribution, contribution
and/or assumption of the Spin-Off Assets, the Merger Assets,
the Merger Liabilities and the Spin-Off Liabilities as
contemplated in Schedule 2.3.
(d) The Spin-Off Closing. The closing of the Spin-Off, the Excess
Shares Redemption, the Holdings Distribution and the Leasing Transactions will
take place, and will be deemed effective for all purposes, at 5:00 p.m., Dallas
time, on the Spin-Off Date. At such closing, the following documents will be
delivered:
(1) Certified resolutions of the Board of Directors
of Bristol (i) with respect to the actions required by Section
3.1(b) and (ii) authorizing the taking of all other actions
necessary or appropriate to effect the Spin-Off;
(2) Resolutions of the Board of Directors and sole
stockholder of BHR and the other appropriate members of the
BHR Group electing the officers and directors of the members
of the BHR Group and authorizing (i) the amendment and
restatement of the certificate of incorporation and bylaws of
BHR, (ii) the stock dividend or stock split, (iii) the Excess
Shares Redemption, (iv) the listing application, (v) the New
Leases and the Leasing Transactions, (vi) the franchise
agreements, (vii) the assumption of the BHR Options, (viii)
the stockholders and registration rights agreements, (ix) the
Hotel Properties Agreement, and (x) the taking of all other
actions necessary or appropriate to effect the Spin-Off;
(3) Certificate of the Agent, dated the Spin-Off
Time, acknowledging receipt of the stock certificate
representing the BHR Common Shares to be distributed in the
Spin-Off, together with a letter from Bristol
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instructing the Agent as to the distribution of such Shares;
(4) Preliminary approval of the NYSE, The Nasdaq
Stock Market or any other nationally recognized securities
exchange or quotation system as to the listing of the BHR
Common Shares on such exchange or quotation system;
(5) Certificate of the Excess Shares Stockholders,
dated prior to the Effective Time, acknowledging receipt of
cash in exchange for the Excess Shares held by the Excess
Shares Stockholders and attaching a stock power irrevocably
assigning such Excess Shares to BHR and certifying as to their
beneficial ownership of Bristol and BHR;
(6) The New Leases;
(7) Agreements or notices terminating all existing
management contracts with respect to any Bristol Hotel
executed by the appropriate parties thereto;
(8) The Hotel Properties Agreement executed by
Holiday Hospitality Corp., BHR and the other parties thereto
(the "Hotel Properties Agreement");
(9) Assumption agreement executed by BHR pursuant to
which BHR expressly assumes all of Bristol's obligations under
the BHR Options as described in Section 4.3 of this Agreement;
(10) An opinion of Jones, Day, Reavis & Pogue,
counsel to Bristol, to the effect that no approval of the
holders of Bristol Common Shares is required in connection
with the consummation of the Subsidiary Mergers, the
Reorganization, the Contribution, and the Spin-Off if such
approval is not solicited by Bristol in the Proxy Statement;
(11) Such other opinions that Bristol may reasonably
determine are appropriate in light of the transactions
contemplated by this Agreement;
(12) Stock transfer forms and/or stock powers of
Holdings assigning to the Partnerships all of the Bristol
Common Shares held by Holdings immediately following the
Spin-Off Time but effective immediately before the Effective
Time and certificates from Holdings and the Partnerships as to
the beneficial ownership of Bristol and BHR by Holdings and
the Partnerships;
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(13) Acknowledgment of FelCor that it will assume the
obligations of Bristol under this Agreement effective as of
the Effective Time; and
(14) Such other documents, instruments and
certificates that may be reasonably required to effect the
Spin-Off, the Excess Shares Redemption, the Leasing
Transactions and the Holdings Distribution.
VII. MISCELLANEOUS
7.1. Termination. Prior to the Spin-Off Date, this Agreement may be
terminated and the Reorganization, the Contribution, the Subsidiary Mergers, the
Excess Shares Redemption and the Holdings Distribution and/or the Spin-Off
abandoned for any or no reason at any time prior to the closing of such
transactions in the sole discretion of the Bristol Board, without the approval
of FelCor or the stockholders of Bristol or FelCor. In the event of such
termination, no party will have any liability of any kind to any other party.
Nothing in this Section 7.1 may be construed to limit Bristol's obligations
under Sections 1.2, 5.3 and 5.9 of the Merger Agreement or Bristol's liabilities
under the Merger Agreement in the event the transactions contemplated by this
Agreement are not consummated.
7.2. Complete Agreement; Construction. This Agreement, including the
Schedules and Exhibits hereto, constitutes the entire agreement between the
parties with respect to the subject matter hereof, and supersedes all previous
negotiations, commitments and writings with respect to such subject matter.
7.3. Survival of Agreements. Except as otherwise contemplated by this
Agreement, all covenants and agreements of the parties contained in this
Agreement will survive the Spin-Off Date and the consummation of the
transactions contemplated hereby.
