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EXHIBIT 10.18
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STOCKHOLDERS' AND REGISTRATION
RIGHTS AGREEMENT
BY AND AMONG
FELCOR SUITE HOTELS, INC.
BASS PLC
BASS AMERICA INC.
HOLIDAY CORPORATION
UNITED/HARVEY INVESTORS I, L.P.
UNITED/HARVEY INVESTORS II, L.P.
UNITED/HARVEY INVESTORS III, L.P.
UNITED/HARVEY INVESTORS IV, L.P.
AND
UNITED/HARVEY INVESTORS V, L.P.
DATED JULY 28, 1998
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS..................................................1
1.1. Definitions.......................................1
ARTICLE II
REGISTRATION RIGHTS..........................................5
2.1. Shelf Registration of Resales.....................5
2.2. "Market Stand-Off" Agreement......................5
2.3. Registration Procedures...........................6
2.4. Registration Expenses............................13
2.5. Indemnification..................................13
2.6. Rule 144.........................................17
2.7. Underwritten Registrations.......................17
2.8. Indemnification of Statutory Underwriters........17
ARTICLE III
CORPORATE GOVERNANCE........................................18
3.1. Composition of the Board.........................18
3.2. Voting................................................18
ARTICLE IV
RESTRICTIONS ON TRANSFER....................................18
4.1. General Restriction..............................18
4.2. Transfers in Compliance with Law.................19
4.3. Legends..........................................19
4.4. Unauthorized Transfers...........................20
4.5. Transfers to Affiliates..........................20
ARTICLE V
RIGHT TO PARTICIPATE IN SALES...............................20
5.1. Right to Participate in Sales....................20
5.2. Securities Not Subject to Tag-Along Right........22
5.3. Termination......................................23
ARTICLE VI
PREEMPTIVE RIGHTS; WAIVER...................................23
6.1. Preemptive Rights................................23
6.2. Regulatory Restrictions; Termination.............23
ARTICLE VII
MISCELLANEOUS...............................................24
7.1. Enforcement......................................24
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TABLE OF CONTENTS
Page
7.2. No Inconsistent Agreements.......................24
7.3. Amendments and Waivers...........................24
7.4. Notices..........................................25
7.5. Owner of Registrable Securities..................25
7.6. Successors and Assigns...........................26
7.7. Counterparts.....................................26
7.8. Headings.........................................26
7.9. Governing Law....................................26
7.10. Entire Agreement.................................26
7.11. Attorneys' Fees..................................26
7.12. Severability.....................................26
7.13. Changes in Outstanding Securities................27
7.14. Termination......................................27
7.15. Acquisition of BHR Shares........................27
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INDEX OF DEFINED TERMS
Page
Affiliate ..................................................1
Agreement ..................................................1
BAI ..................................................1
Bass Parties ..................................................2
Beneficial ownership..................................................2
BHR ..................................................5
BHR Common Shares .................................................27
Blackout .................................................12
Board ..................................................2
Bristol ..................................................1
Business Day ..................................................2
Co-Sale Acceptance Period............................................20
Co-Sale Notice .................................................20
Co-Selling Stockholder...............................................20
Control ..................................................2
Derivatives .................................................19
Election Notice .................................................23
Exchange Act ..................................................2
Excluded Securities ..................................................2
Excluded Transaction.................................................21
Fair Market Value ..................................................2
FelCor ..................................................1
FelCor Common Stock ..................................................1
Form S-4 ..................................................5
HC ..................................................1
Holdings Parties ..................................................2
indemnified party .................................................15
indemnifying party .................................................15
Initial Ownership ..................................................2
Lock-Up Period .................................................18
Losses .................................................13
Market Stand-Off ..................................................5
Merger Agreement ..................................................1
Non-Offering Stockholders............................................20
Offer Notice .................................................20
Offer Price .................................................20
Offered Securities .................................................20
Offering Stockholder.................................................20
Ownership Percentage..................................................3
Partnership A ..................................................1
Partnership B ..................................................1
Permitted Transferee..................................................3
Person ..................................................3
PLC ..................................................1
Portion .................................................21
Pro Rata Number .................................................21
Prospectus ..................................................3
Public Offering ..................................................3
Qualified Offering .................................................23
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Qualified Offering Notice............................................23
Registrable Securities................................................3
Registration Statement................................................4
Registration Stockholder..............................................4
Regulatory Objection.................................................23
Rule 144 ..................................................4
Rule 145 ..................................................4
Rule 415 ..................................................4
SEC ..................................................4
Securities .................................................19
Securities Act ..................................................4
Special Counsel ..................................................6
Stockholder ..................................................4
Subsidiary ..................................................4
Suspension Notice .................................................12
Third Party ..................................................4
Third Party Sale .................................................20
Total Voting Power ..................................................4
Transfer .................................................18
Unauthorized Transfer................................................20
Underwritten Registration or Underwritten Offering....................4
Voting Securities ..................................................5
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STOCKHOLDERS' AND REGISTRATION RIGHTS AGREEMENT
This STOCKHOLDERS' AND REGISTRATION RIGHTS AGREEMENT (this
"Agreement"), is made and entered into as of July 27, 1998, by and among FelCor
Suite Hotels, Inc., a Maryland corporation ("FelCor"), Bass America Inc., a
Delaware corporation ("BAI"), Holiday Corporation, a Delaware corporation
("HC"), Bass plc, an English public limited company ("PLC"), United/Harvey
Investors I, L.P., a Delaware limited partnership ("Partnership A"),
United/Harvey Investors II, L.P., a Delaware limited partnership ("Partnership
B"), United/Harvey Investors III, L.P., a Delaware limited partnership
("Partnership C"), United/Harvey Investors IV, L.P., a Delaware limited
partnership ("Partnership D") and United/Harvey Investors V, L.P., a Delaware
limited partnership ("Partnership E").
RECITALS
A. On March 23, 1998, FelCor and Bristol Hotel Company, a Delaware
corporation ("Bristol"), entered into an Agreement and Plan of Merger (the
"Merger Agreement") pursuant to which Bristol will merge with and into FelCor
subject to the terms and conditions thereof.
B. Upon consummation of the Merger, each Stockholder will beneficially
own the number of shares of common stock, par value $0.01 per share, of FelCor
("FelCor Common Stock") set forth on Schedule A hereto.
C. PLC has agreed to be a party to this Agreement solely for the
purposes set forth on the signature pages hereto.
NOW, THEREFORE, in consideration of the foregoing and the covenants
and agreements herein contained, and intending to be legally bound hereby, the
parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1. Definitions. For purposes of this Agreement, the following terms
have the respective meanings set forth below when used herein with initial
capital letters. Capitalized terms used herein and not defined herein have the
meanings set forth in the Merger Agreement.
"Affiliate" means, with respect to any Person, any other Person who is
directly or indirectly Controlling, Controlled by or under the common Control
with such Person; provided that no Stockholder of FelCor shall be deemed an
Affiliate of any other
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Stockholder of FelCor solely by reason of any investment in FelCor or by this
Agreement.
"Bass Parties" means, collectively, BAI, HC and any of their Permitted
Transferees who are Affiliates of PLC.
"Beneficial ownership", "beneficially own" and "beneficial owner"
shall be determined in accordance with Rules 13d-3 and 13d-5 under the Exchange
Act as in effect on the date hereof.
"Board" means the Board of Directors of FelCor.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in New York, New York or Dallas, Texas are authorized or
obligated to close.
"Control" (including the terms "Controlling", "Controlled by" and
"under common Control with") means the possession, directly or indirectly, of
the power to direct or cause the direction of the management policies of a
Person, whether through the ownership of voting securities, as trustee or
executor, by contract or credit arrangement or otherwise.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder, as in effect from time to
time.
