PREM14A 1 d530013dprem14a.htm PREM14A PREM14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

 

Filed by the Registrant  ☒                             Filed by a Party other than the Registrant  ☐

Check the appropriate box:

 

  Preliminary Proxy Statement
  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
  Definitive Proxy Statement
  Definitive Additional Materials
  Soliciting Material Pursuant to §240. 14a-12

LA QUINTA HOLDINGS INC.

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

 

  No fee required.  
  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
  (1)  

Title of each class of securities to which transaction applies:

 

Common stock, $0.01 par value per share

  (2)  

Aggregate number of securities to which transaction applies:

 

As of February 20, 2018, 119,040,859 shares of La Quinta Holdings Inc. common stock, which includes 117,342,020 issued and outstanding shares of La Quinta Holdings Inc. common stock, and 1,698,839 shares of La Quinta Holdings Inc. common stock subject to or otherwise deliverable in connection with outstanding equity-based awards or the exercise of outstanding options.

  (3)  

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

In accordance with Section 14(g) of the Securities Exchange Act of 1934, as amended, the filing fee was determined by multiplying 0.0001245 by the underlying value of the transaction of $999,943,215.60, which has been calculated as $8.40 multiplied by the sum of:

 

i. 117,342,020 issued and outstanding shares of La Quinta Holdings Inc. common stock; and

 

 

ii. 1,698,839 shares of La Quinta Holdings Inc. common stock subject to or otherwise deliverable in connection with outstanding equity-based awards.

  (4)  

Proposed maximum aggregate value of transaction:

 

$999,943,215.60

  (5)  

Total fee paid:

 

$124,492.93

  Fee paid previously with preliminary materials.
  Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
  (1)  

Amount Previously Paid:

 

     

  (2)  

Form, Schedule or Registration Statement No.:

 

     

  (3)  

Filing Party:

 

     

  (4)  

Date Filed:

 

     

 

 

 


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PRELIMINARY PROXY STATEMENT, SUBJECT TO COMPLETION, DATED FEBRUARY 21, 2018.

 

 

LOGO

[●], 2018

Dear Fellow Stockholder:

On January 17, 2018, La Quinta Holdings Inc. (“La Quinta”) entered into a definitive merger agreement to be acquired by Wyndham Worldwide Corporation (“Wyndham Worldwide”). Subject to the terms and conditions of the merger agreement, a wholly-owned subsidiary of Wyndham Worldwide will be merged with and into La Quinta and La Quinta will survive the merger as a wholly-owned subsidiary of Wyndham Worldwide (the “merger”) following which Wyndham Worldwide will own all of La Quinta’s management and franchise business.

In connection with this acquisition of La Quinta’s management and franchise business, La Quinta has agreed that it will effect, prior to the consummation of the merger and subject to the terms and conditions of the agreements described in this proxy statement, a separation of La Quinta’s real estate assets and certain related assets and liabilities, which will be conveyed to and vest in CorePoint Lodging Inc. (“CorePoint”), a newly formed subsidiary of La Quinta (the “separation”), followed by a pro rata distribution to La Quinta stockholders of common stock representing 100% of the interest in CorePoint (the “spin-off”). After the spin-off is completed, CorePoint will be a separate, publicly held company that will own and operate La Quinta’s real estate assets and certain related assets and liabilities.

The La Quinta board of directors has unanimously determined that it is in the best interests of the stockholders of La Quinta to enter into the merger agreement and has unanimously approved and declared advisable the merger, the merger agreement and the other transactions contemplated thereby (including the separation, the charter amendments described below and the spin-off). The board of directors of La Quinta made its determination after consideration of a number of factors more fully described in this proxy statement. The La Quinta board of directors unanimously recommends that you vote “FOR” the proposal to adopt the merger agreement.

In connection with the merger and the spin-off, and in order to obtain the desired tax treatment with respect to the distribution of CorePoint common stock, La Quinta will, among other things, amend La Quinta’s amended and restated certificate of incorporation to effect a reclassification and combination of the La Quinta common stock at a ratio of 1-for-2 and to amend the par value of the La Quinta common stock from $0.01 per share to $0.02 per share (the “charter amendment proposals”). Pursuant to these reclassification and par value charter amendments, immediately prior to the merger, each share of La Quinta common stock (par value $0.01) will be reclassified and combined into one half of a share of La Quinta common stock (par value $0.02) (the “reverse stock split”). The La Quinta board of directors unanimously recommends that you vote “FOR” the charter amendment proposals.

You are cordially invited to attend a special meeting of our stockholders to be held in connection with the proposed merger and the charter amendment proposals on [●], 2018 at [●], Central Time, at La Quinta Inn & Suites DFW Airport South/Irving, 4105 West Airport Freeway, Irving, Texas 75062. At the special meeting, stockholders will be asked to consider and vote on a proposal to adopt the merger agreement and to approve the charter amendment proposals. Approval of the proposal to adopt the merger agreement and approval of the charter amendment proposals requires the affirmative vote of a majority of the outstanding shares of La Quinta common stock entitled to vote thereon.

If the merger is completed, our stockholders will have the right to receive, for each share of common stock, par value $0.01 per share, of La Quinta that they own immediately prior to the effective time of the merger, $8.40


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in cash per share prior to giving effect to the reverse stock split (or $16.80 in cash per share after giving effect to the reverse stock split), without interest (the “merger consideration”). The merger consideration is in addition to the shares of CorePoint that our stockholders will receive in the spin-off.

At the special meeting, stockholders will also be asked to vote on a proposal to approve, on a non-binding, advisory basis, certain compensation that will or may be paid to La Quinta’s named executive officers by La Quinta based on or otherwise relating to the merger, as required by the rules adopted by the U.S. Securities and Exchange Commission, and a proposal to approve an adjournment of the special meeting, from time to time, if necessary or appropriate, to solicit additional votes for the approval of the proposal to adopt the merger agreement and the charter amendment proposals. The La Quinta board of directors unanimously recommends that you vote “FOR” each of these proposals.

The merger cannot be completed unless the holders of a majority of the voting power of La Quinta’s outstanding common stock adopt the merger agreement and the charter amendment proposals. Your vote is very important, regardless of the number of shares you own. Whether or not you expect to attend the special meeting in person, please submit a proxy to vote your shares as promptly as possible so that your shares may be represented and voted at the special meeting. If you intend to attend the special meeting and vote in person, your vote by ballot will revoke any proxy previously submitted. The failure to vote on the proposal to adopt the merger agreement or the charter amendment proposals will have the same effect as a vote “AGAINST” such proposals.

The obligations of La Quinta and Wyndham Worldwide to complete the merger are subject to the satisfaction or waiver of certain conditions. The accompanying proxy statement contains detailed information about Wyndham Worldwide, the special meeting, the merger agreement and the merger.

Thank you for your confidence in La Quinta.

Yours truly,

 

  Mitesh B. Shah     Keith A. Cline
  Chairman of the Board     President and Chief Executive Officer

Neither the U.S. Securities and Exchange Commission nor any state securities regulatory agency has approved or disapproved of the merger, passed upon the merits of the merger, the merger agreement or any of the other transactions contemplated by the merger agreement or determined if the accompanying proxy statement is accurate or complete. Any representation to the contrary is a criminal offense.

The accompanying proxy statement is dated [●], 2018 and, together with the enclosed form of proxy, is first being mailed to La Quinta stockholders on or about [●], 2018.


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LOGO

La Quinta Holdings Inc.

909 Hidden Ridge, Suite 600

Irving, Texas 75038

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

 

DATE & TIME

[●], 2018 at [●], Central Time

 

PLACE

La Quinta Inn & Suites DFW Airport South/Irving

 

  4105 West Airport Freeway

 

  Irving, Texas 75062

 

ITEMS OF BUSINESS

  To consider and vote on a proposal to adopt the Agreement and Plan of Merger, dated as of January 17, 2018, as it may be amended from time to time (the “merger agreement”), among La Quinta Holdings Inc. (“La Quinta”), Wyndham Worldwide Corporation (“Wyndham Worldwide”), and WHG BB Sub, Inc. (“Merger Sub”) (the “merger proposal”); a copy of the merger agreement is attached to the accompanying proxy statement as Annex A;

 

    To approve the amendments to La Quinta’s amended and restated certificate of incorporation set forth on Annex D to the accompanying proxy statement, consisting of the following proposals (the “charter amendment proposals”):

 

  a. A proposal to effect the reverse stock split at a ratio of 1-for-2; and

 

  b. A proposal to change the par value of the La Quinta common stock in connection with the reverse stock split from $0.01 per share to $0.02 per share;

 

    To consider and vote on a proposal to approve, on a non-binding, advisory basis, certain compensation that will or may be paid by La Quinta to its named executive officers that is based on or otherwise relates to the merger (the “named executive officer merger-related compensation proposal”); and

 

    To consider and vote on a proposal to approve an adjournment of the special meeting of stockholders of La Quinta (the “special meeting”) from time to time, if necessary or appropriate, for the purpose of soliciting additional votes for the approval of the merger proposal and the charter amendment proposals (the “adjournment proposal”).

 

  La Quinta will transact no other business at the special meeting except such business as may properly be brought before the special meeting or any adjournments or postponements thereof.


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RECORD DATE

Only stockholders of record at the close of business on [●], 2018 (the “record date”) are entitled to notice of, and to vote at, the special meeting and at any adjournment or postponement of the special meeting.

 

VOTING BY PROXY

Your vote is very important, regardless of the number of shares you own. The La Quinta board of directors (the “La Quinta Board”) is soliciting your proxy to assure that a quorum is present and that your shares are represented and voted at the special meeting. For information on submitting your proxy over the internet, by telephone or by mailing back the traditional proxy card (no extra postage is needed for the provided envelope if mailed in the U.S.), please see the attached proxy statement and enclosed proxy card. If you later decide to vote in person at the special meeting, information on revoking your proxy prior to the special meeting is also provided.

 

RECOMMENDATIONS

The La Quinta Board unanimously recommends that you vote:

 

    “FOR” the merger proposal;

 

    “FOR” the charter amendment proposals;

 

    “FOR” the named executive officer merger-related compensation proposal, which shall be on a non-binding, advisory basis; and

 

    “FOR” the adjournment proposal.

 

APPRAISAL

Stockholders of La Quinta who do not vote in favor of the proposal to adopt the merger agreement will have the right to seek appraisal of the fair value of their shares of La Quinta common stock, as determined in accordance with Section 262 of the General Corporation Law of the State of Delaware (the “DGCL”), if they deliver a demand for appraisal before the vote is taken on the merger agreement and comply with all of the requirements of Delaware law, including Section 262 of the DGCL, which are summarized herein. Section 262 of the DGCL is reproduced in its entirety in Annex C to the accompanying proxy statement. The accompanying proxy statement constitutes the notice of appraisal rights with respect to the merger proposal required by Section 262 of the DGCL.

YOUR VOTE IS VERY IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING IN PERSON, PLEASE SUBMIT A PROXY OVER THE INTERNET OR BY TELEPHONE PURSUANT TO THE INSTRUCTIONS CONTAINED IN THESE MATERIALS OR COMPLETE, DATE, SIGN AND RETURN A PROXY CARD AS PROMPTLY AS POSSIBLE. IF YOU RECEIVE MORE THAN ONE PROXY BECAUSE YOU OWN SHARES REGISTERED IN DIFFERENT NAMES OR ADDRESSES, EACH PROXY SHOULD BE SUBMITTED. IF YOU DO NOT SUBMIT YOUR PROXY, INSTRUCT YOUR BROKER HOW TO VOTE YOUR SHARES OR VOTE IN PERSON AT THE SPECIAL MEETING ON THE MERGER PROPOSAL AND THE CHARTER AMENDMENT PROPOSALS, IT WILL HAVE THE SAME EFFECT AS A VOTE “AGAINST” SUCH PROPOSALS.

Your proxy may be revoked at any time before the vote at the special meeting by following the procedures outlined in the accompanying proxy statement.


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If your shares are held by a broker, bank or other nominee and you wish to vote in person at the special meeting, you must bring to the special meeting a proxy from the broker, bank or other nominee that holds your shares authorizing you to vote in person at the special meeting. Please also bring to the special meeting your account statement evidencing your beneficial ownership of La Quinta common stock as of the record date. All stockholders and proxy holders who attend the special meeting must also bring photo identification.

The proxy statement, of which this notice forms a part, provides a detailed description of the merger agreement and the merger. We urge you to read the proxy statement, including any documents incorporated by reference, and its annexes carefully and in their entirety. If you have any questions concerning the merger or the proxy statement, would like additional copies of the proxy statement or need help voting your shares of La Quinta common stock, please contact La Quinta’s proxy solicitor, Innisfree M&A Incorporated.

 

By Order of the Board of Directors,
Mark M. Chloupek
Executive Vice President, Secretary and General Counsel

Irving, Texas

[●], 2018

 


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TABLE OF CONTENTS

 

     Page  

SUMMARY TERM SHEET

     1  

QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER

     19  

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     29  

THE PARTIES TO THE MERGER

     31  

THE SPECIAL MEETING

     33  

THE MERGER PROPOSAL (PROPOSAL 1)

     39  

Structure of the Merger

     39  

Merger Consideration —  What La Quinta Stockholders Will Receive in the Merger

     39  

Treatment of La Quinta Equity Awards

     39  

Effects on La Quinta if the Merger is Not Completed

     40  

Background of the Merger

     40  

Recommendation of the La Quinta Board and Reasons for the Merger

     52  

Opinion of J.P. Morgan Securities LLC

     56  

Financial Projections

     62  

Interests of La Quinta’s Executive Officers and Directors in the Merger

     64  

Financing of the Merger

     76  

Regulatory Clearances and Approvals Required for the Merger

     79  

Material U.S. Federal Income Tax Consequences of the Merger

     80  

Delisting and Deregistration of La Quinta Common Stock

     80  

Appraisal Rights

     80  

THE MERGER AGREEMENT

     85  

The Merger

     85  

Closing and Effectiveness of the Merger

     85  

Reverse Stock Split

     85  

Merger Consideration

     85  

Exchange Procedures

     86  

Treatment of La Quinta Equity Awards

     87  

Representations and Warranties

     87  

Conduct of Business Pending the Merger

     91  

Restrictions on Solicitation of Acquisition Proposals

     93  

Efforts to Complete the Merger

     97  

Employee Benefits

     98  

Directors’ and Officers’ Indemnification and Insurance

     98  

 

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Other Covenants and Agreements

     99  

Conditions to the Closing of the Merger

     100  

Termination of the Merger Agreement

     102  

Termination Fees and Expenses

     103  

Amendment and Waiver of the Merger Agreement

     104  

Assignment of the Merger Agreement; Wyndham Spinco

     105  

Specific Performance

     105  

SPIN-OFF TRANSACTION AGREEMENTS

     106  

Separation Agreement

     106  

Employee Matters Agreement

     106  

Tax Matters Agreement

     107  

THE VOTING AGREEMENT

     108  

CHARTER AMENDMENT PROPOSALS (PROPOSAL 2)

     109  

ADVISORY VOTE ON NAMED EXECUTIVE OFFICER MERGER-RELATED COMPENSATION PROPOSAL (PROPOSAL 3)

     111  

ADJOURNMENT PROPOSAL (PROPOSAL 4)

     112  

MARKET PRICES OF LA QUINTA COMMON STOCK

     113  

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     114  

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER

     117  

U.S. Holders

     118  

Non-U.S. Holders

     118  

FUTURE LA QUINTA STOCKHOLDER PROPOSALS

     120  

MULTIPLE STOCKHOLDERS SHARING ONE ADDRESS

     121  

WHERE YOU CAN FIND MORE INFORMATION

     122  

ANNEXES

  

Annex A – Agreement and Plan of Merger

     A-1  

Annex B – Opinion of J.P. Morgan Securities LLC

     B-1  

Annex C – Section  262 of the General Corporation Law of the State of Delaware

     C-1  

Annex D – Certificate of Amendment of La Quinta’s Amended and Restated Certificate of Incorporation

     D-1  

Annex E – Separation and Distribution Agreement

     E-1  

Annex F – Employee Matters Agreement

     F-1  

Annex G – Tax Matters Agreement

     G-1  

 

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SUMMARY TERM SHEET

This summary highlights information contained elsewhere in this proxy statement and may not contain all the information that is important to you with respect to the merger and the other matters being considered at the special meeting of La Quinta stockholders. We urge you to carefully read the remainder of this proxy statement, including the attached annexes, and the other documents to which we have referred you. For additional information on La Quinta included in documents incorporated by reference into this proxy statement, see the section entitled “Where You Can Find More Information” beginning on page 122. We have included page references in this summary to direct you to a more complete description of the topics presented below.