7.4. Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of Delaware, without regard to the
principles of conflict of laws thereof.
7.5. Notices. All notices and other communications hereunder must be in
writing and must be delivered by hand, mailed by registered or certified mail
(return receipt requested) or sent by facsimile transmission to the parties at
the following addresses (or at such other addresses for a party as may be
specified by like notice), and will be deemed given on the date on which such
notice is received:
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(A) To any member of the Bristol Group:
Before the Spin-Off, to:
Bristol Hotel Company
14295 Midway Road
Dallas, Texas 75244
Attention: J. Peter Kline
Attention: Joel M. Eastman
Telecopy: (972) 391-1515
After the Spin-Off, to:
FelCor Suite Hotels, Inc.
545 E. John Carpenter Freeway
Suite 1300
Irving, Texas 75062
Attention: President
Attention: General Counsel
Telecopy: (972) 444-4949
(B) To any member of the BHR Group:
Before the Spin-Off, to:
Bristol Hotel Management Corporation
14295 Midway Road
Dallas, Texas 75244
Attention: J. Peter Kline
Attention: Joel M. Eastman
Telecopy: (972) 391-1515
After the Spin-Off, to:
Bristol Hotels & Resorts, Inc.
14295 Midway Road
Dallas, Texas 75244
Attention: J. Peter Kline
Attention: General Counsel
Telecopy: (972) 391-1515
7.6. Transaction Costs. Except as otherwise provided in this Agreement,
all costs and expenses of any party hereto will be paid by the party that incurs
such costs and expenses. Bristol will pay all costs and expenses relating to the
Reorganization, the Contribution, the Subsidiary Mergers and the Merger,
including without limitation all costs and expenses of (i) printing and
distributing the Proxy Statement, (ii) making any filings or obtaining any
consents in connection with the Reorganization, the Contribution, the Subsidiary
Mergers or the Merger, and (iii) any proxy or solicitation agent or similar
consultants in connection with the Bristol Stockholders Meeting. BHR will pay
all costs and expenses relating to the Spin-Off, including without limitation
all costs and expenses of (a) the
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filing, printing and distribution of the Registration Statement, (b) the listing
of the BHR Common Shares on a securities exchange or quotation system, (c) the
Agent, (d) printing and engraving stock certificates, (e) any transfer agent
engaged by BHR and (f) making any other federal, state, local or other
regulatory filings in connection with the Spin-Off.
7.7. Amendments. This Agreement may not be modified or amended except
by an agreement in writing signed by the parties.
7.8. Successors and Assigns. This Agreement is not assignable, in whole
or in part, directly or indirectly, by either party hereto without the prior
written consent of the other and the prior written consent of FelCor, and any
attempt to assign any rights or obligations arising under this Agreement without
such consent will be void; provided, however, that (i) the rights and
obligations of the parties under this Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and their respective successors
and permitted assigns (including the Surviving Corporation by virtue of the
Merger), and (ii) the rights and obligations of Bristol under this Agreement may
be assigned in whole or in part at the Effective Time by the Surviving
Corporation to the FelCor Operating Partnership.
7.9. No Third-Party Beneficiaries. Except for the provisions of Article
V relating to Indemnitees and as otherwise expressly provided herein, the
provisions of this Agreement are solely for the benefit of the signatories
hereto (including FelCor) and their respective successors and permitted assigns
and will not be deemed to confer upon third parties any remedy, claim,
liability, reimbursement, claim of action or other right.
7.10. Title and Headings. Titles and headings to sections, articles,
exhibits and schedules herein are inserted for the convenience of reference only
and are not intended to be a part of or to affect the meaning or interpretation
of this Agreement.
7.11. Legal Enforceability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction will, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof. Any such prohibition or
unenforceability in any jurisdiction will not invalidate or render unenforceable
such provision in any other jurisdiction. Without prejudice to any rights or
remedies otherwise available to any party hereto, each party hereto acknowledges
that damages would be an inadequate remedy for any breach of the provisions of
this Agreement and agrees that the obligations of the parties hereunder are
specifically enforceable.
7.12. Counterparts. This Agreement may be executed in one or more
counterparts, each of which when executed will be deemed an original, but all of
which together will constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
BRISTOL HOTEL COMPANY
By: /s/ J. PETER KLINE
-------------------------------------
Name: J. Peter Kline
Title: President
BRISTOL HOTEL MANAGEMENT CORPORATION
By: /s/ J. PETER KLINE
-------------------------------------
Name: J. Peter Kline
Title: President
BRISTOL HOTELS & RESORTS, INC.
By: /s/ J. PETER KLINE
-------------------------------------
Name: J. Peter Kline
Title: President
ACKNOWLEDGED AND AGREED:
FELCOR SUITE HOTELS, INC.
By: /s/ LAWRENCE D. ROBINSON
-------------------------------------
Name: Lawrence D. Robinson
Title: Senior Vice President
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