"Excluded Securities" means (i) options granted to directors, officers
and employees of FelCor to purchase capital stock of FelCor, and the securities
issued pursuant to such options or plans under which options may be granted,
which have been authorized by the Board, (ii) capital stock issued or sold upon
exercise of warrants, options or rights, or upon conversion of convertible
securities, which warrants, options, rights or convertible securities are
outstanding on the date hereof or were the subject of the preemptive rights
under Article VI or (iii) any securities which are issued to all stockholders
by means of a distribution, stock dividend or stock split or reclassification.
"Fair Market Value" means the price agreed upon by a willing buyer and
a willing seller both in possession of reasonable knowledge of all relevant
facts, with neither party being under any compulsion to act or not act.
"Holdings Parties" means, collectively, Partnership A, Partnership B,
Partnership C, Partnership D and Partnership E and any of their Permitted
Transferees who are Affiliates of The
Hampstead Group, LLC.
"Initial Ownership" means, with respect to each Stockholder, the total
number of shares (equitably adjusted to reflect any
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stock split, dividend, reclassification or any similar event) of FelCor Common
Stock beneficially owned by such Stockholder as of the Effective Time.
"Ownership Percentage" means with respect to each Stockholder at any
time, the percentage derived by dividing (i) the aggregate number of shares of
FelCor Common Stock beneficially owned by such Stockholder as of such time, by
(ii) the total number of shares of FelCor Common Stock outstanding as of such
time.
"Permitted Transferee" means with respect to each Stockholder, (i) any
Affiliate of such Stockholder, (ii) in the case of Partnership A, Partnership
B, Partnership C, Partnership D or Partnership E, any direct or indirect
constituent partner of such partnership (as to its pro rata interest in the
partnership), and (iii) any transferee approved in writing by FelCor; provided
that, in each case, such transferee has executed a copy of this Agreement and
agreed to be bound by the provisions herein as a Stockholder.
"Person" means an individual, corporation, partnership, association,
trust, limited liability company, joint venture or other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
"Prospectus" means the prospectus included in any Registration
Statement (including without limitation a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by the
Registration Statement and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.
"Public Offering" means an underwritten public offering of Securities
of FelCor pursuant to an effective registration statement under the Securities
Act.
"Registrable Securities" means (i) all shares of FelCor Common Stock
received by a Registration Stockholder pursuant to the Merger, (ii) all shares
of FelCor Common Stock which a Registration Stockholder has an option to
purchase at the Effective Time (including shares of FelCor Common Stock subject
to the Amended and Restated Put/Call Option Agreement, dated as of November 16,
1995, by and between Harvey Hotel Holdings, Inc., H.K. Huie, Jr. and the other
parties thereto, as amended from time to time), and (iii) all other shares of
FelCor Common Stock and shares issued upon exercise of preemptive rights or
upon
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purchase from another Stockholder, until, in the case of any such security, (a)
such security is disposed of in accordance with a Registration Statement, (b)
such security is saleable by the holder thereof pursuant to Rule 144(k), (c)
such security is saleable by the holder thereof pursuant to Rule 144 without
regard to any volume limitations, or (d) such security is distributed to the
public pursuant to Rule 144.
"Registration Statement" means any registration statement of FelCor
under the Securities Act that covers the Registrable Securities pursuant to the
provisions of Article II of this Agreement, including the related Prospectus,
all amendments and supplements to such registration statement (including
post-effective amendments), all exhibits and all materials incorporated by
reference or deemed to be incorporated by reference in such registration
statement.
"Registration Stockholder" means each of (i) the Bass Parties and (ii)
the Holdings Parties, in each case, including any of their Permitted
Transferees.
"Rule 144", "Rule 145" or "Rule 415", as applicable, means Rule 144,
Rule 145, or Rule 415 under the Securities Act, as each such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and all
rules and regulations promulgated thereunder, as in effect from time to time.
"Stockholder" means each of (i) the Bass Parties, as a group, (ii)
Partnership A, (iii) Partnership B, (iv) Partnership C, (v) Partnership D, and
(vi) Partnership E.
"Subsidiary" means, with respect to any Person, any entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other Persons performing similar
functions are at the time directly or indirectly owned by such Person.
"Third Party" means a prospective purchaser of Securities in an
arm's-length transaction from a Stockholder where such purchaser is not a
Permitted Transferee of such Stockholder.
"Total Voting Power" means the aggregate number of votes which may be
cast by holders of outstanding Voting Securities.
"Underwritten Registration" or "Underwritten Offering" means a
registration under the Securities Act in which securities of
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FelCor are sold to an underwriter or group of underwriters for reoffering to
the public.
"Voting Securities" means all securities of FelCor entitled, in the
ordinary course, to vote in the election of directors of FelCor.
ARTICLE II
REGISTRATION RIGHTS
2.1. Shelf Registration of Resales. (a) Registration of Resales.
Subject to Section 2.1(b), FelCor will file with the SEC a Registration
Statement under Rule 415 with respect to all Registrable Securities and use its
reasonable best efforts to cause such Registration Statement to become
effective no later than the expiration of the Lock-Up Period. Subject to
Section 2.1(b), FelCor will file with the SEC, if necessary, a Registration
Statement under Rule 415 with respect to all shares of FelCor Common Stock
issued in the Merger and held by officers and directors of Bristol Hotels &
Resorts, Inc., a Delaware corporation ("BHR"), who may be deemed to be
"affiliates" under Rule 145 at the Effective Time and use its reasonable best
efforts to cause such Registration Statement to be effective as of the
Effective Time.
(b) Conversion of Form S-4. Subject to the other provisions of this
Agreement (including the covenant contained in Section 2.3 with respect to the
absence of Suspension Notices), FelCor may, in its sole discretion, convert the
Form S-4 Registration Statement filed by FelCor in connection with its issuance
of shares of FelCor Common Stock pursuant to the Merger (the "Form S-4") to a
Registration Statement on another form permitted to be used by FelCor for the
registration under the Securities Act of the Registration Stockholders'
offering and resale of Registrable Securities (in accordance with the intended
methods of distribution). References herein to the "Form S-4"
will be deemed to include the Registration Statement into which it may be
converted, and the Form S-4 will be deemed to be a "Registration Statement" for
all purposes of this Agreement.
(c) Maintenance of Effectiveness. FelCor will keep the Registration
Statement filed pursuant to this Section 2.1 effective so long as the
Registration Stockholders hold Registrable Securities.
2.2. "Market Stand-Off" Agreement. The Bass Parties and the Holdings
Parties will not, to the extent requested (by timely written notice) by the
managing underwriter or underwriters for any Underwritten Offering of FelCor's
capital stock (or any securities issued by FelCor that are exercisable to
purchase, convertible into or exchangeable for shares of capital stock of
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FelCor) for FelCor's account in which the expected gross proceeds of such
Offering equal or exceed $100 million, sell, make any short sale of, lend,
grant any option for the purchase of or otherwise Transfer any Registrable
Securities (except to the extent permitted in the Underwritten Offering)
without the prior written consent of FelCor and/or the managing underwriter or
underwriters on the same terms and for the same period of time from the
effective date of the Registration Statement relating to the Underwritten
Offering as the officers and directors of FelCor agree to refrain from taking
such actions; provided, however, such period of time shall not exceed 90
calendar days during any 12 month period. FelCor may impose stop-transfer
instructions with respect to the Registrable Securities of each Stockholder
until the end of such period (not to exceed 90 calendar days during any 12
month period) in order to enforce these restrictions. In no event, however,
will the foregoing parties be required to enter into more than two such
agreements in any 12 month period.