All references to “La Quinta,” “the Company,” “we,” “us,” or “our” in this proxy statement refer to La Quinta Holdings Inc., a Delaware corporation; all references to “Wyndham Worldwide” refer to Wyndham Worldwide Corporation, a Delaware corporation; all references to “Merger Sub” refer to WHG BB Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Wyndham Worldwide, the sole purpose of which is to effect the merger; all references to “La Quinta common stock” refer to the common stock, par value $0.01 per share (and $0.02 per share following the completion of the reverse stock split), of La Quinta; all references to the “Board” or the “La Quinta Board” refer to the board of directors of La Quinta; all references to the “merger” refer to the merger of Merger Sub with and into La Quinta with La Quinta surviving as a wholly-owned subsidiary of Wyndham Worldwide; all references to “CorePoint” refer to CorePoint Lodging Inc., a Maryland corporation; all references to the “spin-off” refer to the pro rata distribution to La Quinta stockholders of common stock representing 100% of the interest in CorePoint, a newly formed company that will become a public company upon the completion of the spin-off and that will own and operate La Quinta’s real estate assets and certain related assets and liabilities; unless otherwise indicated or as the context otherwise requires, all references to the “merger agreement” refer to the Agreement and Plan of Merger, dated as of January 17, 2018, and as may be amended from time to time, by and among La Quinta, Wyndham Worldwide and Merger Sub, a copy of which is included as Annex A to this proxy statement. La Quinta, following the completion of the merger, is sometimes referred to in this proxy statement as the “surviving corporation.”

The Parties

La Quinta (see page 31)

La Quinta Holdings Inc. is a leading owner, operator and franchisor of select-service hotels primarily serving the upper-midscale and midscale segments. The Company’s owned and franchised portfolio consists of more than 890 properties representing approximately 87,500 rooms located in 48 states in the U.S. and in Canada, Mexico, Honduras and Colombia. These properties operate under the La Quinta Inn & Suites™, La Quinta Inn® and LQ Hotel® brands. La Quinta’s team is committed to providing guests with a refreshing and engaging experience.

La Quinta’s common stock is traded on the New York Stock Exchange (“NYSE”) under the ticker symbol LQ. The Company’s headquarters are located at 909 Hidden Ridge, Suite 600, Irving, Texas 75038, and the telephone number is (214) 492-6600. La Quinta’s corporate web address is www.lq.com.

Wyndham Worldwide (see page 31)

Wyndham Worldwide is one of the largest global hospitality companies, providing travelers with access to a collection of trusted hospitality brands in hotels, vacation ownership, and unique accommodations including vacation exchange, holiday parks, and managed home rentals. With a collective inventory of nearly 130,000 places to stay across more than 110 countries on six continents, Wyndham Worldwide and its 38,000 associates



 

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welcome people to experience travel the way they want. Wyndham Hotel Group, the world’s largest hotel company based on number of hotels, is one of three hospitality business units of Wyndham Worldwide. As both a leading hotel brand franchisor and hotel management services provider, Wyndham Hotel Group’s global network consists of approximately 8,350 hotels and over 720,100 rooms in more than 80 countries. Wyndham Worldwide has previously announced the potential spin-off of its hotel business into an independent publicly traded company; it is anticipated that La Quinta’s management and franchise business will form part of such independent publicly traded company.

Wyndham Worldwide’s corporate web address is www.wyndhamworldwide.com. The information provided on the Wyndham Worldwide website is not part of this proxy statement and is not incorporated in this proxy statement by reference hereby or by any other reference to Wyndham Worldwide’s website provided in this proxy statement.

Merger Sub (see page 32)

Merger Sub is a Delaware corporation and a wholly-owned subsidiary of Wyndham Worldwide, the purpose of which is to engage in the transactions contemplated by the merger agreement. Upon completion of the merger, Merger Sub will merge with and into La Quinta, with Merger Sub ceasing to exist and La Quinta surviving as a wholly-owned subsidiary of Wyndham Worldwide.

About CorePoint

CorePoint (see page 32)

CorePoint Lodging Inc. is a Maryland corporation and a wholly owned subsidiary of La Quinta, incorporated on May 8, 2017 for the purpose of effecting the separation and spin-off of La Quinta’s real estate assets and certain related assets and liabilities into an independent publicly traded company. La Quinta stockholders will receive shares of CorePoint common stock in the spin-off. The headquarters of CorePoint will be located in Irving, Texas, at 909 Hidden Ridge, Suite 600, and its telephone number is (214) 492-6600.



 

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The Special Meeting

Date, Time and Place (see page 33)

The special meeting of La Quinta stockholders (the “special meeting”) is scheduled to be held at La Quinta Inn & Suites DFW Airport South/Irving, 4105 West Airport Freeway, Irving, Texas 75062 on [●], 2018 at [●], Central Time.

Purpose of the Special Meeting (see page 33)

At the special meeting, La Quinta stockholders will be asked to consider and vote on the following proposals:

 

    to adopt the merger agreement (the “merger proposal”);

 

    to approve the amendments to La Quinta’s amended and restated certificate of incorporation set forth on Annex D to this proxy statement to (i) effect the reverse stock split of the La Quinta common stock at a ratio of 1-for-2 and (ii) change the par value of the La Quinta common stock in connection with the reverse stock split from $0.01 per share to $0.02 per share (the “charter amendment proposals”);

 

    to approve, on a non-binding, advisory basis, certain compensation that will or may be paid by La Quinta to its named executive officers that is based on or otherwise relates to the merger (the “named executive officer merger-related compensation proposal”); and

 

    to approve the adjournment of the special meeting, from time to time, if necessary or appropriate, for the purpose of soliciting additional votes for the approval of the merger proposal and the charter amendment proposals (the “adjournment proposal”).

La Quinta will transact no other business at the special meeting except such business as may properly be brought before the special meeting or any adjournments or postponements thereof.

The La Quinta Board has unanimously determined that it is in the best interests of the stockholders of La Quinta to enter into the merger agreement and has unanimously approved and declared advisable the merger, the merger agreement and the other transactions contemplated thereby (including the separation, the charter amendments and the spin-off). The La Quinta Board unanimously recommends that La Quinta stockholders vote “FOR” the merger proposal, “FOR” the charter amendment proposals, “FOR” the named executive officer merger-related compensation proposal, and “FOR” the adjournment proposal.

La Quinta stockholders’ approval of the merger proposal is a condition for the merger to occur. La Quinta stockholders must also vote to approve the charter amendment proposals as a condition for the spin-off to occur, which is a condition for the merger to occur. If La Quinta stockholders fail to approve either the merger proposal or the charter amendment proposals by the requisite vote, the merger will not occur.

Record Date; Stockholders Entitled to Vote (see page 34)

Only holders of La Quinta common stock at the close of business on [●], 2018, the record date for the special meeting (the “record date”), will be entitled to notice of, and to vote at, the special meeting or any adjournments or postponements of the special meeting. At the close of business on the record date, [●] shares of La Quinta common stock were issued and outstanding.

Holders of La Quinta common stock are entitled to one vote for each share of La Quinta common stock they own at the close of business on the record date.



 

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Quorum (see page 34)

The presence at the special meeting, in person or by proxy, of the holders of a majority of the voting power of the shares of La Quinta common stock issued and outstanding at the close of business on the record date and entitled to vote at the special meeting will constitute a quorum. There must be a quorum for business to be conducted at the special meeting. Failure of a quorum to be represented at the special meeting will necessitate an adjournment of the special meeting and may subject La Quinta to additional expense.

Required Vote; Voting Agreement (see page 34 and page 108)

Approval of each of the merger proposal and the charter amendment proposals requires the affirmative vote of a majority of the voting power of the shares of La Quinta common stock outstanding at the close of business on the record date and entitled to vote thereon.

Approval of each of the named executive officer merger-related compensation proposal and the adjournment proposal requires a majority of the votes cast in favor of each such proposal at the special meeting at which quorum is present. If no quorum is present at the special meeting, the chairman of the meeting or the stockholders, by the affirmative vote of the holders of a majority of the shares of La Quinta common stock present or represented by proxy at the special meeting, may adjourn the special meeting.

Concurrently with and as a condition to Wyndham Worldwide’s execution of the merger agreement, certain entities affiliated with The Blackstone Group, L.P. (such entities, collectively, the “Blackstone stockholders”), have entered into a support agreement with Wyndham Worldwide (the “voting agreement”) covering shares of La Quinta common stock legally or beneficially owned by the Blackstone stockholders (the “voting party shares”). Pursuant to and subject to the terms and conditions of the voting agreement, the Blackstone stockholders have agreed to vote all the La Quinta common stock owned by them in favor of the merger proposal and the charter amendment proposals. See the section entitled “The Voting Agreement” beginning on page 108. As of January 17, 2018, the Blackstone stockholders owned 35,173,076 shares of La Quinta common stock representing approximately 29.97% of the total issued and outstanding La Quinta common stock.

Voting at the Special Meeting (see page 36)

If your shares are registered directly in your name with our transfer agent, you are considered a “stockholder of record” (also referred to in this proxy statement as a “registered stockholder”) and you may vote your shares in person at the special meeting or by submitting a proxy by mail, over the internet or by telephone. If you plan to attend the special meeting and wish to vote in person, you will be given a ballot at the special meeting. Although La Quinta offers four different voting methods, La Quinta encourages you to submit a proxy over the internet or by telephone, as La Quinta believes they are the most convenient, cost-effective and reliable voting methods. If you choose to submit a proxy over the internet or by telephone, there is no need for you to mail back your proxy card.

If your shares are held by your broker, bank or other nominee, you are considered the beneficial owner of shares held in “street name” and you will receive a form from your broker, bank or other nominee seeking instruction from you as to how your shares should be voted. If you are a beneficial owner and you wish to vote in person at the special meeting, you must bring to the special meeting a proxy from the broker, bank or other nominee that holds your shares authorizing you to vote in person at the special meeting. Beneficial owners should also bring a copy of an account statement reflecting their ownership of La Quinta common stock as of the record date. All stockholders and proxyholders who attend the special meeting must also bring photo identification.

If you are a current or former La Quinta employee with shares received through the La Quinta Holdings Inc. 2015 Employee Stock Purchase Plan (the “ESPP”) and held in street name by RBC Capital Markets Corp.



 

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(“RBC”), you may receive one proxy card that covers the shares held for you by RBC, as well as any other shares registered directly in your name. You may submit one proxy for all of these shares via the internet, by telephone or by mail in the same manner as described above for registered stockholders. If you vote your ESPP shares by 11:59 p.m., Eastern Time, on [●], 2018, RBC will vote the shares as you have directed. If voting instructions are not received in time, RBC will not vote your shares for any proposal.

La Quinta recommends that you submit a proxy or submit your voting instructions as soon as possible, even if you are planning to attend the special meeting, to ensure that your shares will be represented and voted at the special meeting.

Solicitation of Proxies (see page 37)

The La Quinta Board is soliciting your proxy, and La Quinta will bear the cost of soliciting proxies. Innisfree M&A Incorporated (“Innisfree”) has been retained to assist with the solicitation of proxies. Innisfree will be paid approximately $25,000 and will be reimbursed for its reasonable and documented out-of-pocket expenses for these and related services in connection with the special meeting. Solicitation initially will be made by mail. Forms of proxies and proxy materials may also be distributed through brokers, banks and other nominees to the beneficial owners of shares of La Quinta common stock, in which case these parties will be reimbursed for their reasonable out-of-pocket expenses. Proxies may also be solicited in person or by telephone, facsimile, electronic mail, or other electronic medium by Innisfree or, without additional compensation, by certain of La Quinta’s directors, officers and employees.

Adjournment (see page 38)

In addition to the merger proposal, the charter amendment proposals and the named executive officer merger-related compensation proposal, La Quinta stockholders are also being asked to approve the adjournment proposal, which will enable the adjournment of the special meeting for the purpose of soliciting additional votes in favor of the merger proposal and the charter amendment proposals if there are not sufficient votes at the time of the special meeting to approve the merger proposal and the charter amendment proposals. If a quorum is not present, either the chairman of the meeting or the stockholders, by the affirmative vote of the holders of a majority of the voting power of the shares of La Quinta common stock present or represented by proxy at the special meeting, may adjourn the special meeting to another place, date or time. In addition, the special meeting could be postponed before it commences. If the special meeting is adjourned or postponed for the purpose of soliciting additional votes, stockholders who have already submitted their proxies will be able to revoke them at any time prior to the final vote on the proposals. If you return an executed proxy and do not indicate how you wish to vote on the adjournment proposal, your shares will be voted in favor of the adjournment proposal.



 

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The Merger

Wyndham Worldwide will only acquire La Quinta’s management and franchise business. Therefore, as a condition to the merger, La Quinta will separate its owned real estate business and certain related assets and liabilities, which will be transferred to CorePoint and its subsidiaries and, following such separation and the reverse stock split (and prior to the consummation of the merger), La Quinta will effect a pro rata distribution to La Quinta stockholders of common stock representing 100% of the interest in CorePoint. After the spin-off is completed, CorePoint will be a separate, publicly held company that will own and operate La Quinta’s real estate assets and certain related assets and liabilities. As part of the separation (immediately prior to the spin-off), CorePoint will make a cash payment to La Quinta of $983,950,000, subject to certain adjustments based on the actual amount of net indebtedness at La Quinta (as of immediately prior to the effective time of the spin-off) and certain accrued but unpaid expenses incurred in connection with the spin-off and the merger. The separation and the spin-off will be carried out in accordance with the terms of the separation agreement, the employee matters agreement and other ancillary documents referred to therein. See “Spin-Off Transaction Agreements” beginning on page 106 for a description of such spin-off transaction agreements.

