EXHIBIT 4.1
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AMENDMENT TO RIGHTS AGREEMENT
AMENDMENT (this "AMENDMENT"), dated as of May 1, 2002, by and between
MeriStar Hotels & Resorts, Inc., a Delaware corporation (the "COMPANY"), and
Continental Stock Transfer & Trust Company, a New York corporation (the "RIGHTS
AGENT"), to the Preferred Share Purchase Rights Agreement (as amended, the
"RIGHTS AGREEMENT"), dated as of July 23, 1998, between the Company and the
Rights Agent, as amended on December 8, 2000.
W H E R E A S
The Company and the Rights Agent have previously executed and entered
into the Rights Agreement;
Pursuant to Section 27 of the Rights Agreement, the Company and the
Rights Agent may from time to time supplement or amend the Rights Agreement; and
In anticipation of the execution of and the entering into the Agreement
and Plan of Merger, by and between the Company and Interstate Hotels
Corporation, a Maryland corporation, the Company and the Rights Agent wish to
amend the Rights Agreement to, among other things, exclude the parties to the
Merger Agreement that would otherwise be deemed an Acquiring Person after the
implementation of the terms of the Merger Agreement, from such definition of
"Acquiring Person."
Capitalized terms used but not otherwise defined herein shall have the
meanings ascribed to them in the Rights Agreement.
NOW, THEREFORE, in consideration of the mutual promises and agreements
set forth herein, the adequacy of which is hereby acknowledged, the parties
hereto agree to amend the Rights Agreement as follows:
1. AMENDMENTS TO THE RIGHTS AGREEMENT.
1.1 Section 1(a) of the Rights Agreement is amended and restated
in its entirety to read as follows:
"(a) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 20% or more of the Common Shares of the Company then
outstanding but shall not include (i) the Company, (ii) any Subsidiary of the
Company, (iii) any employee benefit plan of the Company or of any Subsidiary of
the Company, or any entity holding Common Shares for or pursuant to the terms of
any such plan, or (iv) an Exempt Merger Holder (unless and until such Exempt
Merger Holder shall have become the Beneficial Owner of a percentage of Common
Shares then outstanding that equals or exceeds such Exempt Merger Holder's
Merger Holder Percentage, at which time such Exempt Merger Holder shall be an
Acquiring Person). Notwithstanding anything in this definition of Acquiring
Person to the contrary, no Person shall become an "Acquiring Person" as the
result of an acquisition of Common Shares by the Company which, by reducing the
number of shares outstanding, increases the proportionate number of shares
beneficially owned by such Person to 20% or more of the Common Shares of the
Company then outstanding; provided, however, that if a Person shall become the
Beneficial Owner of 20% or more of the Common Shares of the Company then
outstanding by reason of share purchases by the Company and shall, after such
share purchases by the Company, become the Beneficial Owner of any additional
Common Shares of the Company, other than as the result of a stock dividend,
stock split or similar transaction in which all holders of Common Shares are
treated equally, then such Person shall be deemed to be an "Acquiring Person."
In addition, notwithstanding anything in this definition of Acquiring Person to
the contrary, if the Board of Directors determines in good faith that a Person
who would otherwise be an "Acquiring Person," as defined pursuant to the
foregoing provisions of this paragraph (a), has become such inadvertently, and
such Person divests as promptly as practicable a sufficient number of Common
Shares so that such Person would no longer be an "Acquiring Person," as defined
pursuant to the foregoing provisions of this paragraph (a), then such Person
shall not be deemed to be an "Acquiring Person" for any purposes of this
Agreement. In addition, notwithstanding anything in this definition of Acquiring
Person to the contrary (i) in calculating the combined Beneficial Ownership of
any Lehman Merger Holder, its Associates and Affiliates, there shall be excluded
any Common Shares Beneficially Owned by an Exempt Affiliate, and (ii) in
calculating the combined Beneficial Ownership of any Exempt Affiliate and its
Associates and Affiliates, there shall be excluded any Common Shares
Beneficially Owned by any Lehman Merger Holder."
1.2 Section 1(b) of the Rights Agreement is hereby amended and
restated in its entirety to read as follows:
"(b) "Affiliate" shall have the meaning ascribed to such
term in Rule 12b-2 of the General Rules and Regulations (the "Rules") under the
Exchange Act as in effect on the date of this Agreement; PROVIDED, HOWEVER, that
a Person will not be deemed to be the Affiliate of another Person solely because
either or both Persons are, as of May 1, 2002, parties to the MeriStar Voting
Agreement, as in effect on May 1, 2002, without giving effect to any amendment,
modification or supplement to such agreement that takes effect after May 1,
2002."
1.3 Section 1(c) of the Rights Agreement is hereby amended and
restated in its entirety to read as follows:
"(c) "Associate" shall have the meaning ascribed to such
term in Rule 12b-2 of the Rules; PROVIDED,HOWEVER, that a Person will not be
deemed to be the Associate of another Person solely because either or both
Persons are, as of May 1, 2002, parties to the MeriStar Voting Agreement, as in
effect on May 1, 2002, without giving effect to any amendment, modification or
supplement to such agreement that takes effect after May 1, 2002."