2.3. Registration Procedures. In connection with FelCor's registration
obligations pursuant to this Article II, FelCor will use its reasonable best
efforts to effect such registration to permit the sale of the Registrable
Securities in accordance with the Registration Stockholders' intended method or
methods of distribution of those Registrable Securities, and pursuant thereto
FelCor will as expeditiously as possible:
(a) Prepare and file with the SEC a Registration Statement on
any appropriate form under the Securities Act available for the sale
of the Registrable Securities by the Registration Stockholders in
accordance with the Registration Stockholders' intended method or
methods of distribution thereof, and use its reasonable best efforts
to cause the Registration Statement to become effective and
remain effective as provided herein; provided, however, that not less
than three Business Days before filing a Registration Statement or
Prospectus or any amendments or supplements thereto (excluding
documents that would be incorporated or deemed to be incorporated
therein by reference) FelCor will furnish to the Registration
Stockholders whose Registrable Securities are covered by that
Registration Statement, counsel for such Registration Stockholders
with respect to such registration ("Special Counsel") and the managing
underwriter, if any, copies of all documents proposed to be filed,
which documents will be subject to the review of the Registration
Stockholders, the Special Counsel and the managing underwriters, if
any, and FelCor will not file a Registration Statement or any
amendment thereto or any Prospectus or any supplement thereto
(excluding any documents which, upon filing, would be incorporated or
deemed to be incorporated by reference therein) to which the
Registration Stockholders whose
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Registrable Securities are covered by that Registration Statement, the
Special Counsel or the managing underwriter, if any, may reasonably
object on a timely basis;
(b) Prepare and file with the SEC any amendments and
post-effective amendments to the Registration Statement as may be
necessary to keep the Registration Statement continuously effective
for the period herein specified; cause the related Prospectus to be
supplemented by any required Prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 (or any similar
provisions then in force) under the Securities Act; and comply with
the provisions of the Securities Act with respect to the distribution
of all securities covered by the Registration Statement during the
applicable period in accordance with the intended methods of
disposition by the sellers thereof set forth in the Registration
Statement as so amended or to the Prospectus as so supplemented;
(c) Notify the Registration Stockholders selling Registrable
Securities, the Special Counsel and the managing underwriters, if any,
promptly, and (if requested by any of those Persons) confirm such
notice in writing, (i) when a Prospectus or any Prospectus supplement
or post-effective amendment has been filed, and, with respect to a
Registration Statement or any post-effective amendment, when the
Registration Statement or amendment has become effective, (ii) of any
request by the SEC or any other federal or state governmental
authority for amendments or supplements to a Registration Statement or
related Prospectus or for additional information, (iii) of the
issuance by the SEC or any other federal or state governmental
authority of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that
purpose, (iv) if at any time the representations and warranties of
FelCor contained in any agreement contemplated by Section 2.3(l)
(including any underwriting agreement) cease to be true and correct,
(v) of the receipt by FelCor of any notification with respect to the
suspension of the qualification or exemption from qualification of any
of the Registrable Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose, (vi) of
the occurrence of any event which makes any statement made in the
Registration Statement or related Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue
in any material respect or which requires the making of any changes in
a Registration Statement, Prospectus or document so that, in the case
of the Registration Statement, it will not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading and,
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in the case of the Prospectus, it will not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated or that is necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and (vii) of FelCor's reasonable determination that a
post-effective amendment to a Registration Statement would be
appropriate;
(d) Use every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of a Registration Statement, or
the lifting of any suspension of the qualification (or exemption from
qualification) of any of the Registrable Securities for sale in any
jurisdiction, at the earliest possible moment;
(e) If requested by the managing underwriters, if any, or
Registration Stockholders whose Registrable Securities are being
registered, (i) promptly incorporate in a Prospectus supplement or
post-effective amendment such information as the managing
underwriters, if any, and those Registration Stockholders agree should
be included therein to comply with applicable law and (ii) make all
required filings of the Prospectus supplement or such post-effective
amendment as soon as practicable after FelCor has received
notification of the matters to be incorporated in the Prospectus
supplement or post-effective amendment; provided, however, that FelCor
will not be required to take any actions under this Section 2.3(e)
that are not, in the reasonable opinion of counsel for FelCor, in
compliance with applicable law;
(f) Furnish to each Registration Stockholder whose
Registrable Securities are being registered, the Special Counsel and
each managing underwriter, if any, without charge, conformed copies of
the Registration Statement and each post-effective amendment or
supplement thereto, including financial statements (including
schedules, all documents incorporated or deemed incorporated therein
by reference and all exhibits) as such Registration Stockholders may
reasonably request in order to facilitate the disposition of the
Registrable Securities owned by each such Registration Stockholder;
(g) Deliver to each Registration Stockholder whose
Registrable Securities are being registered, the Special Counsel and
the underwriters, if any, without charge, copies of the Prospectus or
Prospectuses relating to the Registrable Securities (including each
preliminary prospectus) and any amendment or supplement thereto as
those Persons may reasonably request; and FelCor hereby consents to
the use of that Prospectus or each amendment or supplement thereto by
each of the Registration Stockholders
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whose Registrable Securities are being registered, and the
underwriters, if any, in connection with the offering and sale of the
Registrable Securities covered by that Prospectus or any amendment or
supplement thereto;
(h) Cooperate with the Registration Stockholders that are
selling Registrable Securities and the managing underwriters, if any,
to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold, which certificates
will not bear any restrictive legends; and enable the Registrable
Securities to be in such denominations and registered in such names as
the managing underwriters, if any, may request at least two Business
Days prior to any sale of Registrable Securities to the underwriters;
(i) Use reasonable efforts to cause the sale of Registrable
Securities covered by the Registration Statement to be registered with
or approved by such other governmental agencies or authorities within
the United States, except as may be required solely as a consequence
of the nature of a Registration Stockholder's business, in which case
FelCor will cooperate in all reasonable respects with the filing of
the Registration Statement and the granting of such approvals as may
be necessary to enable such Registration Stockholder or the
underwriters, if any, to consummate the disposition of such
Registrable Securities;
(j) Upon the occurrence of any event contemplated by Section
2.3(c)(vi) or 2.3(c)(vii) hereof, promptly prepare a supplement or
post-effective amendment to the Registration Statement or a supplement
to the related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Securities being sold
thereunder, such Prospectus will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(k) Use its best efforts to cause all Registrable Securities
covered by the Registration Statement to be (i) listed on each
securities exchange, if any, on which similar securities issued by
FelCor are then listed or, if no similar securities issued by FelCor
are then so listed, on the New York Stock Exchange or another national
securities exchange if the securities qualify to be so listed or (ii)
authorized to be quoted on the Nasdaq National Market System or the
Nasdaq SmallCap Market if the securities qualify to be so quoted; in
each case, if requested by the holders of a majority of the
Registrable Securities covered
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by the Registration Statement or the managing underwriters, if any;
(l) Enter into such agreements (including, in the event of an
Underwritten Offering, an underwriting agreement in form, scope and
substance as is customary in underwritten offerings) and take all such
other actions as may be reasonably requested by the managing
underwriters or the placement agent or other counterparty to the
transaction in order to expedite or facilitate the disposition of the
Registrable Securities, and in such connection, whether or not an
underwriting agreement is entered into and whether or not the
registration is an Underwritten Registration, (i) make such
representations and warranties as may be reasonably requested by the
Registration Stockholders whose Registrable Securities are being
registered and the underwriters, if any, with respect to the business
of FelCor and its Subsidiaries, the Registration Statement, Prospectus
and documents incorporated by reference or deemed incorporated by
reference, if any, in each case, in form, substance and scope as are
customarily made by issuers to underwriters in Underwritten Offerings
and confirm those representations and warranties if and when
requested; (ii) obtain opinions of counsel to FelCor and updates
thereof (which counsel and opinions (in form, scope and substance)
shall be reasonably satisfactory to the managing underwriters,
addressed to each of the underwriters and covering the matters
customarily covered in opinions requested in Underwritten Offerings
and such other matters as may be reasonably requested by the
underwriters); (iii) use its best efforts to obtain "comfort" letters
and updates thereof from the independent certified public accountants
of FelCor (and, if necessary, any other certified public accountants
of any subsidiary of FelCor or of any business acquired by FelCor for
which financial statements and financial data is, or is required to
be, included in the Registration Statement), addressed to each