Structure of the Merger (see page 39)

Subject to the terms and conditions of the merger agreement and in accordance with the DGCL, at the effective time of the merger (the “effective time”), Merger Sub will merge with and into La Quinta, the separate corporate existence of Merger Sub will cease and La Quinta will survive the merger as a wholly owned subsidiary of Wyndham Worldwide.

Merger Consideration (see page 39)

Upon the terms and subject to the conditions of the merger agreement, at the effective time, La Quinta stockholders will have the right to receive, for each share of La Quinta common stock that they own immediately prior to the effective time (other than any shares that may be held in the treasury of La Quinta, by Wyndham Worldwide or by any direct or indirect wholly-owned subsidiary of Wyndham Worldwide, and other than shares owned by stockholders who have properly made and not withdrawn a demand for appraisal rights under the DGCL), $8.40 in cash per share prior to giving effect to the reverse stock split (or $16.80 in cash per share after giving effect to the reverse stock split), without interest (the “merger consideration”).

Reverse Stock Split (see page 85)

In connection with the spin-off, and in order to obtain the desired tax treatment in connection with the spin-off, La Quinta will, among other things, amend La Quinta’s amended and restated certificate of incorporation to effect a reclassification and combination of the La Quinta common stock at a ratio of 1-for-2 and to amend the par value of the La Quinta common stock from $0.01 per share to $0.02 per share. Pursuant to these reclassification and par value charter amendments, each share of La Quinta common stock (par value $0.01) will be reclassified and combined into one half of a share of La Quinta common stock (par value $0.02). The reverse stock split is a condition for the spin-off to occur, which is a condition for the merger to occur. The reverse stock split will be carried out in accordance with the terms of the charter amendments and the separation agreement.

Treatment of La Quinta Equity Awards (see page 39)

At the time of the spin-off, then-outstanding La Quinta equity-based awards granted prior to the date of the spin-off will be adjusted into La Quinta equity-based awards and CorePoint equity-based awards in proportion to the relative value of La Quinta (after giving effect to the spin-off) and CorePoint and in accordance with the terms of the employee matters agreement. Following the spin-off, all CorePoint equity-based awards will continue to vest in accordance with their terms based on their respective holders’ continued service with La Quinta or CorePoint, as applicable, and will not vest solely as a result of the merger.



 

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The merger agreement provides that outstanding equity-based awards issued under La Quinta’s equity incentive plan will be treated as set forth below:

Restricted Stock Awards. Except as otherwise agreed between a holder and Wyndham Worldwide in writing, immediately prior to the effective time of the merger, each then-outstanding La Quinta restricted stock award (“La Quinta RSA”) will, automatically and without any required action on the part of the holder thereof, vest and become free of restrictions as of the effective time of the merger and be cancelled and terminated and the holder of such La Quinta RSA will have the right to receive from the surviving corporation, in respect of such La Quinta RSA, an amount in cash, less any applicable withholding taxes, equal to the product of (i) the number of shares of La Quinta common stock previously subject to such La Quinta RSA and (ii) the merger consideration.

Restricted Stock Units. Except as otherwise agreed between a holder and Wyndham Worldwide in writing, immediately prior to the effective time of the merger, any vesting conditions applicable to each then-outstanding award of a stock unit that entitles the holder to a fixed number of shares of La Quinta common stock (“La Quinta RSU”) will, automatically and without any required action on the part of the holder thereof, accelerate in full, and such La Quinta RSU will be cancelled and terminated, and the holder will have the right to receive from the surviving corporation, in respect of such La Quinta RSU, an amount in cash, less any applicable withholding taxes, equal to the product of (i) the number of shares of La Quinta common stock previously subject to such La Quinta RSU and (ii) the merger consideration.

Recommendation of the La Quinta Board of Directors (see page 52)

After consideration of various factors, the La Quinta Board unanimously (i) determined that it is in the best interests of La Quinta stockholders that La Quinta enter into the merger agreement and that the reverse stock split (including the charter amendments contemplated thereby) be consummated, (ii) approved and declared advisable the merger, the merger agreement and the other transactions contemplated thereby (including the separation, the charter amendments and the spin-off) and (iii) resolved that the merger agreement and the charter amendments be submitted for consideration to La Quinta stockholders at a special meeting of La Quinta stockholders and recommended that La Quinta stockholders vote to adopt the merger agreement and the transactions contemplated thereby and to approve the charter amendment proposals. A description of factors considered by the La Quinta Board in reaching its decision to adopt the merger agreement can be found in “The Merger Proposal (Proposal 1) — Recommendation of the La Quinta Board and Reasons for the Merger” beginning on page 52.

The La Quinta Board unanimously recommends that La Quinta stockholders vote:

 

    “FOR” the merger proposal;

 

    “FOR” the charter amendment proposals;

 

    “FOR” the named executive officer merger-related compensation proposal on a non-binding, advisory basis; and

 

    “FOR” the adjournment proposal.

Opinion of J.P. Morgan Securities LLC (see page 56 and Annex B)

On January 17, 2018, J.P. Morgan rendered its opinion to the La Quinta Board that, as of such date and based upon and subject to the factors and assumptions set forth in its opinion, the consideration to be paid to the holders of shares of La Quinta common stock (other than any shares that may be held in the treasury of La Quinta, by Wyndham Worldwide or by any direct or indirect wholly-owned subsidiary of Wyndham Worldwide, and other than shares owned by stockholders who have properly made and not withdrawn a demand for appraisal rights under the DGCL) in the proposed merger was fair, from a financial point of view, to such stockholders.



 

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The full text of the written opinion of J.P. Morgan, which sets forth, among other things, the assumptions made, matters considered and limits on the review undertaken, is attached as Annex B to this proxy statement and is incorporated herein by reference. The Company’s stockholders are urged to read the opinion in its entirety. J.P. Morgan’s written opinion was addressed to the La Quinta Board (in its capacity as such) in connection with and for the purpose of its evaluation of the proposed merger, was directed only to the consideration to be paid in the proposed merger and did not address any other aspect of the proposed merger. The opinion does not constitute a recommendation to any stockholder of the Company as to how such stockholder should vote with respect to the proposed merger or any other matter.

Interests of La Quinta’s Executive Officers and Directors in the Merger (see page 64)

When considering the recommendation of the La Quinta Board that you vote “FOR” the merger proposal, you should be aware that, aside from their interests as La Quinta stockholders, La Quinta’s directors and executive officers have interests in the merger that are different from, or in addition to, the interests of other La Quinta stockholders generally. The La Quinta Board was aware of such interests during its deliberations on the merits of the merger and in deciding to recommend that La Quinta stockholders vote “FOR” the merger proposal at its meeting on January 17, 2018.

With regard to our directors serving on the La Quinta Board, these interests include the impact of the transaction on the La Quinta directors’ outstanding equity awards and the provision of indemnification and insurance arrangements pursuant to the merger agreement and La Quinta’s amended and restated certificate of incorporation and amended and restated bylaws, which reflect that such directors may be subject to claims arising from their service on the La Quinta Board.

With regard to our executive officers, these interests relate to the possible receipt of the following types of payments and benefits that may be triggered by or otherwise relate to the merger, assuming the merger occurs on June 1, 2018 and, where applicable, that the executive officer’s employment was terminated by us without “cause” or by the executive for “good reason” (each as defined below) on June 1, 2018 (or before the merger if the executive officer’s termination is on or within the six month period prior to June 1, 2018):

 

    accelerated vesting of then-outstanding equity awards;
    possible cash severance payments and other termination benefits pursuant to the executive’s employment agreement or the La Quinta Holdings Inc. Executive Severance Plan, as applicable; and
    the provision of indemnification and insurance arrangements pursuant to the merger agreement and La Quinta’s amended and restated certificate of incorporation and amended and restated bylaws.

For the avoidance of doubt, our executive officers (including named executive officers) who begin employment with CorePoint prior to the effective time of the merger will not experience, as a result of the merger, a termination by us without “cause” or by the executive for “good reason” so as to trigger the corresponding payments and benefits.

Financing of the Merger (see page 76)

Wyndham Worldwide has obtained binding financing commitments for the transactions contemplated by the merger agreement, the aggregate proceeds of which, together with cash on hand at Wyndham Worldwide, will be used to consummate the merger and the other transactions contemplated by the merger agreement, including the payment of the merger consideration and all related fees and expenses, to repay certain existing indebtedness of La Quinta, and to pay any other amounts required to be paid by Wyndham Worldwide or Merger Sub in connection with the consummation of the transactions contemplated by the merger agreement. The consummation of the merger is not subject to any financing conditions (although funding of the Wyndham Worldwide financing is subject to the satisfaction of the conditions specified in the binding financing commitments for such financing).



 

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In connection with La Quinta’s entry into the merger agreement, CorePoint has obtained binding financing commitments to provide sufficient funds to make a cash payment to La Quinta of $983,950,000, subject to certain adjustments based on the actual amount of net indebtedness at La Quinta (as of immediately prior to the effective time of the spin-off) and certain accrued but unpaid expenses incurred in connection with the spin-off and the merger, immediately prior to and as a condition of the spin-off. The consummation of the merger is subject to the consummation of the spin-off. Funding of the CorePoint financing is subject to the satisfaction of the conditions specified in the binding financing commitments for such financing.

Regulatory Clearances and Approvals Required for the Merger (see page 79)

Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (“HSR Act”), we cannot complete the merger until we have given notification and furnished information to the Federal Trade Commission (the “FTC”) and the Antitrust Division of the Department of Justice (the “DOJ”), and until the applicable waiting period has expired or has been terminated. On January 31, 2018, La Quinta and Wyndham Worldwide each filed a premerger notification and report form under the HSR Act, as a result of which the applicable waiting period would be expected to expire on March 2, 2018 at 11:59 p.m., Eastern Time, unless otherwise earlier terminated or extended by the antitrust authorities.

Generally under the merger agreement, each of Wyndham Worldwide and Merger Sub, on the one hand, and La Quinta, on the other hand, is required to use reasonable best efforts to satisfy the closing conditions relating to required antitrust and regulatory consents, subject to certain limitations as further described in the section entitled “The Merger Proposal (Proposal 1) — Regulatory Clearances and Approvals Required for the Merger” beginning on page 79.

While we have no reason to believe it will not be possible to obtain regulatory approvals in a timely manner, there is no certainty that these approvals will be obtained within the period of time contemplated by the merger agreement, if at all.

Material U.S. Federal Income Tax Consequences of the Merger (see page 117)

For U.S. federal income tax purposes, the spin-off and the merger are expected to be treated as in part a sale, to the extent of the cash received in the merger, and in part a redemption of La Quinta common stock in exchange for the CorePoint shares received in the spin-off, that together result in a complete termination of La Quinta stockholders’ interests in La Quinta in a fully taxable transaction. The exchange of La Quinta common stock for cash in the merger and the exchange of La Quinta common stock for CorePoint shares in the spin-off may also be taxable under state and local and other tax laws. You should read the section entitled “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 117 and consult your tax advisors regarding the U.S. federal income tax consequences of the merger to you in your particular circumstances, as well as tax consequences arising under the laws of any state, local or foreign taxing jurisdiction.

Appraisal Rights (see page 80)

If the merger is effected, La Quinta stockholders are entitled to appraisal rights under the DGCL in connection with the merger, provided that such stockholders meet all of the conditions and follow all of the requirements set forth in Section 262 of the DGCL. This means that La Quinta stockholders who do not wish to accept the merger consideration and meet all of the conditions set forth in Section 262 of the DGCL are entitled to have the fair value of their shares of La Quinta common stock as of the effective time of the merger determined by the Delaware Court of Chancery and to receive payment based on that valuation in lieu of the merger consideration. The ultimate amount determined by the Delaware Court of Chancery in an appraisal proceeding to be the fair value per share of La Quinta common stock as of the effective time of the merger may be less than, equal to or more than the merger consideration that a La Quinta stockholder will receive under the merger agreement if the merger is effected.



 

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To exercise appraisal rights, a La Quinta stockholder of record must deliver a written demand for appraisal to La Quinta before the vote is taken on the adoption of the merger agreement, such stockholder must not vote, in person or by proxy, in favor of the proposal to adopt the merger agreement and such stockholder must continue to hold the shares of La Quinta common stock of record from the date of making the demand for appraisal through the effective time of the merger. A La Quinta stockholder’s failure to follow exactly the procedures specified under the DGCL may result in the loss of such stockholder’s appraisal rights. See “The Merger Proposal (Proposal 1) — Appraisal Rights” beginning on page 80 and the text of Section 262 of the DGCL reproduced in its entirety as Annex C to this proxy statement. If you hold your shares of La Quinta common stock through a bank, brokerage firm or other nominee and you wish to exercise appraisal rights, because the demand for appraisal rights must be made by the record holder, you should consult with your bank, brokerage firm or other nominee to determine the appropriate procedures for such bank, broker or other nominee to make a demand for appraisal on your behalf. Stockholders who may wish to pursue appraisal rights should consult their legal and financial advisors promptly.

Expected Timing of the Merger

We expect to complete the merger in the second quarter of 2018. However, the merger is subject to various regulatory clearances and approvals and other conditions, and it is possible that factors outside of the control of La Quinta or Wyndham Worldwide could result in the merger being completed at a later time, or not at all. There may be a substantial amount of time between the date of the special meeting and the completion of the merger. We expect to complete the merger promptly following the receipt of all required clearances and approvals and the satisfaction or, to the extent permitted, waiver of the other conditions to the consummation of the merger.

Restrictions on Solicitation of Acquisition Proposals (see page 93)

From the date of the merger agreement until the earlier of the effective time of the merger and the termination of the merger agreement, we are subject to restrictions on our ability to initiate, solicit or knowingly facilitate third party proposals relating to alternative transactions or to provide information to and engage in discussions or negotiations with a third party in relation to an alternative transaction (subject to certain exceptions prior to the approval of the merger proposal by La Quinta stockholders at the special meeting described further in this proxy statement). Specifically, La Quinta shall not, nor will it authorize or permit any of its subsidiaries, directors, officers, or employees to, and La Quinta shall not permit its representatives to:

 

    initiate, solicit or knowingly facilitate or encourage any inquiries with respect to, or the making of, any acquisition proposal (as defined below);

 

    engage in any negotiations or discussions concerning, or provide access to its or its subsidiaries’ properties, books and records or any confidential information or data to, any person relating to an acquisition proposal or any proposal, offer or inquiry that would reasonably be expected to lead to, an acquisition proposal;

 

    amend or grant any waiver or release under or fail to enforce any standstill or similar agreement;

 

    approve, endorse or recommend, or propose publicly to approve, endorse or recommend, any acquisition proposal; or

 

    execute or enter into, any letter of intent, merger agreement, acquisition agreement or other agreement relating to any acquisition proposal (other than an acceptable confidentiality agreement).