1.4 Section 1(d)(i) of the Rights Agreement is hereby amended
and restated in its entirety to read as follows:
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"(i) that such Person or any of such Person's Affiliates or
Associates directly or indirectly, now or hereafter owns or has (or by agreement
with the Company is, on the date of this Agreement, entitled to receive) the
right to acquire (whether such right is exercisable immediately or only after
the passage of time) pursuant to any agreement, arrangement or understanding
(whether or not in writing) or upon the exercise of conversion rights, exchange
rights, rights (other than the Rights), warrants or options or otherwise;
PROVIDED, HOWEVER, that a Person shall not be deemed to be the Beneficial Owner
of, or to Beneficially Own, securities tendered pursuant to a tender or exchange
offer made pursuant to and in accordance with the Rules by or on behalf of such
Person or any of such Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange; PROVIDED, FURTHER, HOWEVER,
that (x) a Lehman Merger Holder shall not be deemed to be the Beneficial Owner
of, or to Beneficially Own, Common Shares that are Beneficially Owned by an
Exempt Affiliate solely because such Lehman Merger Holder is an Affiliate or
Associate of such Exempt Affiliate, and (y) an Exempt Affiliate shall not be
deemed to be the Beneficial Owner of, or to Beneficially Own, Common Shares that
are Beneficially Owned by a Lehman Merger Holder solely because such Exempt
Affiliate is an Affiliate or Associate of such Lehman Merger Holder."
1.5 Section 1(d)(iii) of the Rights Agreement is hereby amended
and restated in its entirety to read as follows:
"(iii) that are beneficially owned, directly or indirectly,
by any other Person (or any Affiliate or Associate thereof) with which such
Person (or any of such Person's Affiliates of Associates) has any agreement,
arrangement or understanding (whether or not in writing), for the purpose of, or
with respect to, acquiring, holding, voting (except as described in the proviso
to subparagraph (ii) of this paragraph (d)) or disposing of any voting
securities of the Company; PROVIDED, HOWEVER, that a Person will not be deemed
to be the Beneficial Owner or to Beneficially Own securities Beneficially Owned
by another Person solely because both Persons are, as of the date May 1, 2002,
parties to the MeriStar Voting Agreement, as in effect on May 1, 2002, without
giving effect to any amendment, modification or supplement to such agreement
that takes effect after May 1, 2002."
1.6 Section 1(f) of the Rights Agreement is hereby amended and
restated in its entirety to read as follows:
"(t) "Merger" means the transactions contemplated by the
Agreement and Plan of Merger to be executed by and between the Company and
Interstate Hotels Corporation (as may be amended from time to time)."
1.7 Section 1(u) of the Rights Agreement" is hereby amended and
restated in its entirety to read as follows:
"(u) "Merger Holder" means any Person that Beneficially Owns
Common Shares of the Company as a result of (i) the execution and delivery of
the Merger Agreement or (ii) the consummation of the Merger."
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1.8 Section 1 of the Rights Agreement is amended by adding the
following subsections (v), (w), (x), (y), (z), (aa), (bb), (cc) and (dd)
immediately after subsection (u):
"(v) "Exempt Affiliate" means the Lehman Parent Entities and
their respective Affiliates and Associates to the extent that such Affiliates
and Associates are not also Lehman Merger Holders; PROVIDED, HOWEVER, that no
such Person will be deemed an Exempt Affiliate (x) if any Person involved in
making the decision to acquire Beneficial Ownership of Common Shares was, at the
time of such decision, in possession of any material non-public information
provided to a Lehman Merger Holder by the Company, (y) if such Person has an
agreement, arrangement or understanding (whether or not in writing), with a
Lehman Merger Holder, for the purpose of, or with respect to, acquiring,
holding, voting or disposing of voting securities of the Company or (z) if such
Person is a Related Transferee of a Lehman Merger Holder.
(w) "Exempt Merger Holder" means any Merger Holder or any
Affiliate or Associate of such Merger Holder that or which, solely as a result
of the execution and delivery of the Merger Agreement or the consummation of the
transactions contemplated thereby, including without limitation the delivery of
the Merger Consideration (as defined in the Merger Agreement), becomes the
Beneficial Owner of 20% or more of the then outstanding Common Shares.
(x) "Lehman Merger Holder" means (i) CGLH Partners I LP and
CGLH Partners II LP, (ii) Affiliates and Associates of such Persons to the
extent that such Affiliates and Associates are not also either the Lehman Parent
Entities or Affiliates or Associates of the Lehman Parent Entities, and (iii)
Related Transferees of the Persons in clauses (i) and (ii) of this definition;
(y) "Lehman Parent Entities" means Lehman Brothers Holdings
Inc. and Lehman Brothers Inc.