Registration Stockholder whose Registrable Securities are being
registered and each of the underwriters, if any, such letters to be in
customary form and covering matters of the type customarily covered in
"comfort" letters in connection with Underwritten Offerings; (iv)
deliver such documents and certificates as may be requested by any
Registration Stockholder whose Registrable Securities are being
registered, the Special Counsel and the managing underwriters, if any,
to evidence the continued validity of the representations and
warranties of FelCor and its Subsidiaries made pursuant to clause (i)
above and to evidence compliance with any customary conditions
contained in the underwriting agreement or similar agreement entered
into by FelCor; (v) promptly incorporate in a Prospectus supplement or
post-effective amendment to the Registration
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Statement such information as the managing underwriter or
underwriters, if any, and such Registration Stockholders agree should
be included therein as may be required by applicable law; and (vi)
make all required filings of such Prospectus supplement or such
post-effective amendment (or other Registration Statement) as soon as
practicable after FelCor has received notification of the matters to
be incorporated in such Prospectus supplement or post-effective
amendment (or other Registration Statement); provided, however, that
FelCor will not be required to take any actions under clauses (v) and
(vi) that are not, in the opinion of counsel for FelCor, in compliance
with applicable law. The foregoing actions will be taken in connection
with each closing under such underwriting or similar agreement as and
to the extent required thereunder;
(m) Make available for inspection by a representative of the
Registration Stockholders whose Registrable Securities are being
registered, any underwriter participating in any disposition of
Registrable Securities and any attorney or accountant retained by such
Registration Stockholders or underwriter, all financial and other
records, pertinent corporate documents and properties of FelCor and
its Subsidiaries, and cause the officers, directors and employees of
FelCor and its Subsidiaries to supply all information reasonably
requested by any such representative, underwriter, attorney or
accountant in connection with the Registration Statement; provided,
however, that any records, information or documents that are
designated by FelCor in writing as confidential at the time of
delivery of such records, information or documents will be kept
confidential by those Persons unless (i) those records, information or
documents are in the public domain or otherwise publicly available,
(ii) disclosure of those records, information or documents is required
by court or administrative order or is necessary to respond to
inquiries of regulatory authorities, or (iii) disclosure of those
records, information or documents, in the opinion of counsel to such
Person, is otherwise required by law (including, without limitation,
pursuant to the requirements of the Securities Act);
(n) Comply with all applicable rules and regulations of the
SEC and make generally available to its security holders earning
statements satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder (or any similar rule
promulgated under the Securities Act) no later than 45 calendar days
after the end of any 12-month period (or 90 calendar days after the
end of any 12-month period if such period is a fiscal year) (i)
commencing at the end of any fiscal quarter in which Registrable
Securities are sold to underwriters in a firm commitment or
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best efforts Underwritten Offering, and (ii) if not sold to
underwriters in such an offering, commencing on the first day of the
first fiscal quarter of FelCor, after the effective date of a
Registration Statement, which statements shall cover that 12-month
period;
(o) Cause its directors, officers and other appropriate
employees to participate in any presentations regarding any
Underwritten Offering reasonably requested by the Registration
Stockholders or the managing underwriter or underwriters participating
in the disposition of those Registrable Securities, provided that so
doing does not unreasonably interfere with the business of FelCor and
the out-of-pocket costs thereof are reimbursed to FelCor;
(p) Use all reasonable efforts to facilitate the
Stockholders' purchase or sale of puts, calls and forward contracts,
short sales and other hedging transactions involving Registrable
Securities; and
(q) Use all reasonable efforts to take all of the steps
necessary or advisable to effect the registration of the Registrable
Securities pursuant to the Registration Statement.
FelCor may require each Registration Stockholder whose Registrable
Securities are being registered to furnish to FelCor such information regarding
the distribution of its Registrable Securities as FelCor may, from time to
time, reasonably request in writing and FelCor may exclude from such
registration the Registrable Securities of any Registration Stockholder that
unreasonably fails to furnish such information within a reasonable time after
receiving such request.
Each Registration Stockholder will be deemed to have agreed by virtue
of its acquisition of Registrable Securities that, upon receipt of any notice
from FelCor of the occurrence of any event of the kind described in Section
2.3(c)(ii), 2.3(c)(iii), 2.3(c)(v), 2.3(c)(vi) or 2.3(c)(vii) (each, a
"Suspension Notice"), the Registration Stockholder will forthwith discontinue
disposition of its Registrable Securities covered by the Registration Statement
or Prospectus (a "Blackout") until the Registration Stockholder's receipt of
the copies of the supplemented or amended Prospectus contemplated by Section
2.3(j), or until it is advised in writing by FelCor that the use of the
applicable Prospectus may be resumed, and has received copies of any additional
or supplemental filings that are incorporated or deemed to be incorporated by
reference in such Prospectus. FelCor will not give a Suspension Notice at any
time prior to the date which is 60 calendar days after the effective date of
the Registration Statement (or after expiration of the Lock-Up Period if the
Form S-4 is converted under Section
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2.1(b)) and in no event will the aggregate number of days the Registration
Stockholders are subject to Blackout during any period of 12 consecutive months
exceed 180 days.
2.4. Registration Expenses. All fees and expenses incident to the
performance of or compliance with this Agreement by FelCor will be borne by
FelCor. Those fees and expenses will include, without limitation, (i) all
registration and filing fees (including without limitation fees and expenses
with respect to filings required to be made with the National Association of
Securities Dealers, Inc.), (ii) printing expenses (including without limitation
expenses of printing certificates for Registrable Securities in a form eligible
for deposit with The Depository Trust Company and of printing or photocopying
prospectuses), (iii) messenger, telephone and delivery expenses, (iv)
reasonable fees and disbursements of counsel for FelCor and the Special Counsel
(provided however, that FelCor will reimburse the Registration Stockholders for
the reasonable fees and disbursements of not more than one Special Counsel
chosen by the Registration Stockholders), (v) fees and disbursements of all
independent certified public accountants referred to in Section 2.3(l)(iii)
(including the expenses of any special audit and "comfort" letters required by
or incident to such performance), (vi) Securities Act liability insurance if
FelCor so desires that insurance, and (vii) fees and expenses of all other
Persons retained by FelCor; but excluding underwriting discounts and
commissions and transfer Taxes, if any, relating to the sale or disposition of
Registrable Securities, which shall be borne by the Registration Stockholders.
In addition, FelCor will pay its internal expenses (including without
limitation all salaries and expenses of its officers and employees performing
legal or accounting duties), the expense of any annual audit, the fees and
expenses incurred in connection with the listing of the securities to be
registered on any securities exchange on which similar securities issued by
FelCor are then listed and the fees and expenses of any Person, including
special experts, retained by FelCor.
2.5. Indemnification. (a) Indemnification by FelCor. FelCor will,
without limitation as to time, indemnify and hold harmless, to the fullest
extent permitted by law, each Registration Stockholder holding Registrable
Securities registered pursuant to this Agreement, the officers, directors,
partners, stockholders, agents and employees of each of them, each Person who
Controls (within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act) a Registration Stockholder and the officers, directors,
partners, stockholders, agents and employees of any such Controlling Person,
from and against all losses, claims, damages, liabilities, costs (including
without limitation the costs of investigation and attorneys' fees) and expenses
(collectively, "Losses"), as incurred, arising out of or based upon any untrue
or alleged
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untrue statement of a material fact contained in any Registration Statement,
Prospectus or form of Prospectus or in any amendment or supplement thereto or
in any preliminary prospectus, or arising out of or based upon any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
the same are based solely upon information furnished in writing to FelCor by
such Registration Stockholder expressly for use therein; provided, however,
that FelCor will not be liable to any Registration Stockholder to the extent
that any such Losses arise out of or are based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any
preliminary prospectus if either (i)(A) that Registration Stockholder failed to
send or deliver a copy of the Prospectus with or prior to the delivery of
written confirmation of the sale by that Registration Stockholder of a
Registrable Security to the Person asserting the claim from which such Losses
arise and (B) the Prospectus would have completely corrected such untrue
statement or alleged untrue statement or such omission or alleged omission;
(ii) such untrue statement or alleged untrue statement, omission or alleged
omission is completely corrected in an amendment or supplement to the
Prospectus previously furnished by or on behalf of FelCor with copies of the
Prospectus as so amended or supplemented, and that Registration Stockholder
thereafter fails to deliver such Prospectus as so amended or supplemented prior
to or concurrently with the sale of a Registrable Security to the Person
asserting the claim from which such Losses arise; or (iii) such untrue
statement or alleged untrue statement, omission or alleged omission was
contained in any information so furnished in writing by that Stockholder to
FelCor expressly for use in the Registration Statement or Prospectus and was
relied upon by FelCor in the preparation of the Registration Statement,
Prospectus or preliminary prospectus.