Notwithstanding the foregoing, nothing in the provisions of the merger agreement relating to acquisition proposals prevents us from:

 

   

taking and disclosing a position contemplated by Rule 14d-9 or Rule 14e-2(a) under the Exchange Act (or any similar communication to stockholders in connection with the making or amendment



 

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of a tender offer or exchange offer), making any “stop-look-and-listen” communication to our stockholders pursuant to Rule 14d-9(f) under the Exchange Act or making any legally required disclosure to our stockholders with regard to an acquisition proposal;

 

    prior to obtaining our stockholders’ approval of the merger proposal and our stockholders’ approval of the charter amendment proposals, contacting and engaging in discussions with any person or group and their respective representatives who has made an unsolicited acquisition proposal after the date of the merger agreement, solely for the purpose of clarifying such acquisition proposal and the terms thereof;

 

    prior to obtaining our stockholders’ approval of the merger proposal and our stockholders’ approval of the charter amendment proposals, providing access to our properties, books and records and providing information or data in response to a request therefor by a person or group who has made an acquisition proposal after the date of the merger agreement that was not solicited in breach of the foregoing paragraph and bullets related thereto, if the La Quinta Board shall have determined in good faith, after consultation with its legal counsel and financial advisor, that such acquisition proposal constitutes or would reasonably be expected to constitute, result in or lead to a superior proposal (as defined below), we have received from the person so requesting such information an executed acceptable confidentiality agreement and promptly (and in any event within 24 hours) after furnishing or making available any such non-public information, we furnish or make available such information to Wyndham Worldwide or its representatives;

 

    prior to obtaining our stockholder’s approval of the merger proposal, contacting and engaging in any negotiations or discussions with any person or group and their respective representatives who has made an unsolicited acquisition proposal after the date of the merger agreement (which negotiations or discussions need not be solely for clarification purposes) if the La Quinta Board shall have determined in good faith, after consultation with its legal counsel and financial advisor, that such acquisition proposal constitutes or would reasonably be expected to constitute, result in or lead to a superior proposal; or

 

    prior to obtaining our stockholders’ approval of the merger proposal, making a change of board recommendation in accordance with the merger agreement.

Conditions to the Closing of the Merger (see page 100)

Each party’s obligation to effect the merger is subject to the satisfaction or, to the extent permitted, waiver of various conditions, which include the following:

 

    the merger agreement shall have been adopted, and the charter amendment proposals shall have been approved, by La Quinta stockholders at the special meeting and such approval must continue to be in full force and effect;

 

    the CorePoint registration statement in connection with the spin-off shall have been declared effective by the SEC and shall not be the subject of any stop order or proceedings seeking a stop order, all necessary permits and authorizations under state securities or “blue sky” laws, the Securities Act and the Exchange Act relating to the issuance and trading of shares of CorePoint common stock shall have been obtained and be in effect, and such shares of CorePoint common stock shall have been approved for listing on the NYSE;

 

    the spin-off shall have been consummated in all material respects in accordance with the terms of the separation and distribution agreement;

 

   

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Antitrust Division of the DOJ or the FTC wherein an unfavorable judgment, decree, injunction, order or ruling would prevent the performance of the merger agreement or the spin-off transaction agreements or any of the transactions under such agreements, declare unlawful the transactions contemplated by the merger agreement or the spin-off transaction agreements or cause such transactions to be rescinded; and

 

    no order, injunction or decree issued by any governmental entity of competent jurisdiction preventing the consummation of the merger or the distribution shall be in effect, and no statute, rule, regulation, order, injunction or decree shall have been enacted, entered, promulgated or enforced (and still be in effect) by any governmental entity that prohibits, restrains, enjoins or makes illegal the consummation of the merger or the distribution.

Wyndham Worldwide and Merger Sub’s obligations to effect the merger are subject to the satisfaction or, to the extent permitted, waiver of various conditions, which include the following:

 

    our representations and warranties in the merger agreement regarding (i) our and our subsidiaries’ due organization, valid existence, good standing, qualification to do business and similar corporate matters; (ii) our organizational documents; (iii) our corporate power and authority to enter into and perform our obligations under the merger agreement and complete the merger, and the enforceability and due execution and delivery of the merger agreement; and (iv) our brokers, finders or investment bankers must be true and correct in all material respects, in each case, as of the date of the merger agreement and as of the closing date (unless any such representation or warranty was made only as of a specified date, in which event such representation and warranty shall have been true and accurate as of such specified date);

 

    our representations and warranties in the merger agreement regarding (i) our capitalization and capital structure and (ii) absence of certain events shall be true and correct in all respects at and as of the closing date as if made at and as of such time (except to the extent expressly made as of an earlier date, in which case such representation and warranty shall be so true and correct as of such earlier date), except, in the case of clause (i) only, for such inaccuracies as are de minimis in nature and amount;

 

    all our other representations and warranties in the merger agreement shall be true and correct (disregarding any qualifications as to materiality or material adverse effect contained therein), in each case, at and as of the closing as if made at and as of such time (except to the extent expressly made as of an earlier date, in which case such representation and warranty shall be so true and correct as of such earlier date), except where the failure of any such representations and warranties to be so true and accurate, has not had and would not reasonably be expected to have, a material adverse effect;

 

    performance in all material respects of our obligations, and compliance in all material respects with the agreements and covenants, required to be performed by or complied with by us under the merger agreement at or prior to the closing of the merger;

 

    absence of a material adverse effect since the date of the merger agreement;

 

    execution of each spin-off transaction agreement by the parties thereto, and performance of the covenants set forth therein required to be performed prior to the effective time of the merger in all material respects;

 

    receipt by Wyndham Worldwide of a certificate executed by a senior officer of La Quinta confirming that the conditions described in the first through the fourth bullets above have been satisfied; and

 

    receipt by La Quinta or the applicable retained subsidiary of the cash payment (as defined in the separation agreement).


 

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Our obligation to effect the merger is subject to the satisfaction or, to the extent permitted, waiver of various conditions, which include the following:

 

    the representations and warranties of Wyndham Worldwide and Merger Sub in the merger agreement regarding (i) their respective due organization, valid existence, good standing, qualification to do business and similar corporate matters; (ii) their respective corporate power and authority to enter into and perform their obligations under the merger agreement and complete the merger, and the enforceability and due execution and delivery of the merger agreement; (iii) brokers, finders or investment bankers; and (iv) La Quinta’s eligible independent contractor status with respect to CorePoint as of the effective time of the merger, shall be true and accurate in all material respects, in each case, as of the date of the merger agreement and as of the closing date (unless any such representation or warranty was made only as of a specified date, in which event such representation and warranty shall have been true and accurate as of such specified date);

 

    each of Wyndham Worldwide’s and Merger Sub’s other representations and warranties in the merger agreement shall be true and correct (disregarding any qualifications as to materiality or material adverse effect contained therein), in each case, as of the date of the merger agreement and as of the closing date as though made on and as of such date (unless any such representation or warranty is made only as of a specific date, in which event such representation and warranty shall be so true and accurate as of such specified date), except where the failure of any such representations and warranties to be so true and accurate, individually or in the aggregate, would not, and would not reasonably be expected to have, a material adverse effect on the ability of Wyndham Worldwide or Merger Sub to timely perform their obligations under the merger agreement or to timely consummate the transactions contemplated thereby;

 

    performance by Wyndham Worldwide and Merger Sub in all material respects of each of their obligations, and compliance in all material respects with the agreements and covenants, required to be performed by them or complied with by them under the merger agreement prior to the closing of the merger; and

 

    receipt by us of a certificate of a senior officer of each of Wyndham Worldwide and Merger Sub, certifying that the conditions described in the bullets above have been satisfied.

Termination of the Merger Agreement (see page 102)

The merger agreement can be terminated by La Quinta or Wyndham Worldwide under the following circumstances, notwithstanding the adoption of the merger agreement by the stockholders of La Quinta or Merger Sub at any time prior to the effective time of the merger:

 

    by mutual written consent of La Quinta and Wyndham Worldwide;

 

    if any court of competent jurisdiction or other governmental entity has issued a final order, decree or ruling or taken any other final action restraining, enjoining or otherwise prohibiting the merger and such order, decree, ruling or other action is or shall have become final and nonappealable, provided that the party seeking to terminate under this circumstance used its reasonable best efforts as required by the merger agreement (and as described in this proxy statement) to prevent, oppose and remove such order, decree, ruling or other action and the issuance of such final, non-applicable order, decree or ruling or other action was not primarily due to the failure of such party to perform any of its obligations under the merger agreement;

 

    if approval of the merger proposal and the charter amendment proposals by La Quinta stockholders has not been obtained at the special meeting or at any adjournment or postponement thereof at which a vote on the approval of the merger proposal and the charter amendment proposals was taken; or


 

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    if the merger has not occurred on or prior to July 17, 2018 (as such date may be extended as described below, the “outside date”), provided that the right to terminate the merger agreement under this circumstance will not be available to any party if any action of such party (and, in the case of Wyndham Worldwide, including Merger Sub) or failure by such party to fulfill any obligation under the merger agreement has been the primary cause of, or resulted in, the failure of the merger to be consummated on or before the outside date and such action or failure to perform constitutes a breach of the merger agreement, provided, further, that if prior to the outside date all of the conditions to the closing have been satisfied or waived, as applicable, other than the condition that any applicable waiting period (and any extension thereof) under the HSR Act shall have expired or been terminated, and no proceeding relating thereto shall be pending, and those conditions that by their nature are to be satisfied at the closing, but subject (with exceptions) to such conditions being capable of being satisfied, either La Quinta or Wyndham Worldwide may extend the outside date by 90 days.

La Quinta may also terminate the merger agreement, notwithstanding the adoption of the merger agreement by the stockholders of La Quinta or Merger Sub:

 

    if there shall have been a breach of any representation, warranty, covenant or agreement contained in the merger agreement on the part of Wyndham Worldwide or Merger Sub and such breach would cause the failure of a closing condition to be satisfied by the outside date, and such breach is incapable of being cured by Wyndham Worldwide or Merger Sub within 20 days of written notice provided by La Quinta (or by the outside date if less than 20 days prior to the outside date), provided that La Quinta may not terminate the merger agreement pursuant to this provision if it is then in breach of the merger agreement in any material respect; or

 

    in compliance with the non-solicitation provisions set forth in the merger agreement, in order to enter into a definitive agreement with respect to a superior proposal, subject to payment of a termination fee to Wyndham Worldwide prior to or concurrently with such termination.

Wyndham Worldwide may also terminate the merger agreement, notwithstanding the adoption of the merger agreement by the stockholders of La Quinta or Merger Sub:

 

    if there shall have been a breach of any representation, warranty, covenant or agreement contained in the merger agreement on the part of La Quinta and such breach would cause the failure of a closing condition to be satisfied by the termination date, and such breach is incapable of being cured by La Quinta within 20 days of written notice provided by Wyndham Worldwide (or by the outside date if less than 20 days prior to the outside date), provided that Wyndham Worldwide may not terminate the merger agreement pursuant to this provision if it is then in breach of the merger agreement in any material respect; or

 

    if prior to the approval by La Quinta stockholders of the merger proposal and the charter amendment proposals, the La Quinta Board or any committee thereof (a) has made a change of recommendation with respect to the merger, or (b) has otherwise failed to include its recommendation in this proxy statement.

Termination Fees and Expenses (see page 103)

We will be required to pay Wyndham Worldwide a termination fee equal to $37,000,000 in cash if the merger agreement is terminated under specified circumstances.

If we fail to pay Wyndham Worldwide the termination fee within the specified time period, we will be required to reimburse Wyndham Worldwide’s reasonable out-of-pocket costs and expenses incurred in connection with any action taken to collect payment of such amounts.



 

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Except for the termination fee, out-of-pocket expenses and monetary damages payable by La Quinta under certain specified circumstances, whether or not the merger is completed, we and Wyndham Worldwide are each responsible for all respective costs and expenses incurred in connection with the merger and the other transactions contemplated by the merger agreement. We are not required to pay the applicable termination fee on more than one occasion.

Specific Performance (see page 105)

The parties to the merger agreement are entitled to seek injunction, specific performance and other equitable remedies to prevent breaches of the merger agreement and to enforce the terms thereof.

Directors’ and Officers’ Indemnification and Insurance (see page 98)

From and after the effective time of the merger, Wyndham Worldwide agrees to cause the surviving corporation to indemnify, defend and hold harmless each present and former director, officer and employee of La Quinta (including in their capacity as fiduciary under the La Quinta equity plan) (the “indemnified parties”), against any costs or expenses (including reasonable attorneys’ fees), judgments, fines, losses, claims, damages, liabilities or awards paid in settlement incurred in connection with any actual or threatened proceeding, arising out of, relating to or in connection with matters existing or occurring at or prior to the effective time of the merger (including the fact that such person is or was a director, officer or employee of La Quinta or any acts or omissions occurring or alleged to occur prior to the effective time of the merger), whether asserted or claimed prior to, at or after the effective time of the merger, to the fullest extent permitted under the DGCL, and Wyndham Worldwide or the surviving corporation shall advance expenses (including reasonable legal fees and expenses) incurred in the defense of any proceeding, including any expenses incurred in enforcing such person’s rights, to the same extent as such indemnified parties are entitled to indemnification and advancement of expenses as of the date of the merger agreement under the amended and restated certificate of incorporation or amended and restated bylaws of La Quinta or the certificate of incorporation and bylaws, or equivalent organizational documents, of any of its retained subsidiaries.

La Quinta shall (and, if La Quinta is unable to, Wyndham Worldwide shall cause the surviving corporation as of the effective time of the merger to) purchase and fully pay by the effective time of the merger, at no expense to the beneficiaries, “tail” policies to the current directors’ and officers’ liability insurance policies maintained at such time by La Quinta from an insurance carrier with the same or better credit rating as La Quinta’s current insurance carrier with respect to directors’ and officers’ liability insurance and fiduciary liability insurance, which tail policies (i) will be effective for a period from the effective time of the merger through and including the date six years after the effective time of the merger with respect to claims arising from facts or events that existed or occurred prior to or at the effective time of the merger (including in connection with the merger agreement, the spin-off transaction agreements or the transactions or actions contemplated thereby), and (ii) will contain coverage that is at least as protective to such directors and officers as the coverage provided by such existing policies. Wyndham Worldwide will cause such policies to be maintained in full force and effect for their full term, and cause all obligations thereunder to be honored by the surviving corporation.

Delisting and Deregistration of La Quinta Common Stock (see page 80)

As promptly as practicable following the completion of the merger, La Quinta common stock will be delisted from the NYSE and deregistered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Market Prices of La Quinta Common Stock (see page 113)

On January 17, 2018, the last trading day prior to the public announcement of the proposed merger, the closing price per share of La Quinta common stock on the NYSE was $19.45. The closing price of the La Quinta



 

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common stock on the NYSE on [●], the most recent practicable date prior to the filing of this proxy statement, was $[●] per share. You are encouraged to obtain current market prices of La Quinta common stock in connection with voting your shares of La Quinta common stock. The merger consideration, consisting of $8.40 in cash per share prior to giving effect to the reverse stock split (or $16.80 in cash per share after giving effect to the reverse stock split), without interest, is in addition to the shares of CorePoint that our stockholders will receive in the spin-off.