(z) "Merger Agreement" means the Agreement and Plan of
Merger, dated as of May 1, 2002, by and between the Company and Interstate
Hotels Corporation.
(aa) "Merger Holder Percentage" means, with respect to any
Exempt Merger Holder, a percentage of Common Shares then outstanding equal to
the next highest whole percentage in excess of the percentage of Common Shares
then outstanding Beneficially Owned by such Exempt Merger Holder immediately
after the consummation of the Merger, up to and including the Close of Business
on May 1, 2006, at which time such Exempt Merger Holder's Merger Holder
Percentage shall be reduced to (i) 20%, if such Exempt Merger Holder is not the
Beneficial Owner of 20% or more of the Common Shares of the Company then
outstanding at such time, or (ii) if such Exempt Merger Holder is the Beneficial
Owner of 20% or more of the Common Shares of the Company then outstanding at
such time, the next highest whole percentage in excess of the percentage of
Common Shares then outstanding Beneficially Owned by such Exempt Merger Holder.
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(bb) "MeriStar Voting Agreement" means the MeriStar Hotels &
Resorts, Inc. Stockholder Voting Agreement, dated as of May 1, 2002, by and
among Interstate Hotels Corporation, the Principal MeriStar Managers (as defined
in the Merger Agreement) and the Principal MeriStar Stockholders.
(cc) "Related Person" shall mean, with respect to any
Person, (i) any Affiliate or Associate of such Person, (ii) any investment
manager, investment adviser or partner of such Person or an Affiliate or
Associate of such Person, and (iii) any investment fund, investment account or
investment entity whose investment manager, investment advisor or general
partner is such Person or Affiliate or Associate of such Person.
(dd) "Related Transferee" shall mean, any Related Person to
whom the Beneficial Ownership of Common Shares is transferred."
1.8 Section 3 of the Rights Agreement is amended and restated in
its entirety to read as follows:
"Section 3. ISSUE OF RIGHT CERTIFICATES. (a) Until the
earlier of (i) the tenth day after the Shares Acquisition Date or (ii) the tenth
Business Day (or such later date as may be determined by action of the Board of
Directors prior to such time as any Person becomes an Acquiring Person) after
the date of the commencement by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company, any entity holding Common Shares for or pursuant to
the terms of any such plan or any MeriStar Affiliate) of, or of the first public
announcement of the intention of any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company, any entity holding Common Shares for or pursuant to
the terms of any such plan or, any MeriStar Affiliate) to commence, a tender or
exchange offer (other than the Merger) the consummation of which would result in
any Person becoming the Beneficial Owner of Common Shares aggregating 20% or
more of the then outstanding Common Shares (the earlier of such dates being
herein referred to as the "Rights Distribution Date"), (x) the Rights shall be
evidenced (subject to the provisions of Section 3(b) hereof) by the certificates
for Common Shares registered in the names of the holders thereof (which
certificates shall also be deemed to be Right Certificates) and not by separate
Right Certificates, and (y) the right to receive Right Certificates shall be
transferable only in connection with the transfer of Common Shares. As soon as
practicable after the Rights Distribution Date, the Company shall prepare and
execute, the Rights Agent shall countersign, and the Company shall send or cause
to be sent (and the Rights Agent shall, if requested, send) by first-class,
postage-prepaid mail, to each record holder of Common Shares as of the Close of
Business on the Rights Distribution Date, at the address of such holder shown on
the records of the Company, a Right Certificate, in substantially the form of
Exhibit B hereto (a "Right Certificate"), evidencing one Right for each Common
Share so held. From and after the Rights Distribution Date, the Rights shall be
evidenced solely by such Right Certificates."
1.9 Section 35 of the Rights Agreement is deleted in its
entirety.
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2. MISCELLANEOUS.
2.1 Except as expressly amended or modified herein, the
provisions of the Rights Agreement are and shall remain in full force and
effect.
2.2 In the event any provision hereof is held void or
unenforceable by any court, such provision shall be severable and shall not
affect the remaining provisions hereof.
2.3 This Amendment, together with the Rights Agreement, reflects
the entire agreement among the parties and supersedes all prior agreements and
communications, either oral or in writing, among the parties hereto with respect
to the subject matter hereof.
2.4 Each of the parties shall execute such documents and other
papers and take such further actions as may be reasonably required or desirable
to carry out the provisions hereof and the transactions contemplated hereby.
2.5 THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE (WITHOUT REGARD TO THE CONFLICTS
OF LAWS PRINCIPLES OF SUCH STATE).
2.6 This Amendment may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
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IN WITNESS WHEREOF, the undersigned have executed this Amendment
as of the date first above written.
MERISTAR HOTELS & RESORTS, INC.
By: /s/ Christopher L. Bennett
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Name: Christopher L. Bennett
Title: Senior Vice President and General
Counsel
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
By: /s/ William F. Seegraber
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Name: William F. Seegraber
Title: Vice President