(b) Indemnification by Holders of Registrable Securities. In
connection with the Registration Statement, the Registration Stockholders
selling Registrable Securities will furnish to FelCor in writing such
information as FelCor reasonably requests for use in connection with the
Registration Statement or Prospectus and will severally, but not jointly,
indemnify, to the fullest extent permitted by law, FelCor, its directors and
officers, agents and employees, each Person who Controls (within the meaning of
Section 15 of the Securities Act and Section 20 of the Exchange Act) FelCor,
and the directors, officers, agents or employees of such Controlling Persons,
from and against all Losses arising out of or based upon any untrue statement
of a material fact contained in any Registration Statement, Prospectus or
preliminary prospectus or arising out of or based upon any omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but only to the extent, that such untrue statement or
omission is contained in any information so furnished in writing by that
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Registration Stockholder to FelCor expressly for use in the Registration
Statement or Prospectus and was relied upon by FelCor in the preparation of the
Registration Statement, Prospectus or preliminary prospectus. In no event will
the liability of any Registration Stockholder under this Section 2.5(b) be
greater in amount than the dollar amount of the
proceeds (net of payment of all expenses) received by that Registration
Stockholder upon the sale of the Registrable Securities giving rise to the
indemnification obligation.
(c) Conduct of Indemnification Proceedings. In case any proceeding
(including any governmental investigation) shall be instituted involving any
Person in respect of which indemnity may be sought pursuant to this Section
2.5, such Person (the "indemnified party") will promptly notify the Person
against whom such indemnity may be sought (the "indemnifying party") in writing
and the indemnifying party, upon request of the indemnified party, will retain
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate in such
proceeding and will pay the fees and disbursements of such counsel related to
such proceeding; provided that the failure of any indemnified party so to
notify the indemnifying party will not relieve the indemnifying party of its
obligations hereunder except to the extent that the indemnifying party is
actually prejudiced by such failure to notify. In any such proceeding, any
indemnified party will have the right to retain its own counsel, but the fees
and expenses of such counsel will be at the expense of such indemnified party
unless (i) the indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the indemnifying
party and the indemnified party and representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them. It is understood that the indemnifying party will not, in respect
of the legal expenses of any indemnified party in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for the
fees and expenses of more than one separate firm (in addition to any local
counsel) for all indemnified parties and that all such fees and expenses will
be reimbursed as they are incurred. The indemnifying party will not be liable
for any settlement of any proceeding effected without its written consent, but
if settled with such consent or if there be a final judgment for the plaintiff,
the indemnifying party agrees to indemnify the indemnified party from and
against any Loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second and third
sentences of this paragraph, the indemnifying party agrees that it will be
liable
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for any settlement of any proceeding effected without its written consent if
(i) such settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party in accordance with such request
prior to the date of such settlement. No indemnifying party will, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is
or could have been a party and indemnity could have been sought hereunder by
such indemnified party, unless such settlement includes an unconditional
release of such indemnified party from all liability on claims that are the
subject matter of such proceeding.
(d) Contribution. If the indemnification provided for in this Section
2.5 is unavailable to an indemnified party under Section 2.5(a) or 2.5(b) in
respect of any Losses or is insufficient to hold the indemnified party harmless
(other than giving effect to the last sentence of Section 2.5(b)), then each
applicable indemnifying party, in lieu of indemnifying the indemnified party,
will, jointly and severally, contribute to the amount paid or payable by the
indemnified party as a result of the Losses, in the proportion as is
appropriate to reflect the relative fault of the indemnifying party or
indemnifying parties, on the one hand, and the indemnified party, on the other
hand, in connection with the actions, statement or omissions that resulted in
the Losses as well as any other relevant equitable considerations. The relative
fault of the indemnifying party or indemnifying parties, on the one hand, and
the indemnified party, on the other hand, will be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission of
a material fact, has been taken or made by, or related to information supplied
by, the indemnifying party or indemnified party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such action, statement or omission. The amount paid or payable by a party as a
result of any Losses will be deemed to include any legal or other fees or
expenses incurred by such party in connection with any action or proceeding. In
no event will the obligation of a Registration Stockholder under this Section
2.5(d) be greater in amount than the dollar amount of the proceeds (net of
payment of all expenses) received by that Registration Stockholder upon the
sale of the Registrable Securities giving rise to the contribution obligation.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 2.5(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this
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Section 2.5(d), an indemnifying party that is a Registration Stockholder will
not be required to contribute any amount in excess of the dollar amount of the
proceeds (net of payment of all expenses) received by that Registration
Stockholder upon the sale of the Registrable Securities giving rise to the
contribution obligation over the amount of any damages which that Registration
Stockholder has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
The indemnity, contribution and expense reimbursement obligations of
FelCor hereunder will be in addition to any liability FelCor may otherwise have
under this Agreement. The provisions of this Section 2.5 will survive so long
as Registrable Securities remain outstanding, notwithstanding any transfer of
the Registrable Securities by any holder thereof or any termination of this
Agreement.
2.6. Rule 144. FelCor will file the reports required to be filed by it
under the Securities Act and the Exchange Act, and will cooperate with any
Registration Stockholder (including without limitation by making any
representations as any Registration Stockholder may reasonably request), all to
the extent required from time to time to enable the Registration Stockholder to
sell Registrable Securities without registration under the Securities Act
within the limitations of the exemptions provided by Rule 144. Upon the request
of any Registration Stockholder, FelCor will deliver to such Registration
Stockholder a written statement as to whether it has complied with such filing
requirements. Notwithstanding the foregoing, nothing in this Section 2.6 will
be deemed to require FelCor to register any of its securities under any section
of the Exchange Act.
2.7. Underwritten Registrations. If any of the Registrable Securities
are to be sold in an Underwritten Offering (other than an Underwritten Offering
with respect to Securities that are sold primarily on behalf of FelCor), the
underwriter or underwriters and the managing underwriter or managing
underwriters will be selected by the Registration Stockholders holding a
majority of such Registration Securities; provided, that such underwriter or
managing underwriter shall be reasonably satisfactory to FelCor. Each party
hereby agrees that, in connection with any Underwritten Offering hereunder in
which it participates, it will undertake to offer customary indemnification to
the participatory underwriters.
2.8. Indemnification of Statutory Underwriters. Any institutional
buyer, placement agent or counterparty who is deemed to be an underwriter
pursuant to Section 2(11) of the
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Securities Act in connection with the sale of Registrable Securities by a
Registration Stockholder to such Person will be entitled to the indemnity set
forth in Section 2.5(a).
ARTICLE III
CORPORATE GOVERNANCE
3.1. Composition of the Board. Each of the Bass Parties as a group and
the Holdings Parties as a group have designated on Schedule 1.7 to the Merger
Agreement one Person to serve as a director of FelCor effective upon the
Merger. FelCor will take all necessary action in order to ensure that the
Persons designated pursuant to this Section 3.1 are appointed to the Board
promptly following or upon the effectiveness of the Merger to serve in the
class of directors specified thereon and, in the case of Donald J. McNamara, to
serve as the Chairman of the Board and of its Executive Committee.