 

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Spin-Off Transaction Agreements

Concurrently with the execution of the merger agreement, La Quinta and CorePoint have entered into a separation and distribution agreement (the “separation agreement”) and an employee matters agreement (the “employee matters agreement”). A tax matters agreement (the “tax matters agreement”) will be executed in connection with the spin-off. The summary of the material provisions of the separation agreement, the employee matters agreement and the tax matters agreement, a copy of each of which is attached to this proxy statement as Annex E, Annex F and Annex G, respectively, and each of which is hereby incorporated by reference into this proxy statement, does not purport to be complete and may not contain all of the information about these agreements that is important to you. We encourage you to read carefully each of these agreements in its entirety.

Separation Agreement (see page 106)

The separation agreement governs the terms and conditions regarding the reverse stock split, the transfer of La Quinta’s real estate assets and certain related assets and liabilities (the “CorePoint business”) from La Quinta to CorePoint (the “separation”) and the spin-off. In connection with the separation, the separation agreement provides, among other things, for the transfer by La Quinta to CorePoint of certain assets, and the assumption by CorePoint of certain liabilities, related to the CorePoint business.

The separation agreement provides that, immediately prior to and as a condition of the spin-off, CorePoint will make a cash payment to La Quinta of $983,950,000, subject to certain adjustments based on the actual amount of net indebtedness at La Quinta (as of immediately prior to the effective time of the spin-off) and certain accrued but unpaid expenses incurred in connection with the separation, the spin-off and the merger (the “cash payment”). In connection with La Quinta’s entry into the merger agreement, CorePoint entered into a commitment letter (the “debt commitment letter”) with JPMorgan Chase Bank, N.A. (the “debt commitment party”) pursuant to which the debt commitment party has committed, subject to customary conditions specified in the debt commitment letter, to provide CorePoint with $1.085 billion in secured debt financing to provide sufficient funds to make the cash payment.

The separation agreement provides that the spin-off is subject to the satisfaction or waiver of various conditions, including receipt of the cash payment by La Quinta, the receipt of an opinion of counsel regarding CorePoint’s status as a real estate investment trust for U.S. federal income tax purposes in certain circumstances and the effectiveness of CorePoint’s Form 10 in connection with the spin-off. The separation agreement also sets forth certain other covenants and agreements between La Quinta and CorePoint related to the separation, including provisions concerning the termination and settlement of intercompany accounts and obtaining certain governmental approvals and third party consents. The separation agreement also sets forth certain covenants and agreements that govern certain aspects of the relationship between La Quinta and CorePoint following the spin-off, including provisions with respect to release of claims and indemnification provisions.

Employee Matters Agreement (see page 106)

The employee matters agreement generally allocates liabilities and responsibilities relating to employee compensation and benefit plans and programs between La Quinta and CorePoint. The employee matters agreement, in conjunction with the merger agreement, will provide for the treatment of La Quinta’s outstanding equity awards in connection with the spin-off (as described more fully below in the section titled “Treatment of La Quinta Equity Awards” on page 39). In addition, the employee matters agreement sets forth the general principles relating to various employee matters, including with respect to the assignment of employees and the transfer of employees from La Quinta to CorePoint, the assumption and retention of liabilities and related assets, workers’ compensation, and related matters. Generally, other than with respect to certain specified compensation and benefit plans and liabilities, (i) La Quinta will retain sponsorship of, and the liabilities relating to, La Quinta



 

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compensation and benefit plans and be solely responsible for employee-related liabilities relating to current and former employees of La Quinta, whether arising prior to or after the spin-off, and employee-related liabilities of CorePoint employees, to the extent arising on or prior to the spin-off, and (ii) CorePoint will assume sponsorship of, and the liabilities relating to, compensation and benefit plans and agreements with respect to CorePoint employees and be solely responsible for employee-related liabilities relating to CorePoint employees, to the extent arising following the spin-off.

La Quinta and Wyndham Worldwide encourage you to read the employee matters agreement carefully.

Tax Matters Agreement (see page 107)

The tax matters agreement will govern the respective rights, responsibilities and obligations of La Quinta and CorePoint after the spin-off with respect to tax liabilities and benefits, tax attributes, tax returns, tax contests, and tax sharing regarding U.S. federal, state, local and foreign taxes for periods prior to the spin-off. The tax matters agreement also will provide special rules for allocating tax liabilities resulting from the spin-off and related transactions.

Under the tax matters agreement, La Quinta will generally provide an indemnity to CorePoint for pre-closing taxes, provided, however, that CorePoint will be responsible for 50% of any taxes and losses attributable to any failure to comply with taxes imposed by the Affordable Care Act under Section 4980H of the Internal Revenue Code of 1986, as amended (the “Code”) by La Quinta and/or its subsidiaries for the taxable years ending December 31, 2015 an December 31, 2016. CorePoint will also be responsible for any taxes and losses resulting from certain audits identified in the tax matters agreement.

The tax matters agreement also provides that to the extent the income taxes (as computed on an estimated basis) due with respect to the spin-off and related transactions are (i) less than $240,000,000 (the “reserve amount”), La Quinta will pay to CorePoint an amount equal to the difference between the reserve amount and such estimated taxes, or (ii) greater than the reserve amount, CorePoint will pay to La Quinta an amount equal to the difference between such estimated taxes and the reserve amount.



 

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QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER

The following are brief answers to certain questions that you may have regarding the merger, the special meeting and the proposals being considered at the special meeting. We urge you to carefully read the remainder of this proxy statement because the information in this section does not provide all the information that might be important to you with respect to the merger and the special meeting. Additional important information is also contained in the annexes attached to this proxy statement and the documents referred to or incorporated by reference into this proxy statement.

 

Q. Why am I receiving these proxy materials?

 

A. On January 17, 2018, La Quinta entered into the merger agreement providing for the merger of Merger Sub with and into La Quinta, pursuant to which La Quinta will survive the merger as a wholly-owned subsidiary of Wyndham Worldwide. As a condition to the merger, and prior to the consummation of the merger, La Quinta will separate its real estate and certain related assets and liabilities, which will be transferred to CorePoint and its subsidiaries and, following such separation and the reverse stock split (and prior to the consummation of the merger), La Quinta will effect a pro rata distribution to La Quinta stockholders of common stock representing 100% interest in CorePoint. You are receiving this proxy statement in connection with the solicitation by the La Quinta Board of proxies from La Quinta stockholders to vote in favor of the merger proposal and the other matters to be voted on at the special meeting.

 

Q. What is the proposed transaction?

 

A. If the merger proposal is approved by La Quinta stockholders and the other conditions to the consummation of the merger contained in the merger agreement are satisfied or waived, Merger Sub will merge with and into La Quinta. La Quinta will be the surviving corporation in the merger and will be privately held as a wholly owned subsidiary of Wyndham Worldwide.

Wyndham Worldwide will only acquire La Quinta’s management and franchise business. Therefore, prior to and as a condition to the merger, La Quinta will separate its owned real estate business and certain related assets and liabilities, which will be transferred to CorePoint and its subsidiaries and, following such separation and the reverse stock split (and prior to the consummation of the merger), La Quinta will effect a pro rata distribution to La Quinta stockholders of common stock representing 100% of the interest in CorePoint. After the spin-off is completed, CorePoint will be a separate, publicly held company that will own and operate La Quinta’s real estate assets and certain related assets and liabilities. The separation and the spin-off will be carried out in accordance with the terms of the separation agreement, the employee matters agreement and other ancillary documents referred to therein.

In connection with the spin-off, and in order to obtain the desired tax treatment therefore, La Quinta will, among other things, amend La Quinta’s amended and restated certificate of incorporation to effect a reclassification and combination of the La Quinta common stock at a ratio of 1-for-2 and to amend the par value of the La Quinta common stock from $0.01 per share to $0.02 per share. Pursuant to these reclassification and par value amendments, each share of La Quinta common stock (par value $0.01) will be reclassified and combined into one half of a share of La Quinta common stock (par value $0.02) (the “reverse stock split”). CorePoint will be a stand-alone, publicly traded company owned 100% by the stockholders of La Quinta of record as of the date for the spin-off.

Prior the distribution of the shares of common stock of CorePoint to La Quinta stockholders, CorePoint will enter into certain debt financings, and use a portion of the proceeds of such debt financings to make a cash payment to La Quinta to facilitate the repayment of substantially all of La Quinta’s existing debt.

 

Q. What will I receive in the merger if it is completed?

 

A.

Under the terms of the merger agreement, if the merger is completed, you will be entitled to receive for each share of La Quinta common stock that you own immediately prior to the effective time, the merger

 

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  consideration consisting of $8.40 in cash per share prior to giving effect to the reverse stock split (or $16.80 in cash per share after giving effect to the reverse stock split), without interest. The merger consideration received pursuant to the merger agreement will be in addition to the shares of common stock of CorePoint that stockholders of record as of the record date of the spin-off (the “spin-off record date”) will be entitled to receive in connection with the spin-off. Immediately after the spin-off, La Quinta stockholders as of the spin-off record date will own 100% of the issued and outstanding shares of common stock of CorePoint. You will not be entitled to receive shares in Wyndham Worldwide in connection with the merger or the spin-off.

For additional information regarding the spin-off, please see CorePoint’s Form 10 filed with the SEC (File No. 001-38168).

 

Q. Will the shares of CorePoint common stock be traded on an exchange?

 

A. Immediately following the spin-off, CorePoint will be a new publicly traded company 100% owned by La Quinta stockholders as of the spin-off record date. La Quinta will cause the CorePoint common stock to be distributed in the spin-off to be approved for listing on the NYSE prior to the consummation of the spin-off. The CorePoint common stock will be traded on the NYSE under the ticker symbol CPLG.

 

Q. Where and when is the special meeting, and who may attend?

 

A. The special meeting will be held at La Quinta Inn & Suites DFW Airport South/Irving, 4105 West Airport Freeway, Irving, Texas 75062 on [●] at [●], Central Time. The meeting room will open at [●], Central Time, and registration will begin at that time. Stockholders who are entitled to vote may attend the meeting. Beneficial owners of shares held in “street name” who have not obtained a proxy from the holder of record but who wish to attend the meeting should bring a copy of an account statement reflecting their ownership of La Quinta common stock as of the record date. All stockholders and proxyholders should bring photo identification.

 

Q. Does La Quinta intend to hold its 2018 annual meeting of stockholders?

 

A. La Quinta has not determined whether it will hold its 2018 annual meeting of stockholders (the “2018 annual meeting”) due to the merger proposal. If the merger is not completed, La Quinta stockholders will continue to be entitled to attend and participate in La Quinta’s annual meeting of stockholders, and we will provide information about the 2018 annual meeting at a later date. If the merger is consummated, we will not have public stockholders and there will be no public participation in any future stockholders meetings, including any in 2018.

 

Q. Who can vote at the special meeting?

 

A. All La Quinta stockholders of record as of the close of business on [●], the record date for the special meeting, are entitled to receive notice of, attend and vote at the special meeting, or any adjournment or postponement thereof. Each share of La Quinta common stock is entitled to one vote on all matters that come before the meeting. At the close of business on the record date, there were [●] shares of La Quinta common stock issued and outstanding.

 

Q. What matters will be voted on at the special meeting?

 

A. At the special meeting, you will be asked to consider and vote on the following proposals:

 

    to adopt the merger agreement (the “merger proposal”);

 

    to approve the amendments to La Quinta’s amended and restated certificate of incorporation set forth on Annex D to this proxy statement to (i) effect the reverse stock split of the La Quinta common stock at a ratio of 1-for-2 and (ii) change the par value of the La Quinta common stock in connection with the reverse stock split from $0.01 per share to $0.02 per share (the “charter amendment proposals”);

 

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    to approve, on a non-binding, advisory basis, certain compensation that will or may be paid by La Quinta to its named executive officers that is based on or otherwise relates to the merger (the “named executive officer merger-related compensation proposal”); and

 

    to approve the adjournment of the special meeting, from time to time, if necessary or appropriate, for the purpose of soliciting additional votes for the approval of the merger proposal and the charter amendment proposals (the “adjournment proposal”).

La Quinta will transact no other business at the special meeting except such business as may properly be brought before the special meeting or any adjournments or postponements thereof.

 

Q. How does the La Quinta Board recommend that I vote on the proposals?

 

A. La Quinta’s Board unanimously recommends that you vote:

 

    “FOR” the merger proposal;

 

    “FOR” the charter amendment proposals;

 

    “FOR” the named executive officer merger-related compensation proposal on a non-binding, advisory basis; and

 

    “FOR” the adjournment proposal.

 

Q. What vote is required to approve the merger proposal?

 

A. The merger proposal will be approved if stockholders holding a majority of the voting power of the shares of La Quinta common stock outstanding at the close of business on the record date and entitled to vote thereon vote “FOR” the proposal.

 

Q. What vote is required to approve the charter amendment proposals?

 

A. The charter amendment proposals will be approved if stockholders holding a majority of the voting power of the shares of La Quinta common stock outstanding at the close of business on the record date and entitled to vote thereon vote “FOR” the proposals.

 

Q. What vote is required to approve the other proposals?

 

A. Approval of each of the named executive officer merger-related compensation proposal and the adjournment proposal requires a majority of the votes cast in favor of each such proposal at the special meeting at which quorum is present. If no quorum is present at the special meeting, the affirmative vote of the holders of a majority of the shares of La Quinta common stock present or represented by proxy at the special meeting is required to approve the adjournment proposal.

 

Q. How are La Quinta’s directors and executives intending to vote?

 

A. As of February 20, 2018, the directors and executive officers of La Quinta collectively owned and were entitled to vote 1,469,151 shares of La Quinta common stock, representing approximately 1.25% of the shares of La Quinta common stock outstanding on that date. La Quinta currently expects that these directors and executive officers will vote such shares of La Quinta common stock in favor of the foregoing proposals, although none of them has entered into any agreement obligating them to do so.

 

Q. What is the voting agreement?

 

A.

Concurrently with and as a condition to Wyndham Worldwide’s execution of the merger agreement, certain entities affiliated with The Blackstone Group, L.P. (such entities, collectively, the “Blackstone stockholders”),

 

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  have entered into a support agreement with Wyndham Worldwide (the “voting agreement”). Pursuant to and subject to the terms and conditions of the voting agreement, the Blackstone stockholders have agreed to vote all the La Quinta common stock legally or beneficially owned by them in favor of the merger proposal and the charter amendment proposals. See the section entitled “The Voting Agreement” beginning on page 108. As of January 17, 2018, the Blackstone stockholders owned 35,173,076 shares of La Quinta common stock representing approximately 29.97% of the total issued and outstanding La Quinta common stock.

 

Q. Do you expect the merger to be taxable to La Quinta stockholders?

 

A. As further described in CorePoint’s Form 10 filed with the SEC (File No. 001-38168), for U.S. federal income tax purposes, the spin-off and the merger are expected to be treated as in part a sale, to the extent of the cash received in the merger, and in part a redemption of La Quinta common stock in exchange for the CorePoint shares received in the spin-off, that together result in a complete termination of La Quinta stockholders’ interests in La Quinta in a fully taxable transaction. The exchange of La Quinta common stock for cash in the merger and the exchange of La Quinta common stock for CorePoint shares in the spin-off may also be taxable under state and local and other tax laws. You should read the section entitled “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 117 and consult your tax advisors regarding the U.S. federal income tax consequences of the merger to you in your particular circumstances, as well as tax consequences arising under the laws of any state, local or foreign taxing jurisdiction.

