Item 1.01 Entry into a Material Definitive Agreement
Agreement and Plan of Merger
On
At the effective time of the Merger (the "Merger Effective Time"), each share of
common stock, par value
The Merger Agreement also provides that each restricted stock unit ("Red Lion RSU") and performance stock unit ("Red Lion PSU") of Red Lion issued and outstanding immediately prior to the Merger Effective Time will, whether vested or unvested (and with respect to Red Lion PSUs, treating any performance-based vesting condition to which such Red Lion PSU is subject as having been attained at the "target level," and applying proration for such Red Lion PSUs based on the portion of the applicable performance period up to and including the Merger Effective Time), be cancelled and converted into a right to receive, with respect to each share of Red Lion Common Stock underlying such Red Lion RSU or such converted and prorated Red Lion PSU, as applicable, the Red Lion Per Share Merger Consideration.
The consummation of the Merger is subject to certain customary closing conditions set forth in the Merger Agreement, including, but not limited to, (i) the affirmative vote of the holders of two thirds of the outstanding shares of Red Lion Common Stock approving and adopting the transactions contemplated by the Merger Agreement (the "Red Lion Shareholder Approval"), (ii) the absence of any law or injunction order, judgment or decree by any governmental entity that prohibits or makes the consummation of the transactions illegal, (iii) subject to certain exceptions, the accuracy of each of Red Lion's, Sonesta's and Merger Sub's representations and warranties, subject to certain materiality qualifiers, and (iv) compliance in all material respects by each of Red Lion, Sonesta and Merger Sub with its covenants and obligations under the Merger Agreement.
Concurrently with the execution of the Merger Agreement, Sonesta and each of the directors and executive officers of Red Lion who hold Red Lion Common Stock (the "Red Lion Supporting Shareholders") (who collectively beneficially own approximately 1.9% of Red Lion Common Stock), entered into a voting agreement (the "Support Agreement") pursuant to which they have agreed, among other things and subject to the terms and conditions of the Support Agreement, to vote each of the shares they beneficially own as of the record date of the Red Lion shareholders meeting held to obtain Red Lion Shareholder Approval (the "Red Lion Shareholders Meeting"), in favor of the Merger, the approval of the Merger Agreement and any other matters necessary for the consummation of the Merger and other transactions contemplated by the Merger Agreement. The obligations of the Red Lion Supporting Shareholders under the Support Agreement will automatically terminate without any further action required by any person upon the earliest to occur of (i) the closing of the Merger, (ii) the date on which the Merger Agreement is validly terminated in accordance with its terms, (iii) the change by the Red Lion Board of its recommendation in favor of the transaction prior to obtaining Red Lion Shareholder Approval, (iv) the completion of the Red Lion Shareholders Meeting (regardless of whether the Merger Agreement is approved or not) and (v) written notice of the termination of the Support Agreement by Sonesta to the Red Lion Supporting Shareholders.
Pursuant to the Merger Agreement, between the date of the signing of the Merger Agreement and the earlier of its termination or the Merger Effective Time, Red Lion has agreed not to, and to cause its subsidiaries not to, solicit, propose, initiate or knowingly encourage or facilitate any alternative transaction proposals from third parties or to engage in discussions or negotiations with third parties regarding any alternative transaction proposals or enter into any definitive agreement relating to any alternative transaction proposal, in each case subject to certain exceptions. The Red Lion Board may change its recommendation to its shareholders or terminate the Merger Agreement in response to a superior proposal or change its recommendation in response to an intervening event if the Red Lion Board determines in good faith (after consultation with a financial advisor and outside counsel) that the failure to change its recommendation would reasonably be expected to be inconsistent with the fiduciary duties of the Red Lion Board under applicable law, subject to complying with notice, and other specified, conditions, including giving Sonesta the opportunity to propose revisions to the terms of the Merger Agreement during a period following such notice.
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The Merger Agreement contains certain termination rights for each of Red Lion
and Sonesta upon the occurrence of certain events, including, but not limited
to, (i) if the Merger is not consummated on or before
The Merger Agreement requires that if Red Lion terminates the Merger Agreement
prior to obtaining Red Lion Shareholder Approval in order to enter into a
written agreement with respect to a superior proposal made by a third party, Red
Lion will reimburse Sonesta for not more than
Sonesta has obtained equity financing for the purpose of financing the
transactions contemplated by the Merger Agreement.
If the Merger is consummated, the Red Lion Common Stock will be delisted from
the
The foregoing summary does not purport to be a complete description and is qualified in its entirety by reference to the full text of the Merger Agreement, which is attached hereto as Exhibit 2.1 and is incorporated herein by reference.
Important Statement regarding the Merger Agreement. The Merger Agreement has
been included to provide investors with information regarding terms of the
transaction. It is not intended to provide any other factual information about
Red Lion, Sonesta or their respective subsidiaries or affiliates or to modify or
supplement any factual disclosures about Red Lion included in its public reports
filed with the
Item 8.01 Other Events
On
Note on Forward Looking Statements
This communication contains forward-looking statements including, but not limited to, statements regarding the proposed merger with Sonesta, including statements relating to satisfaction of the conditions to and consummation of the proposed transaction, the expected goals and benefits of the transaction, and the future leadership of Red Lion. Forward-looking statements are usually identified by the use of words such as "believes," "anticipates," "expects," "intends," "plans," "may," "potential," "will," "could" and similar expressions. Actual results may differ materially from those indicated by forward-looking statements as a result of various important factors and risks, including, but not limited to, the continuing impact of the COVID-19 pandemic on Red Lion's financial condition and results of operations. Additional factors, risks and uncertainties that could cause or contribute to such differences include, but are not limited to, the following: the ability of the parties to satisfy the conditions precedent and consummate the proposed transaction, the timing of consummation of the proposed merger; the ability of Red Lion to secure shareholder approval in the anticipated timeframe or at all; the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement; risks related to disruption of
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management's attention from ongoing business operations due to the pending
transaction; potential adverse reactions or changes to employee or business
relationships resulting from the announcement or completion of the proposed
Merger; the risk of litigation or legal proceedings related to the proposed
transaction; unexpected costs, charges or expenses resulting from the proposed
transaction; and other factors discussed in the "Risk Factors" section of Red
Lion's most recent Annual Report on Form 10-K, and Red Lion's subsequent
Quarterly Reports on Form 10-Q and in other filings Red Lion makes with the
Additional Information about the Merger and Where To Find It
In connection with the proposed transaction, Red Lion will prepare and file
relevant documents with the
Participants in the Solicitation of Red Lion Shareholders
Red Lion, its directors and certain of its officers and employees, may be deemed
to be participants in the solicitation of proxies from Red Lion shareholders in
connection with the proposed transaction. Information about Red Lion's directors
and executive officers is set forth in its Annual Report on Form 10-K for the
year ended
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Item 9.01 Financial Statements and Exhibits
(d) Exhibits Exhibit Number Description of Exhibit 2.1* Agreement and Plan of Merger, dated as ofDecember 30, 2020 , by and amongRed Lion Hotels Corporation ,Sonesta International Hotels Corporation andRoar Merger Sub Inc. 99.1 Press Release ofRed Lion Hotels Corporation , datedDecember 30, 2020 . 104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
* Certain schedules to the Agreement and Plan of Merger have been omitted from
this filing pursuant to Item 601(b)(2) of Regulation S-K. Registrant will
furnish copies of such schedules to the
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