3.2. Voting. Until either the Holdings Parties or the Bass Parties
owns less than 25% of its Initial Ownership, each of the Bass Parties and the
Holdings Parties will vote its Voting Securities, or execute written consents,
as the case may be, and each of the Bass Parties and the Holdings Parties will
take all other necessary action (including causing FelCor to call a special
meeting of stockholders), in order to ensure that the Person designated by the
Bass Parties and the Person designated by the Holdings Parties are elected to
the Board, and none of the Bass Parties or the Holdings Parties will vote any
of their Voting Securities in favor of the removal of any director who shall
have been so designated, unless such removal shall be for cause or the Person
entitled to designate such director shall have consented to such removal in
writing. When either the Holdings Parties or the Bass Parties, as applicable,
no longer own at least 25% of their Initial Ownership, each Stockholder's
obligations to take or refrain from taking certain actions pursuant to this
Section 3.2 will terminate without further action. For the avoidance of doubt,
this Article III will not apply to any Voting Securities held or received by
the direct or indirect constituent partners of any of the Holdings Parties.
ARTICLE IV
RESTRICTIONS ON TRANSFER
4.1. General Restriction. Until the six month anniversary of the
Effective Time (such period, the "Lock-Up Period"), no Stockholder may,
directly or indirectly, sell, assign, transfer, grant a participation in,
pledge or otherwise dispose of ("Transfer") any shares of FelCor Common Stock
or any securities convertible into, or exchangeable for shares of FelCor Common
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Stock or rights to purchase shares of FelCor Common Stock ("Derivatives" and
collectively with the shares of FelCor Common Stock referred to herein as
"Securities") except (a) to a Permitted Transferee, (b) in compliance with the
limitations of Rule 145, (c) pursuant to a tender offer or other transaction
that has been approved by the Board and is made to all holders of Securities
that are the subject of the tender offer or other transaction, (d) any pledge
of Securities by a Stockholder made in connection with a bona fide loan to such
Stockholder, (e) any involuntary Transfer resulting from a lender foreclosing
on any pledge of any Securities which pledge existed on the date hereof or was
made in accordance with this Section 4.1, or (f) any Transfer made with the
prior written consent of FelCor.
4.2. Transfers in Compliance with Law. No Stockholder may Transfer any
Securities at any time to any Person except in compliance with applicable
federal, state and foreign securities laws.
4.3. Legends. Each Stockholder understands and agrees that stop
transfer instructions will be given to FelCor's transfer agent with respect to
certificates evidencing the FelCor Common Stock such Stockholder may acquire
pursuant to the Merger and that there will be placed on the certificate
evidencing the FelCor Common Stock such Stockholder may acquire pursuant to the
Merger a legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE
MAY NOT BE OFFERED, SOLD, PLEDGED, EXCHANGED, TRANSFERRED OR OTHERWISE
DISPOSED OF EXCEPT IN ACCORDANCE WITH THE REQUIREMENTS OF THE
SECURITIES ACT OF 1933, AS AMENDED, AND THE OTHER CONDITIONS SPECIFIED
IN THAT CERTAIN STOCKHOLDERS' AND REGISTRATION RIGHTS AGREEMENT DATED
JULY 27, 1998 AMONG FELCOR AND THE STOCKHOLDERS NAMED THEREIN, A COPY
OF WHICH WILL BE MAILED TO THE HOLDER HEREOF WITHOUT CHARGE WITHIN
FIVE DAYS AFTER RECEIPT OF WRITTEN REQUEST THEREFOR."
FelCor agrees to notify the transfer agent of the removal of such stop transfer
instructions and legend upon (i) the transfer of the FelCor Common Stock
represented by such certificate pursuant to a Registration Statement under the
Securities Act or in accordance with the applicable provisions of Rule 145
(including without limitation paragraph (d) thereof), (ii) the expiration of
the restrictive period set forth in Rule 145(d), or (iii) the delivery by the
Stockholder to FelCor of a copy of a letter from the staff of the SEC, or an
opinion of counsel in form and substance reasonably satisfactory to FelCor, to
the effect that
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the shares subject thereto may be offered and sold without registration under
the Securities Act.
4.4. Unauthorized Transfers. Any purported Transfer of any Securities
in violation of the provisions of this Article IV (an "Unauthorized Transfer")
will be null and void. FelCor will not register, recognize or give effect to
any Unauthorized Transfer and the purported transferee of any Securities
pursuant to an Unauthorized Transfer will not thereby acquire any rights in
those Securities. FelCor will, immediately upon becoming aware of an actual or
attempted Unauthorized Transfer, instruct the transfer agent or registrar for
the Securities to issue an appropriate stop-transfer order with regard to the
Unauthorized Transfer or attempted Unauthorized Transfer.
4.5. Transfers to Affiliates. No Stockholder will Transfer any of its
shares of FelCor Common Stock to an Affiliate unless such Affiliate executes a
copy of this Agreement and agrees to be bound by all the provisions herein,
whereupon references in this Agreement to a Stockholder will be deemed to
include any such Affiliates; provided, however, this Section 4.5 will not apply
to any distribution by Partnership A or Partnership B to their respective
direct or indirect constituent partners.
ARTICLE V
RIGHT TO PARTICIPATE IN SALES
5.1. Right to Participate in Sales. (a) If a Stockholder (the
"Offering Stockholder") proposes to sell any or all of the Securities owned by
the Offering Stockholder (the "Offered Securities") to a Third Party in a bona
fide transaction not involving an Excluded Transaction (a "Third Party Sale"),
the Offering Stockholder will, prior to effecting any Third Party Sale, deliver
to the other Stockholders (the "Non-OfferingStockholders") a written notice (an
"Offer Notice") specifying (i) the aggregate amount of cash consideration, the
amount of any promissory note or other debt instrument and the Fair Market
Value of any other non-cash consideration (the "Offer Price") for which the
Offering Stockholder proposes to sell the Offered Securities in the proposed
Third Party Sale, (ii) the identity of the purchaser in the proposed Third
Party Sale, (iii) the date the proposed Third Party Sale is scheduled to close,
and (iv) all other material terms of the proposed Third Party Sale, including
without limitation any other contract or transaction entered into or proposed
to be entered into in connection with the Third Party Sale. If a Non-Offering
Stockholder so requests in a written notice (a "Co-Sale Notice") delivered to
the Offering Stockholder within 20 calendar days following the delivery of the
Offer Notice (the "Co-Sale Acceptance Period"), such Non-Offering Stockholder
(a "Co-Selling Stockholder") will be permitted to
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sell in that Third Party Sale, on the same terms as the Offering Stockholder,
up to the number of Securities held by such Co- Selling Stockholder as is
specified in the Co-Sale Notice; provided that the number of Securities to be
sold by such Co- Selling Stockholder participating in such Third Party Sale
will in no event exceed the Portion corresponding to such Co-Selling
Stockholder. As used herein, "Portion" means, with respect to a Co-Selling
Stockholder, the number of Securities beneficially owned by such Co-Selling
Stockholder multiplied by a fraction the numerator of which is the number of
Securities to be sold by the Offering Stockholder and its Permitted Transferees
in such Third Party Sale and the denominator of which is the aggregate number
of Securities beneficially owned by the Offering Stockholder and its Permitted
Transferees, without duplication, immediately prior to such Third Party Sale.