 

Q. What other effects will the merger have on La Quinta?

 

A. If the merger is completed, La Quinta common stock will be delisted from the NYSE and deregistered under the Exchange Act, and La Quinta will no longer be required to file periodic reports with the U.S. Securities and Exchange Commission (the “SEC”) with respect to La Quinta common stock, in each case in accordance with applicable law, rules and regulations. Following the completion of the merger, La Quinta common stock will no longer be publicly traded and you will no longer have any interest in La Quinta’s future earnings or growth; each share of La Quinta common stock you hold will represent only the right to receive the merger consideration in cash, without interest.

 

Q. When is the merger expected to be completed?

 

A. Assuming timely satisfaction of necessary closing conditions, including the approval by our stockholders to adopt the merger agreement, the parties to the merger agreement expect to complete the merger in the second quarter of 2018. However, La Quinta cannot assure completion by any particular date, if at all. Because the merger is subject to a number of conditions, including the receipt of stockholder approval of the merger proposal, the receipt of certain regulatory approvals and the consummation of the spin-off, the exact timing of the merger cannot be determined at this time and we cannot guarantee that the merger will be completed.

 

Q. What happens if the merger is not completed?

 

A. If the merger proposal or the charter amendment proposals are not approved by La Quinta stockholders, or if the merger is not completed for any other reason, La Quinta stockholders will not receive any payment for their shares of La Quinta common stock in connection with the merger. Instead, La Quinta will remain an independent public company and shares of La Quinta common stock will continue to be listed and traded on the NYSE.

Further, if the merger is not completed as a result of the termination of the merger agreement under certain specified circumstances, La Quinta may be required to pay Wyndham Worldwide a termination fee of $37,000,000. See “The Merger Agreement — Termination Fees and Expenses” beginning on page 103 for a discussion of the circumstances under which such fees, expenses or damages may be payable.

 

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The spin-off may still occur if the merger is not completed. However, we cannot guarantee that the spin-off will occur if the merger is not completed.

 

Q. Do any of La Quinta’s directors or officers have interests in the merger that may differ from or be in addition to my interests as a stockholder?

 

A. Yes. In considering the recommendation of the La Quinta Board with respect to the proposal to adopt the merger agreement, you should be aware that our directors and executive officers have interests in the merger that are different from, or in addition to, the interests of our stockholders generally. The La Quinta Board was aware of and considered these differing interests, to the extent such interests existed at the time, among other matters, in evaluating and negotiating the merger agreement and the merger, and in unanimously recommending that the merger agreement be adopted by La Quinta stockholders. See “The Merger Proposal (Proposal 1) — Interests of La Quinta’s Executive Officers and Directors in the Merger” beginning on page 64.

 

Q. What are the charter amendment proposals and why I am being asked to approve them?

 

A. La Quinta is asking its stockholders to approve the amendments to La Quinta’s amended and restated certificate of incorporation set forth on Annex D to this proxy statement, consisting of (1) a proposal to effect the reverse stock split of the La Quinta common stock at a ratio of 1-for-2 and (2) a proposal to change the par value of the La Quinta common stock in connection with the reverse stock split from $0.01 per share to $0.02 per share.

The distribution of CorePoint common stock in connection with the reverse stock split is intended to be treated as a redemption of the shares of La Quinta common stock that are no longer outstanding as a result of the reverse stock split for U.S. federal income tax purposes. We expect that such redemption of stock, combined with the merger as part of a prearranged, integrated plan, will be viewed together as a complete termination of La Quinta stockholders’ interests in La Quinta, and that each of the redemption and the merger will be integrated and be treated as a sale or exchange of La Quinta common stock for U.S. federal income tax purposes. We have agreed in the merger agreement to treat the redemption in connection with the reverse stock split and the merger in a manner consistent with this expectation for tax purposes.

La Quinta stockholders’ approval of the charter amendment proposals is a condition for the spin-off to occur, which is a condition for the merger to occur. If La Quinta stockholders fail to approve the charter amendment proposals, the merger will not occur.

 

Q. What happens if La Quinta stockholders approve the merger proposal but do not approve the charter amendment proposals?

 

A. The approval by La Quinta stockholders of the charter amendment proposals is a condition for the spin-off to occur, and the completion of the spin-off is a condition for the merger to occur. Therefore, even if La Quinta stockholders approve the merger proposal, if La Quinta stockholders fail to approve the charter amendment proposals, the merger will not occur.

 

Q. Why am I being asked to consider and vote on the named executive officer merger-related compensation proposal?

 

A. The SEC rules require La Quinta to seek approval on a non-binding, advisory basis with respect to certain payments that will or may be made to La Quinta’s named executive officers in connection with the merger. Approval of the named executive officer merger-related compensation proposal is not required to complete the merger.

 

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Q. Who is soliciting my vote?

 

A. The La Quinta Board is soliciting your proxy, and La Quinta will bear the cost of soliciting proxies. Innisfree M&A Incorporated (“Innisfree”) has been retained by La Quinta to assist with the solicitation of proxies. Innisfree will be paid approximately $25,000 and will be reimbursed for its reasonable and documented out-of-pocket expenses for these and related services in connection with the special meeting. Solicitation initially will be made by mail. Forms of proxies and proxy materials may also be distributed through brokers, banks or other nominees to beneficial owners of shares of La Quinta common stock, in which case these parties will be reimbursed for their reasonable out-of-pocket expenses. Proxies may also be solicited in person or by telephone, facsimile, electronic mail or other electronic medium by Innisfree or, without additional compensation, by certain of La Quinta’s directors, officers and employees.

 

Q. What do I need to do now?

 

A. Carefully read and consider the information contained in and incorporated by reference into this proxy statement, including the attached annexes. Whether or not you expect to attend the special meeting in person, please submit a proxy to vote your shares as promptly as possible to ensure that your shares will be represented and voted at the special meeting.

 

Q. How do I vote if my shares are registered directly in my name?

 

A. If your shares are registered directly in your name with our transfer agent, you are considered a “stockholder of record” (also referred to in this proxy statement as a “registered stockholder”) and there are four methods by which you may vote your shares at the special meeting:

 

    Internet:    To submit a proxy to vote over the internet, go to www.proxyvote.com and follow the steps outlined on the secured website. You will need the 16-digit number included on your proxy card to obtain your records and to create an electronic voting instruction form. If you submit your vote via proxy over the internet, you do not have to mail in a proxy card. If you choose to submit your vote via proxy over the internet, you must do so prior to 11:59 p.m., Eastern Time, on [●], 2018.

 

    Telephone:    To submit a proxy to vote by telephone, call toll-free 1-800-690-6903 within the USA, US territories and Canada on a touch-tone telephone. Please have your proxy card available for reference because you will need the validation details that are located on your proxy card in order to submit your vote by proxy by telephone. If you submit your vote via proxy by telephone, you do not have to mail in a proxy card. If you choose to submit your vote via proxy by telephone, you must do so prior to 11:59 p.m., Eastern Time, on [●], 2018.

 

    Mail:    To submit a proxy to vote by mail, complete, sign and date a proxy card and return it promptly to the address indicated on the proxy card in the postage paid envelope provided.

 

    In Person:    You may attend the special meeting and vote your shares in person, rather than by submitting a proxy to vote your shares by mail, over the internet or by telephone. You will be given a ballot when you arrive.

Whether or not you plan to attend the meeting, we urge you to submit a proxy to vote to ensure your vote is counted. You may still attend the meeting and vote in person if you have already submitted a proxy. Please choose only one method to cast your vote by proxy. We encourage you to vote by submitting a proxy over the internet or by telephone, both of which are convenient, cost-effective and reliable alternatives to returning a proxy card by mail. If you return your signed proxy card to us or vote by submitting your proxy by telephone or over the internet before the special meeting, and you do not subsequently revoke your proxy, we will vote your shares as you direct in such proxy.

 

Q. How do I vote if my shares are held in the name of my broker, bank or other nominee?

 

A.

If your shares are held by your broker, bank or other nominee, you are considered the beneficial owner of shares held in “street name” and you will receive a vote instruction form from your broker, bank or other

 

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  nominee seeking instruction from you as to how your shares should be voted. If you are a beneficial owner of shares held by a broker, bank or other nominee and you wish to vote in person at the special meeting, you must bring to the special meeting a proxy from the broker, bank or other nominee that holds your shares authorizing you to vote in person at the special meeting.

 

Q. How do I vote my shares that are held in any employee plans?

 

A. If you are a current or former La Quinta employee with shares received through the ESPP and held in street name by RBC, you may receive one proxy card that covers the shares held for you by RBC, as well as any other shares registered directly in your name. You may submit one proxy for all of these shares via the internet, by telephone or by mail in the same manner as described above for registered stockholders. If you vote your ESPP shares by 11:59 p.m., Eastern Time, on [●], 2018, RBC will vote the shares as you have directed. If voting instructions are not received in time, RBC will not vote your shares for any proposal.

Participants with shares received through the ESPP may attend the special meeting by following the instructions in the section “Where and when is the special meeting, and who may attend?” above. Shares held through RBC, however, can only be voted as described in this section and cannot be voted at the meeting.

 

Q. Can I change or revoke my proxy after it has been submitted?

 

A. Yes. You can change or revoke your proxy at any time before the final vote at the special meeting. If you are the stockholder of record of your shares, you may change or revoke your proxy by:

 

    submitting another proxy over the internet or by telephone prior to 11:59 p.m., Eastern Time, on [●], 2018;

 

    timely delivering a written notice that you are revoking your proxy to our Secretary;

 

    timely delivering a valid, later-dated proxy; or

 

    attending the special meeting and voting in person. Simply attending the special meeting will not, by itself, revoke your proxy.

If you are the beneficial owner of shares held in “street name,” you will have to follow the instructions provided by your broker, bank or other nominee to change or revoke your voting instructions provided to such broker, bank or other nominee.

 

Q. How many shares of La Quinta common stock must be present to constitute a quorum for the meeting?

 

A. The presence at the special meeting, in person or by proxy, of a majority of the voting power of the shares of La Quinta common stock issued and outstanding on the record date and entitled to vote at the meeting will constitute a quorum. There must be a quorum for business to be conducted at the special meeting. If a quorum does not exist, the chairman of the meeting or the stockholders, by the affirmative vote of a majority of the voting power of the shares of La Quinta common stock present or represented by proxy at the special meeting may adjourn the special meeting to another place, date or time. Failure of a quorum to be present at the special meeting will necessitate an adjournment of the special meeting and may subject La Quinta to additional expense. As of the close of business on the record date, there were [●] shares of La Quinta common stock outstanding. Accordingly, [●] shares of La Quinta common stock must be present or represented by proxy at the special meeting to constitute a quorum.

 

Q. What if I abstain from voting on any proposal?

 

A.

For the merger proposal and the charter amendment proposals, you may vote “FOR,” “AGAINST” or “ABSTAIN.” Abstentions will not count as votes cast on the merger proposal or the charter amendment

 

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  proposals, but will still count for the purpose of determining whether a quorum is present. However, the vote to approve the merger proposal and the charter amendment proposals is based on the total number of shares of La Quinta common stock outstanding on the record date, not just the shares that are counted as present in person or by proxy at the special meeting. As a result, if you abstain, it will have the same effect as if you vote “AGAINST” the approval of the merger agreement and the approval of the charter amendment proposals.

For the named executive officer merger-related compensation proposal and the adjournment proposal, you may vote “FOR,” “AGAINST” or “ABSTAIN.” Abstentions will not count as votes cast on the named executive officer merger-related compensation proposal and the adjournment proposal, but will still count for the purpose of determining whether a quorum is present. The named executive officer merger-related compensation proposal and the adjournment proposal requires a majority of the votes cast for such proposals at the special meeting at which a quorum is present. As a result, assuming a quorum is present at the special meeting, abstentions, broker non-votes and failures to vote will have no effect on the outcome of the named executive officer merger-related compensation proposal or the adjournment proposal.

 

Q. Will my shares be voted if I do not sign and return my proxy card or vote by telephone or over the internet or in person at the special meeting?

 

A. If you are a stockholder of record and you do not attend the special meeting or sign and return your proxy card, vote by submitting your proxy by telephone or vote by submitting your proxy over the internet, your shares will not be voted at the special meeting and will not be counted as present for purposes of determining whether a quorum exists. The failure to return your proxy card or otherwise vote your shares at the special meeting will have no effect on the outcome of the named executive officer merger-related compensation proposal or the adjournment proposal. However, the vote to approve the merger proposal and the vote to approve the charter amendment proposals are based on the total number of shares of La Quinta common stock outstanding as of the close of business on the record date, not just the shares that are counted as present in person or by proxy at the special meeting. As a result, if you fail to return your proxy card or otherwise fail to vote your shares at the special meeting, it will have the same effect as a vote “AGAINST” the merger proposal and “AGAINST” the charter amendment proposals.

 

Q. What is a broker non-vote?

 

A. Broker non-votes are shares held in “street name” by brokers, banks and other nominees, but with respect to which the broker, bank or other nominee is not instructed by the beneficial owner of such shares how to vote on a particular proposal and such broker, bank or nominee does not have discretionary voting power on such proposal. Under NYSE rules, brokers, banks and other nominees holding shares in “street name” do not have discretionary voting authority with respect to any of the four proposals described in this proxy statement. Accordingly, if a beneficial owner of shares of La Quinta common stock held in “street name” does not give voting instructions to the broker, bank or other nominee, then those shares will not be counted as present in person or by proxy at the special meeting. Assuming a quorum is present at the special meeting, the failure to issue voting instructions to your broker, bank or other nominee will have no effect on the outcome of the named executive officer merger-related compensation proposal or the adjournment proposal because the vote to approve such matters is based on the number of votes cast. However, the vote to approve the merger proposal and the charter amendment proposals is based on the total number of shares of La Quinta common stock outstanding on the record date, not just the shares that are counted as present in person or by proxy at the special meeting. As a result, if you fail to issue voting instructions to your broker, bank or other nominee, it will have the same effect as a vote “AGAINST” the merger proposal and the charter amendment proposals.

 

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Q. Will my shares held in “street name” or another form of record ownership be combined for voting purposes with shares I hold of record?

 

A. No. Because any shares you may hold in “street name” will be deemed to be held by a different stockholder than any shares you hold of record, any shares held in “street name” will not be combined for voting purposes with shares you hold of record. Similarly, if you own shares in various registered forms, such as jointly with your spouse, as trustee of a trust or as custodian for a minor, you will receive, and will need to sign and return, a separate proxy card for those shares because they are held in a different form of record ownership. Shares held by a corporation or business entity must be voted by an authorized officer of the entity. Shares held in an individual retirement account must be voted under the rules governing the account.

 

Q. What does it mean if I get more than one proxy card or voting instruction form?

 

A. If your shares are registered differently or are held in more than one account, you will receive more than one proxy card or voting instruction form. Please complete and return all of the proxy cards or voting instruction forms you receive (or submit each of your proxies over the internet or by telephone) to ensure that all of your shares are voted.

 

Q. Am I entitled to exercise appraisal rights under the DGCL instead of receiving the per share merger consideration for my shares of La Quinta common stock?

 

A. Yes. If you are a record holder of La Quinta common stock and do not vote in favor of the proposal to adopt the merger agreement, you are entitled to exercise appraisal rights under Section 262 of the DGCL in connection with the merger if you take certain actions and meet certain conditions. See “The Merger Proposal (Proposal 1) — Appraisal Rights” beginning on page 80. In addition, a copy of Section 262 of the DGCL is attached to this proxy statement as Annex C.

 

Q. What happens if I sell my shares of La Quinta common stock before the completion of the merger?

 

A. If you transfer your shares of La Quinta common stock, you will have transferred your right to receive the merger consideration in the merger or to demand appraisal rights in connection with the merger. In order to receive the merger consideration or to exercise appraisal rights in connection with the merger, you must hold your shares of La Quinta common stock through the effective time of the merger.

 

Q. Should I send in my stock certificates or other evidence of ownership now?

 

A. As of the date of this proxy statement, none of our shares were held in certificated form. After the merger is completed, you will receive a letter of transmittal from the paying agent for the merger with detailed written instructions for exchanging your shares of La Quinta common stock for the consideration to be paid to former La Quinta stockholders in connection with the merger. If you are the beneficial owner of shares of La Quinta common stock held in “street name,” you may receive instructions from your broker, bank or other nominee as to what action, if any, you need to take to effect the surrender of such shares.

 

Q. What is householding and how does it affect me?

 

A.

The SEC’s proxy rules and the DGCL permit companies and intermediaries, such as brokers and banks, to satisfy delivery requirements for proxy statements with respect to two or more stockholders sharing an address by delivering a single proxy statement to those stockholders, unless contrary instructions have been received. This procedure reduces the amount of duplicate information that stockholders receive and lowers printing and mailing costs for companies. Certain brokerage firms may have instituted householding for beneficial owners of common stock held through brokerage firms. If your family has multiple accounts holding common stock, you may have already received a householding notification from your broker. You

 

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  may decide at any time to revoke your decision to household, and thereby receive multiple copies of proxy materials. If you wish to opt out of this procedure and receive a separate set of proxy materials in the future, or if you are receiving multiple copies and would like to receive only one, you should contact your broker, trustee or other nominee or La Quinta at the address and telephone number below. A separate copy of these proxy materials will be promptly delivered to any stockholder upon written request to: Secretary, La Quinta Holdings Inc., 909 Hidden Ridge, Suite 600, Irving, TX 75038.

 

Q. Why is the separation important and why is the consummation of the spin-off a condition to the closing of the merger?

 

A. Under the terms of the merger agreement, Merger Sub will merge with and into La Quinta, with La Quinta surviving the merger as a wholly owned subsidiary of Wyndham Worldwide, following which Wyndham Worldwide will own La Quinta’s management and franchise business. In connection with this acquisition, the real estate assets of La Quinta (and certain related assets and liabilities) will be separated from La Quinta and transferred to CorePoint so that, at the effective time of the merger, La Quinta only owns the management and franchise business that Wyndham Worldwide has agreed to acquire. Accordingly, the separation of La Quinta’s real property is an important step in the transactions agreed to by La Quinta and Wyndham Worldwide and the consummation of the spin-off is a condition to the closing of the merger. For additional information regarding the spin-off, please see CorePoint’s Form 10 filed with the SEC (File No. 001-38168).

 

Q. When will La Quinta announce the voting results of the special meeting, and where can I find the voting results?

 

A. La Quinta intends to announce the preliminary voting results at the special meeting, and will report the final voting results of the special meeting in a Current Report on Form 8-K filed with the SEC within four business days after the special meeting. All reports that La Quinta files with the SEC are publicly available when filed.

 

Q: Who can help answer my other questions?

 

A: If you have questions about the merger, require assistance in submitting your proxy or voting your shares, or need additional copies of this proxy statement or the enclosed proxy card, please contact Innisfree, which is acting as the proxy solicitation agent for La Quinta in connection with the merger.

Innisfree M&A Incorporated

501 Madison Avenue, 20th Floor

New York, NY 10022

Domestic and Canadian Stockholders Call: (888) 750-5834

International Stockholders Call: (412) 232-3651

Bankers and Brokers May Call Collect: (212) 750-5833

If your broker, bank or other nominee holds your shares, you should also call your broker, bank or other nominee for additional information.

If you have questions about the spin-off, you can find more information regarding the spin-off by reading CorePoint’s Form 10 filed with the SEC (File No. 001-38168).

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

The proxy statement and the attached annexes contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. We intend for these forward-looking statements to be covered by the safe harbor provisions of the federal securities laws relating to forward-looking statements. These forward-looking statements include statements relating to the expected timing, completion and effects of the proposed merger, the separation and the spin-off, as well as other statements representing management’s beliefs about, future events, transactions, strategies, operations and financial results, including, without limitation, our expectations with respect to the costs and other anticipated financial impacts of the spin-off and merger; future financial and operating results of CorePoint and La Quinta; the ability of La Quinta, CorePoint and Wyndham Worldwide to complete the contemplated financing transactions and reorganizations in connection with the merger and the spin-off; La Quinta’s plans, objectives, expectations and intentions with respect to future operations and services; required approvals to complete the merger and the spin-off by our stockholders and by governmental regulatory authorities, and the timing and conditions for such approvals; the stock price of CorePoint following the consummation of the transactions; the stock price of La Quinta prior to the consummation of the transactions; the satisfaction of the closing conditions to the proposed merger and the spin-off; and the timing of the completion of the merger and the spin-off. Such forward-looking statements often contain words such as “assume,” “will,” “anticipate,” “believe,” “predict,” “project,” “potential,” “contemplate,” “plan,” “forecast,” “estimate,” “expect,” “intend,” “is targeting,” “may,” “should,” “would,” “could,” “goal,” “seek,” “hope,” “aim,” “continue” and other similar words or expressions or the negative thereof or other variations thereon. Forward-looking statements are made based upon management’s current expectations and beliefs and are not guarantees of future performance. Such forward-looking statements involve numerous assumptions, risks and uncertainties that may cause actual results to differ materially from those expressed or implied in any such statements. Although it is believed that the expectations reflected in such forward-looking statements are reasonable and are expressed in good faith, such expectations may not prove to be correct and persons reading this proxy statement are therefore cautioned not to place undue reliance on these forward-looking statements which speak only to expectations as of the date of this proxy statement. We do not undertake or plan to update or revise forward-looking statements to reflect actual results, changes in plans, assumptions, estimates or projections, or other circumstances occurring after the date of this proxy statement, even if such results, changes or circumstances make it clear that any forward-looking information will not be realized. If we make any future public statements or disclosures which modify or impact any of the forward-looking statements contained in or accompanying this proxy statement, such statements or disclosures will be deemed to modify or supersede such statements in this proxy statement.

There are a number of risks, uncertainties and other important factors that could cause our actual results to differ materially from those suggested by our forward-looking statements. These risks and uncertainties, which could have a material adverse effect on us and our stock price, include the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement; the inability to complete the proposed merger or the spin-off due to the failure to obtain stockholder approval for the proposed merger or the charter amendment proposals or the failure to satisfy other conditions to completion of the proposed merger or the spin-off, including that a governmental entity may prohibit, delay or refuse to grant approval for the consummation of the transactions contemplated by the merger agreement; risks related to disruption of management’s attention from La Quinta’s ongoing business operations due to the transactions contemplated by the merger agreement, the separation and the spin-off; the effect of the announcement of the proposed merger on La Quinta’s relationships with its customers, operating results and business generally; the risk that the proposed merger and the spin-off will not be consummated in a timely manner; economic conditions adversely affecting our business or results; the unsuccessful implementation of the spin-off; any developments related to antitrust investigations adversely affecting our financial condition, results, cash flows or reputation; pricing pressures from our customers adversely affecting our profitability; competition adversely affecting our sales, profitability or financial condition; any disruption in our information technology systems adversely impacting our business and operations; our contingent liabilities and tax matters causing us to incur losses or costs; any inability to protect our intellectual property rights adversely affecting our business or our competitive position; commodity inflationary pressures adversely affecting our profitability or supply base; costs or adverse effects on our

 

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business, reputation or results from governmental regulations; work stoppages or other labor issues adversely affecting our business, results or financial condition; and other risks and uncertainties set forth in La Quinta’s Annual Report on Form 10-K for fiscal year ended December 31, 2016 and subsequent quarterly reports on Form 10-Q under “Item 1A. Risk Factors” and current reports on Form 8-K.

 

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THE PARTIES TO THE MERGER

La Quinta

La Quinta Holdings Inc.

909 Hidden Ridge, Suite 600

Irving, Texas 75038

(212) 492-6600

La Quinta Holdings Inc. is a leading owner, operator and franchisor of select-service hotels primarily serving the upper-midscale and midscale segments. The Company’s owned and franchised portfolio consists of more than 890 properties representing approximately 87,500 rooms located in 48 states in the U.S. and in Canada, Mexico, Honduras and Colombia. These properties operate under the La Quinta Inn & Suites™, La Quinta Inn® and LQ Hotel® brands. La Quinta’s team is committed to providing guests with a refreshing and engaging experience. Our common stock is traded on the New York Stock Exchange (“NYSE”) under the ticker symbol LQ. La Quinta’s headquarters are located at 909 Hidden Ridge, Suite 600, Irving, Texas 75038, and our telephone number is (214) 492-6600. Our corporate web address is www.lq.com.

For additional information about La Quinta included in documents incorporated by reference into this proxy statement, see the section entitled “Where You Can Find More Information” on page 122. For additional information about La Quinta, visit www.lq.com. The information provided on the La Quinta website is not part of this proxy statement and is not incorporated in this proxy statement by reference hereby or by any other reference to La Quinta’s website provided in this proxy statement.

Wyndham Worldwide

Wyndham Worldwide Corporation

22 Sylvan Way

Parsippany, New Jersey 07054

(973) 753-6000

Wyndham Worldwide is one of the largest global hospitality companies, providing travelers with access to a collection of trusted hospitality brands in hotels, vacation ownership, and unique accommodations including vacation exchange, holiday parks, and managed home rentals. With a collective inventory of nearly 130,000 places to stay across more than 110 countries on six continents, Wyndham Worldwide and its 38,000 associates welcome people to experience travel the way they want. Wyndham Hotel Group, the world’s largest hotel company based on number of hotels, is one of three hospitality business units of Wyndham Worldwide. As both a leading hotel brand franchisor and hotel management services provider, Wyndham Hotel Group’s global network consists of approximately 8,350 hotels and over 720,100 rooms in more than 80 countries. Wyndham Worldwide has previously announced the potential spin-off of its hotel business into an independent publicly traded company; it is anticipated that La Quinta’s management and franchise business will form part of such independent publicly traded company.

Wyndham Worldwide’s corporate web address is www.wyndhamworldwide.com. The information provided on the Wyndham Worldwide website is not part of this proxy statement and is not incorporated in this proxy statement by reference hereby or by any other reference to Wyndham Worldwide’s website provided in this proxy statement.

 

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Merger Sub

WHG BB Sub, Inc.

c/o Wyndham Worldwide Corporation

22 Sylvan Way Parsippany, New Jersey 07054

(973) 753-6000

Wyndham Worldwide formed Merger Sub, a Delaware corporation and a wholly owned subsidiary of Wyndham Worldwide, on January 11, 2018, and its sole purpose is to engage in the transactions contemplated by the merger agreement. Prior to the effective time of the merger, Merger Sub will have engaged in no other business activities and will have incurred no liabilities or obligations other than as contemplated in the merger agreement. All of the outstanding shares of capital stock of Merger Sub is, and as of the effective time of the merger will be, owned directly or indirectly by Wyndham Worldwide. Upon completion of the merger, Merger Sub will merge with and into La Quinta, and Merger Sub will cease to exist.

About CorePoint

CorePoint Lodging Inc.

909 Hidden Ridge, Suite 600

Irving, Texas 75038

(212) 492-6600

CorePoint Lodging Inc. is a Maryland corporation and a wholly owned subsidiary of La Quinta, incorporated on May 8, 2017 for the purpose of effecting the separation and spin-off of La Quinta’s real estate assets and certain related assets and liabilities into an independent publicly traded company. La Quinta stockholders will receive shares of CorePoint common stock in the spin-off. The headquarters of CorePoint will be located in Irving, Texas, at 909 Hidden Ridge, Suite 600, and its telephone number is (214) 492-6600.

For additional information regarding CorePoint and the spin-off, please see CorePoint’s Form 10 filed with the SEC (File No. 001-38168).

 

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THE SPECIAL MEETING

This proxy statement is being provided to La Quinta stockholders as part of a solicitation by the La Quinta Board of proxies for use at the special meeting to be held at the time and place specified below, and at any properly convened meeting following an adjournment or postponement of the special meeting.

Date, Time and Place

The special meeting is scheduled to be held at La Quinta Inn & Suites DFW Airport South/Irving, 4105 West Airport Freeway, Irving, Texas 75062 on [●] at [●], Central Time.

Purpose of the Special Meeting

At the special meeting, La Quinta stockholders will be asked to consider and vote on the following proposals:

 

    the merger proposal, which is further described in the sections entitled “The Merger Proposal (Proposal 1)” and “The Merger Agreement,” beginning on pages 39 and 85, respectively;

 

    proposals to approve the amendments to La Quinta’s amended and restated certificate of incorporation set forth on Annex D to this proxy statement to (i) effect the reverse stock split of the La Quinta common stock at a ratio of 1-for-2 and (ii) change the par value of the La Quinta common stock in connection with the reverse stock split from $0.01 per share to $0.02 per share, as further discussed under “Charter Amendment Proposals (Proposal 2)” beginning on page 109;

 

    the named executive officer merger-related compensation proposal, which approval shall be on a on a non-binding, advisory basis, as further discussed under “The Merger Proposal (Proposal 1) — Interests of La Quinta’s Executive Officers and Directors in the Merger” and “Advisory Vote on Named Executive Officer Merger-Related Compensation Proposal (Proposal 3)” beginning on pages 64 and 111, respectively; and

 

    the adjournment proposal, as further discussed under “Adjournment Proposal (Proposal 4)” on page 112.

 

    La Quinta will transact no other business at the special meeting except such business as may properly be brought before the special meeting or any adjournments or postponements thereof.