If a Co-Selling Stockholder requests to include more Securities than provided
under the preceding sentences, the Offering Stockholder will attempt to cause
the Third Party purchaser to acquire those additional Securities, but will have
no liability for the Third Party purchaser's refusal to purchase those
additional Securities. To the extent that the Third Party purchaser is
unwilling to purchase all of the Securities proposed to be sold by the Offering
Stockholder and the Co-Selling Stockholders, the number of Securities to be
sold by each of the Offering Stockholder and the Co-Selling Stockholders will
be reduced to their respective Pro Rata Number of Securities. "Pro Rata Number"
means, with respect to the participation of the Offering Stockholder and each
Co-Selling Stockholder in a Third Party Sale, the product of (i) the total
number of Securities proposed to be sold by such Stockholder (not to exceed,
with respect to any Co-Selling Stockholder, such Co- Selling Stockholder's
Portion) and (ii) a fraction, the numerator of which is the total number of
Securities proposed to be purchased by the Third Party purchaser, and the
denominator of which is the total number of Securities proposed to be sold by
both the Offering Stockholder and all of the Co-Selling Stockholders (not to
exceed, with respect to any Co-Selling Stockholder, such Co-Selling
Stockholder's Portion). For purposes of this Section 5.1, an "Excluded
Transaction" will mean any Transfer (i) pursuant to or as a result of (A) a
public offering or (B) a hedging transaction with a broker-dealer, bank or
other financial institution, (ii) in an open-market transaction effected on a
national securities exchange or national quotation system or a transaction
involving as a counterparty an underwriter, broker-dealer or other similar
Person effecting a transaction in or consistent with the ordinary course of its
business, (iii) to one or more financial institutions, investment companies,
pension or other employee benefit plans, trusts, mutual or similar funds or
"qualified institutional buyers" within the meaning of Rule 144A under the
Securities Act, (iv) pursuant to a tender offer or other transaction that has
been approved by the Board, or (v) resulting from any pledge of Securities by a
Stockholder made in connection
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with a bona fide loan to the Stockholder, including any Transfer resulting from
a lender foreclosing on any pledge of any Security or exercising its other
rights in respect thereof.
(b) Notwithstanding anything to the contrary herein contained, the
Offering Stockholder (i) will have the right to elect not to consummate any
Third Party Sale (without liability to the Non-Offering Stockholders) if it is
unable to sell all of the Offered Securities as initially set forth in the
Offer Notice and (ii) may increase the number of Securities included in the
Offered Securities to accommodate any Securities proposed to be sold by a
Non-Offering Stockholder.
(c) If a Co-Selling Stockholder properly elects to participate in a
Third-Party Sale, the Offering Stockholder will represent such Co-Selling
Stockholder in the sale but will not assume any fiduciary duty to the
Co-Selling Stockholder under this Agreement. The Co-Selling Stockholder will
execute and deliver the documentation providing for the Third Party Sale as
negotiated by the Offering Stockholder; provided that, at any time prior to
such execution and delivery, the Co-Selling Stockholder may decline to
participate in the Third Party Sale if the documentation is not reasonably
acceptable to it. If the Co- Selling Stockholder fails to execute and deliver
the documentation or timely to perform its obligations thereunder, the Offering
Stockholder may complete the Third Party Sale without the participation of the
Co-Selling Stockholder. The Offering Stockholder will have no responsibility to
the Co-Selling Stockholder if it fails to consummate a Third Party Sale, and
the Offering Stockholder will in all events be free to abandon any Third Party
Sale at any time prior to its consummation without any liability to the
Non-Offering Stockholders.
If the Holdings Parties so request, the Bass Parties will deliver to
the Holdings Parties such documents as the Holdings Parties may reasonably
request consistent with this Section 5.1 confirming the terms hereof for the
benefit of any Third Party, including without limitation execution of a written
acknowledgment prepared by the Holdings Parties within a reasonable period of
time, not to exceed two Business Days, confirming that, with respect to a
particular Excluded Transaction, the provisions of this Section 5.1 do not
apply to a sale of any Securities owned by any of the Holdings Parties in such
Excluded Transaction.
5.2. Securities Not Subject to Tag-Along Right. For the avoidance of
doubt, this Article V will not apply to (i) the Transfer of Securities by
either of the Holdings Parties to any of their direct or indirect constituent
partners or (ii) Securities held or received by such direct or indirect
partners. Nothing in this Article V or VI will constitute a
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waiver, modification or amendment of any restriction on transfer or ownership
arising under FelCor's charter or Section 4.1 hereof.
5.3. Termination. This Article V will terminate on the date either the
Bass Parties or the Holdings Parties beneficially own less than 25% of their
Initial Ownership.
ARTICLE VI
PREEMPTIVE RIGHTS; WAIVER
6.1. Preemptive Rights. Except for the issuance of Excluded
Securities, FelCor will provide the Bass Parties and the Holdings Parties with
written notice of any sale by it for cash of any Securities of FelCor in which
the gross proceeds of such sale to FelCor and its Subsidiaries equals or
exceeds $100 million (such offering, a "Qualified Offering") no later than the
closing date of the Qualified Offering (such notice, the "Qualified Offering
Notice"). The Qualified Offering Notice will specify the Securities issued, the
purchase price (which, in the case of a public offering, will be the initial
offering price to the public, and in all other cases, the price to the
purchasers of the Securities without regard to underwriting discounts or
commissions), the issuance date and all other material terms of such issuance.
No later than five calendar days after receipt of the Qualified Offering
Notice, each Stockholder must deliver to FelCor a written notice stating
whether such Stockholder desires to acquire the same type of Securities that
were issued and the number of Securities it intends to purchase (the "Election
Notice"). The Election Notice will constitute a binding contract by the
Stockholder to acquire, on the terms set forth in the Qualified Offering
Notice, up to that number of Securities such that, after giving effect to the
consummation of the Qualified Offering and the issuance to the Stockholder
pursuant to this Section 6.1, the Stockholder would hold that Ownership
Percentage equal to such Stockholder's Ownership Percentage immediately prior
to the Qualified Offering, to be completed five days after the Qualified
Offering or on such other date to which FelCor and the relevant Stockholder
agree. Payment will be made in immediately available funds on such completion
date.
6.2. Regulatory Restrictions; Termination. (a) FelCor may modify this
Article VI in whole or in part to the extent necessary to address any
objections raised by the NYSE or any other securities exchange or quotation
system on which the FelCor Common Stock is listed (a "Regulatory Objection").
FelCor will use all reasonable efforts to address any Regulatory Objection so
as to preserve to the greatest extent practicable the parties' rights
hereunder.
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(b) This Article VI will terminate (i) with respect to any Stockholder
that fails three times to deliver an Election Notice with respect to the full
number of Securities purchasable under Section 6.1 and (ii) as to the Bass
Parties or the Holdings Parties, as applicable, on the date the Bass Parties or
the Holdings Parties, respectively, beneficially own less than 50% of their
Initial Ownership.
ARTICLE VII
MISCELLANEOUS
7.1. Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties will be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of Delaware or in any Delaware State court, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (a) consents to submit itself (without
making such submission exclusive) to the personal jurisdiction of any federal
court located in the State of Delaware or any Delaware State court in the event
any dispute arises out of this Agreement or any of the transactions
contemplated by this Agreement and (b) agrees that it will not attempt to deny
or defeat such personal jurisdiction by motion or other request for leave from
any such court. Process in any action, suit or proceeding hereunder may be
served on any party anywhere in the world, whether within or without the
jurisdiction of any such court. Without limiting the foregoing, each party
agrees that service of process on such party as provided in Section 7.4 will be
deemed effective service of process or such party. All rights, powers and
remedies provided under this Agreement or otherwise available in respect hereof
at law or in equity will be cumulative and not alternative, and the exercise of
any thereof by any party will not preclude the simultaneous or later exercise
of any other such right, power or remedy by such party.
7.2. No Inconsistent Agreements. FelCor has not, as of the date
hereof, and will not, on or after the date hereof, enter into any agreement
with respect to the Securities which is inconsistent with the rights granted to
the holders of Securities in this Agreement or otherwise conflicts with the
provisions hereof.
7.3. Amendments and Waivers. Except as set forth in Section 6.2(a), no
provision of this Agreement may be waived except by an instrument in writing
executed by the party against whom the
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waiver is to be effective. The provisions of this Agreement may not be amended,
modified or supplemented without the prior written consent of FelCor and the
Stockholders. Notwithstanding the foregoing, a waiver or consent to depart from
the provisions of this Agreement with respect to a matter that relates
exclusively to the rights of a particular Stockholder and that does not
directly or indirectly affect the rights of the other Stockholders may be given
only by affected Stockholders; provided, however, that the provisions of this
sentence may not be amended, modified, or supplemented except in accordance
with the provisions of the immediately preceding sentence.
7.4. Notices. All notices, requests, claims, demands and other
communications under this Agreement will be in writing and will be delivered
personally, sent by overnight courier (providing proof of delivery) to the
parties or sent by telecopy (providing confirmation of transmission) if to
FelCor, at the address or telecopy number below and if to a Stockholder, at the
address or telecopy number set forth on Schedule A (or at such other address or
telecopy number for a party as will be specified by like notice):
if to FelCor:
FelCor Suite Hotels, Inc.
545 E. John Carpenter Freeway
Suite 1300
Irving, Texas 75062
Attention: President
Attention: General Counsel
Telecopy No.: (972) 444-4949
with a copy to:
Jenkens & Gilchrist, P.C.
1445 Ross Avenue
Suite 3200
Dallas, Texas 75202
Attention: Robert W. Dockery
Telecopy No.: (214) 855-4300
All notices will be deemed to be given only when actually received.
7.5. Owner of Registrable Securities. FelCor will maintain, or will
cause its registrar and transfer agent to maintain, a stock book with respect
to FelCor Common Stock, in which all transfers of Registrable Securities of
which FelCor has received notice will be recorded. FelCor may deem and treat
the person in whose name Registrable Securities are registered in the stock
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book of FelCor as the owner thereof for all purposes, including without
limitation the giving of notices under this Agreement.
7.6. Successors and Assigns. Except as provided elsewhere herein, no
party may assign its rights or delegate its obligations under this Agreement.
Notwithstanding the foregoing, Permitted Transferees will succeed to the rights
granted under Article II and Article III (to the extent provided therein), and
to the extent applicable thereto, Articles I and VII, of this Agreement.
7.7. Counterparts. This Agreement may be executed in one or more
counterparts, all of which will be considered one and the same agreement and
will become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties hereto.
7.8. Headings. Article and Section headings in this
Agreement are included herein for convenience of reference only and will not
constitute a part of this Agreement for any other purpose.
7.9. Governing Law. This Agreement will be governed by, and construed
in accordance with, the laws of the State of Delaware, regardless of the laws
that might otherwise govern under applicable conflict of laws principles
thereof.
7.10. Entire Agreement. This Agreement constitutes the entire
agreement, and supersedes all prior agreements and undertakings, both written
and oral, including without limitation, the Stockholders' Agreement, dated as
of April 28, 1997, among Holdings, HC, BAI, PLC and Bristol and the
Registration Rights Agreement, dated as of April 28, 1997, among Holdings, HC,
BAI and Bristol, with respect to the subject matter of this Agreement.
7.11. Attorneys' Fees. In any action or proceeding brought to enforce
any provision of this Agreement, or where any provision hereof is validly
asserted as a defense, the prevailing party, as determined by the court, will
be entitled to recover reasonable attorneys' fees and related disbursements and
expenses in addition to any other available remedy.
7.12. Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction will, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as
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to be unenforceable, the provision will be interpreted to be only so broad as
is enforceable.
7.13. Changes in Outstanding Securities. The provisions of this
Agreement regarding Registrable Securities, FelCor Common Stock and other
securities of FelCor will apply to securities of FelCor or any successor or
assign of FelCor (whether by merger, consolidation, sale of assets or
otherwise) that may be issued in respect of, or by reason of any stock
dividend, stock split, stock issuance, reverse stock split, combination,
recapitalization, reclassification, merger, consolidation or otherwise. Upon
the occurrence of any such event, the definitions of FelCor Common Stock and
Registrable Securities will be appropriately modified by the board of directors
of FelCor.
7.14. Termination. Except as otherwise provided herein, this entire
Agreement will terminate on the earlier of (i) the voluntary or involuntary
dissolution or liquidation of FelCor, and (ii) the mutual agreement of the
parties hereto.
7.15. Acquisition of BHR Shares. The Bass Parties will not, and will
not permit their Affiliates to, purchase or otherwise acquire, or agree or
offer to purchase or otherwise acquire, beneficial ownership of any shares
("BHR Common Shares") of the common stock, par value $0.01 per share, of BHR if
after giving effect thereto the Bass Parties would be deemed to own, 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), BHR Common Shares representing more than 9.9% of the total number of
outstanding BHR Common Shares, without the prior written consent of FelCor.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
FELCOR SUITE HOTELS, INC.
By: /s/ LAWRENCE D. ROBINSON
------------------------
Name: Lawrence D. Robinson
Title: Senior Vice President/
General Counsel
BASS AMERICA INC.
By: /s/ A.E. STERN
------------------------
Name: A.E. Stern
Title: Vice President and
Treasurer
HOLIDAY CORPORATION
By: /s/ THOMAS R. OLIVER
------------------------
Name: Thomas R. Oliver
Title: President
UNITED/HARVEY INVESTORS I, L.P.,
By: Hampstead Genpar, L.P., its
General Partner
By: HH GenPar Partners, its
General Partner
By: Hampstead Associates, Inc.,
its Managing General Partner
By: /s/ DANIEL A DECKER
------------------------
Name: Daniel A Decker
Title: Vice President
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UNITED/HARVEY INVESTORS II, L.P.,
By: Hampstead Genpar, L.P., its
General Partner
By: HH GenPar Partners, its
General Partner
By: Hampstead Associates, Inc.,
its Managing General Partner
By: /s/ DANIEL A DECKER
------------------------
Name:
Title:
UNITED/HARVEY INVESTORS III, L.P.
By: Hampstead Genpar, L.P., its
General Partner
By: HH GenPar Partners, its
General Partner
By: Hampstead Associates, Inc.,
its Managing General Partner
By: /s/ DANIEL A DECKER
------------------------
Name:
Title:
UNITED/HARVEY INVESTORS IV, L.P.
By: Hampstead Genpar, L.P., its
General Partner
By: HH GenPar Partners, its
General Partner
By: Hampstead Associates, Inc.,
its Managing General Partner
By: /s/ DANIEL A DECKER
------------------------
Name:
Title:
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UNITED/HARVEY INVESTORS V, L.P.
By: Hampstead Genpar, L.P., its
General Partner
By: HH GenPar Partners, its
General Partner
By: Hampstead Associates, Inc.,
its Managing General Partner
By: /s/ DANIEL A DECKER
------------------------
Name:
Title:
The undersigned agrees to the terms
of Article IV and Section 7.15.
By: /s/ R.C. NORTH
----------------------------------
Name: R.C. North
Title: Financial Director
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SCHEDULE A
Name and Address Number of Shares of
of Stockholder FelCor Common Stock
- ---------------- -------------------
Bass America Inc. 7,161,698
1105 North Market Street
Suite 1046
Wilmington, Delaware 19801
Attn: Ed White
Holiday Corporation 2,457,046
Three Ravinia Drive
Suite 2900
Atlanta, Georgia 30346
Attn: Craig H. Hunt
Telecopy: (770) 604-5988
United/Harvey Investors I, L.P. 2,170,140
2200 Ross Avenue
Suite 4200 West
Dallas, Texas 75201
Attn: Daniel A. Decker
United/Harvey Investors II, L.P. 2,034,746
2200 Ross Avenue
Suite 4200 West
Dallas, Texas 75201
Attn: Daniel A. Decker
United/Harvey Investors III, 1,356,497
L.P.
2200 Ross Avenue
Suite 4200 West
Dallas, Texas 75201
Attn: Daniel A. Decker
United/Harvey Investors IV, L.P. 1,356,497
2200 Ross Avenue
Suite 4200 West
Dallas, Texas 75201
Attn: Daniel A. Decker
United/Harvey Investors V, L.P. 2,712,995
2200 Ross Avenue
Suite 4200 West
Dallas, Texas 75201
Attn: Daniel A. Decker