La Quinta stockholders must approve the merger proposal as a condition to the completion of the merger. Further, La Quinta stockholders must approve the charter amendment proposals as a condition for the spin-off to occur, which is a condition for the merger to occur. If La Quinta stockholders fail to approve either the merger proposal or the charter amendment proposals, the merger will not occur. The vote on the named executive officer merger-related compensation proposal is a vote separate and apart from the vote to approve the merger proposal and the charter amendment proposals. Accordingly, a stockholder may vote to approve the merger proposal and the charter amendment proposals, and vote not to approve the named executive officer merger-related compensation proposal, and vice versa. Because the vote on the named executive officer merger-related compensation proposal is only advisory in nature, it will not be binding on La Quinta, Wyndham Worldwide or the surviving corporation. Accordingly, because La Quinta is contractually obligated to pay such merger-related compensation, the compensation will be payable, subject only to the conditions applicable thereto, if the merger proposal is approved, regardless of the outcome of the advisory vote.

Other than the matters described above, La Quinta does not expect a vote to be taken on any other matters at the special meeting or any adjournment or postponement thereof. However, if any other matters are properly brought before the special meeting or any adjournment or postponement thereof for consideration, the holders of the proxies will have discretion to vote on such matters in accordance with their best judgment.

 

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Recommendation of the La Quinta Board of Directors

The La Quinta Board has unanimously determined that it is in the best interests of the stockholders of La Quinta to enter into the merger agreement and has unanimously approved and declared advisable the merger, the merger agreement and the other transactions contemplated thereby (including the separation, the charter amendments and the spin-off). A description of factors considered by the La Quinta Board in reaching its decision to approve and declare advisable the merger agreement can be found in “The Merger Proposal (Proposal 1) — Recommendation of the La Quinta Board and Reasons for the Merger” beginning on page 52.

The La Quinta Board unanimously recommends that La Quinta stockholders vote “FOR” the merger proposal, “FOR” the charter amendment proposals, “FOR” the named executive officer merger-related compensation proposal and “FOR” the adjournment proposal.

La Quinta stockholders’ approval of the merger proposal is a condition for the merger to occur. Further, La Quinta stockholders’ approval of the charter amendment proposals is a condition for the spin-off to occur, which is a condition for the merger to occur. If La Quinta stockholders fail to approve the merger proposal or the charter amendment proposals by the requisite vote, the merger will not occur.

Record Date; Stockholders Entitled to Vote

Only holders of La Quinta common stock at the close of business on [●], the record date for the special meeting, will be entitled to notice of, and to vote at, the special meeting or any adjournments or postponements of the special meeting. At the close of business on the record date, [●] shares of La Quinta common stock were issued and outstanding.

Holders of La Quinta common stock are entitled to one vote for each share of La Quinta common stock they own at the close of business on the record date.

Quorum

The presence at the special meeting, in person or by proxy, of the holders of a majority of the voting power of the shares of La Quinta common stock issued and outstanding at the close of business on the record date and entitled to vote at the meeting will constitute a quorum. There must be a quorum for business to be conducted at the special meeting. If a quorum does not exist, the chairman of the meeting or the stockholders, by the affirmative vote of a majority of the shares of La Quinta common stock present or represented by proxy at the special meeting, may adjourn the meeting to another place, date or time. Failure of a quorum to be represented at the special meeting will necessitate an adjournment of the special meeting and may subject La Quinta to additional expense.

If you submit a properly executed proxy card or submit your proxy over the internet or by telephone, even if you abstain from voting, your shares will be counted as present for purposes of determining whether a quorum exists at the special meeting.

Required Vote

Approval of each of the merger proposal and the charter amendment proposals requires the affirmative vote of a majority of the voting power of the shares of La Quinta common stock outstanding at the close of business on the record date and entitled to vote thereon.

Approval of each of the named executive officer merger-related compensation proposal and the adjournment proposal requires a majority of the votes cast in favor of each such proposal at the special meeting at which quorum is present. If no quorum is present at the special meeting, the chairman of the meeting or the stockholders, by the affirmative vote of the holders of a majority of the shares of La Quinta common stock present or represented by proxy at the special meeting, may adjourn the special meeting.

 

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Abstentions and Broker Non-Votes

An abstention occurs when a stockholder attends a meeting, either in person or by proxy, but abstains from voting. At the special meeting, abstentions will be counted as present for purposes of determining whether a quorum exists. Abstaining from voting will have the same effect as a vote “AGAINST” the merger proposal and the charter amendment proposals. Abstaining from voting will have no effect on the named executive officer merger-related compensation proposal and the adjournment proposal, assuming a quorum is present at the special meeting.

If no instruction as to how to vote is given (including no instruction to abstain from voting) in an executed, duly returned and not revoked proxy, the proxy will be voted “FOR” (i) approval of the merger proposal, (ii) approval of the charter amendment proposals, (iii) approval of the named executive officer merger-related compensation proposal, which approval shall be on a non-binding, advisory basis, and (iv) approval of the adjournment proposal.

Broker non-votes are shares held in “street name” by brokers, banks and other nominees, but with respect to which the broker, bank or other nominee is not instructed by the beneficial owner of such shares how to vote on a particular proposal and such broker, bank or nominee does not have discretionary voting power on such proposal. Under NYSE rules, brokers, banks and other nominees holding shares in “street name” do not have discretionary voting authority with respect to any of the four proposals described in this proxy statement. Accordingly, if a beneficial owner of shares of La Quinta common stock held in “street name” does not give voting instructions to the broker, bank or other nominee, then those shares will not be counted as present in person or by proxy at the special meeting.

Failure to Vote

If you are a stockholder of record and you do not sign and return your proxy card or vote over the internet, by telephone or in person at the special meeting, your shares will not be voted at the special meeting, will not be counted as present in person or by proxy at the special meeting and will not be counted as present for purposes of determining whether a quorum exists.

Under NYSE rules, brokers, banks and other nominees that hold shares in “street name” for their customers do not have discretionary voting authority with respect to the merger proposal, the named executive officer merger-related compensation proposal and the adjournment proposal. Accordingly, if you are the beneficial owner of shares held in “street name” and you do not issue voting instructions to your broker, bank or other nominee, your shares will not be voted at the special meeting. Assuming a quorum is present at the special meeting, the failure to issue voting instructions to your broker, bank or other nominee will have no effect on the outcome of the named executive officer merger-related compensation proposal or the adjournment proposal. However, the vote to approve the merger proposal and the charter amendment proposals is based on the total number of shares of La Quinta common stock outstanding on the record date, not just the shares that are counted as present in person or by proxy at the special meeting. As a result, if you fail to issue voting instructions to your broker, bank or other nominee, it will have the same effect as a vote “AGAINST” the merger proposal and the charter amendment proposals.

A failure to have your shares present at the meeting will have no effect on the outcome of the named executive officer merger-related compensation proposal or the adjournment proposal (assuming a quorum is present). However, the vote to approve the merger proposal and the vote to approve the charter amendment proposals are based on the total number of shares of La Quinta common stock outstanding at the close of business on the record date and entitled to vote thereon, not just the shares that are counted as present in person or by proxy at the special meeting. As a result, if you fail to vote your shares, it will have the same effect as a vote “AGAINST” the merger proposal and “AGAINST” the charter amendment proposals.

 

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Voting by La Quinta’s Directors and Executive Officers

At the close of business on the record date, directors and executive officers of La Quinta and their affiliates were entitled to vote [●] shares of La Quinta common stock, or approximately [●]% of the shares of La Quinta common stock issued and outstanding on that date. La Quinta’s directors and executive officers have informed us that they intend to vote their shares in favor of the merger proposal, the charter amendment proposals and the other proposals to be considered at the special meeting, although none of La Quinta’s directors and executive officers is obligated to do so.

Voting Agreement

Concurrently with and as a condition to Wyndham Worldwide’s execution of the merger agreement, certain entities affiliated with The Blackstone Group, L.P. (such entities, collectively, the “Blackstone stockholders”), have entered into a support agreement with Wyndham Worldwide (the “voting agreement”). Pursuant to and subject to the terms and conditions of the voting agreement, the Blackstone stockholders have agreed to vote all the La Quinta common stock legally or beneficially owned by them in favor of the merger proposal and the charter amendment proposals. As of January 17, 2018, the Blackstone stockholders owned 35,173,076 shares of La Quinta common stock representing approximately 29.97% of the total issued and outstanding La Quinta common stock.

Voting at the Special Meeting

If your shares are registered directly in your name with our transfer agent, you are considered a “stockholder of record” (also referred to in this proxy statement as a “registered stockholder”) and there are four methods by which you may vote your shares at the special meeting. You may attend the special meeting and vote your shares in person, rather than signing and returning your proxy card, or you may cause your shares to be voted by authorizing the persons named as proxies on the proxy card to vote your shares at the special meeting by returning the proxy card by mail, through the internet, or by telephone. If you choose to submit a proxy to vote your shares over the internet or by telephone, there is no need for you to mail back your proxy card. Although La Quinta offers four different voting methods, La Quinta encourages you to submit a proxy to vote either over the internet or by telephone to ensure that your shares are represented and voted at the special meeting.

 

    To Vote in Person:    If you plan to attend the special meeting and wish to vote in person, you will be given a ballot at the special meeting.

 

    To Submit a Proxy to Vote Over the Internet:    To submit a proxy to vote over the internet, go to www.proxyvote.com and follow the steps outlined on the secured website. You will need the 16-digit number included on your proxy card to obtain your records and to create an electronic voting instruction form. If you submit your proxy to vote over the internet, you do not have to mail in a proxy card. If you choose to submit your vote via proxy over the internet, you must do so prior to 11:59 p.m., Eastern Time, on [●], 2018.

 

    To Submit a Proxy by Telephone:    To submit a proxy to vote by telephone, call toll-free 1-800-690-6903 within the USA, US territories and Canada on a touch-tone telephone. Please have your proxy card available for reference because you will need the validation details that are located on your proxy card in order to submit your vote by proxy by telephone. If you submit your proxy to vote by telephone, you do not have to mail in a proxy card. If you choose to submit your vote via proxy by telephone, you must do so prior to 11:59 p.m., Eastern Time, on [●], 2018.

 

    To Submit a Proxy by Mail:    To submit a proxy to vote by mail, complete, sign and date the proxy card and return it promptly to the address indicated on the proxy card in the postage paid enveloped provided. If you sign and return your proxy card without indicating how you want your shares of La Quinta common stock to be voted with regard to a particular proposal, your shares of La Quinta common stock will be voted in favor of such proposal. If you return your proxy card without a signature, your shares will not be counted as present at the special meeting and cannot be voted.

 

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If your shares are held by your broker, bank or other nominee, you are considered the beneficial owner of shares held in “street name” and you will receive a vote instruction form from your broker, bank or other nominee seeking instruction from you as to how your shares should be voted. If you are a beneficial owner and you wish to vote in person at the special meeting, you must bring to the special meeting a proxy from the broker, bank or other nominee that holds your shares authorizing you to vote in person at the special meeting.

If you are a current or former La Quinta employee with shares received through the ESPP and held in street name by RBC, you may receive one proxy card that covers the shares held for you by RBC, as well as any other shares registered directly in your name. You may submit one proxy for all of these shares via the Internet, by telephone or by mail in the same manner as described above for registered stockholders. If you vote your ESPP shares by 11:59 p.m., Eastern Time, on [●], 2018, RBC will vote the shares as you have directed. If voting instructions are not received in time, RBC will not vote your shares for any proposal.

In accordance with the terms of the applicable employee plan and to the extent permitted under applicable law, you are considered the “named fiduciary” (as defined in the Employee Retirement Income Security Act of 1974, as amended) of the employee plan with regard to the stock funds in which you invest and otherwise exercise control. If you participate in any of these plans or maintain other accounts under more than one name, you may have received more than one set of proxy materials. To be sure that all shares are counted, you must provide a separate valid proxy for shares held in each such name.

Stockholders who are entitled to vote at the special meeting may attend the special meeting. Beneficial owners who have not obtained a proxy but who wish to attend the special meeting should bring a copy of an account statement reflecting their ownership of La Quinta common stock as of the record date. All stockholders and proxyholders should bring photo identification.

Revocation of Proxies

You can change or revoke your proxy at any time before the final vote at the special meeting. If you are the stockholder of record of your shares, you may revoke your proxy by:

 

    submitting another proxy over the internet or by telephone prior to 11:59 p.m., Eastern Time, on [●], 2018;

 

    timely delivering a written notice that you are revoking your proxy to our Secretary;

 

    timely delivering a valid, later-dated proxy; or

 

    attending the special meeting and voting in person. Simply attending the special meeting will not, by itself, revoke your proxy.

If you are the beneficial owner of shares held in “street name,” you should contact your broker, bank or other nominee with questions about how to change or revoke your voting instructions.

Solicitation of Proxies

The La Quinta Board is soliciting your proxy, and La Quinta will bear the cost of soliciting proxies. Innisfree M&A Incorporated (“Innisfree”) has been retained by La Quinta to assist with the solicitation of proxies. Innisfree will be paid approximately $25,000 and will be reimbursed for its reasonable and documented out-of-pocket expenses for these and related services in connection with the special meeting. Solicitation initially will be made by mail. Forms of proxies and proxy materials may also be distributed through brokers, banks and other nominees to the beneficial owners of shares of La Quinta common stock, in which case these parties will be reimbursed for their reasonable out-of-pocket expenses. Proxies may also be solicited in person or by telephone, facsimile, electronic mail, or other electronic medium by Innisfree or, without additional compensation, by certain of La Quinta’s directors, officers and employees.

 

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Adjournment

In addition to the merger proposal, the charter amendment proposals and the named executive officer merger-related compensation proposal, La Quinta stockholders are also being asked to approve the adjournment proposal, which will enable the adjournment of the special meeting for the purpose of soliciting additional votes in favor of the merger proposal and the charter amendment proposals if there are not sufficient votes at the time of the special meeting to approve the merger proposal and the charter amendment proposals. If a quorum is not present, the chairman of the meeting or the stockholders, by the affirmative vote of the holders of a majority of the voting power of the shares of La Quinta common stock present or represented by proxy at the special meeting, may adjourn the special meeting to another place, date or time. In addition, the special meeting could be postponed before it commences. If the special meeting is adjourned or postponed for the purpose of soliciting additional votes, stockholders who have already submitted their proxies will be able to revoke them at any time prior to the final vote on the proposals. If you return a signed proxy and do not indicate how you wish to vote on the adjournment proposal, your shares will be voted in favor of the adjournment proposal.

The La Quinta Board unanimously recommends a vote “FOR” the adjournment proposal, if necessary or appropriate, to solicit additional proxies.

Other Information

You should not return your stock certificate (if any) or send documents representing La Quinta common stock with the proxy card. If the merger is completed, the paying agent for the merger will send you a letter of transmittal and instructions for exchanging your shares of La Quinta common stock for the consideration to be paid to the former La Quinta stockholders in connection with the merger.

Questions

If you have more questions about the merger or how to submit your proxy, or if you need additional copies of this proxy statement or the enclosed proxy card or voting instructions, please contact Innisfree M&A Incorporated, our proxy solicitor, by calling (888) 750-5834 (for domestic and Canadian stockholders) or (412) 232-3651 (for international stockholders).

 

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THE MERGER PROPOSAL (PROPOSAL 1)

The following summary describes certain material provisions of the merger agreement. The complete text of the merger agreement is attached to this proxy statement as Annex A and incorporated into this proxy statement by reference. We urge you to read the merger agreement carefully and in its entirety.

Structure of the Merger

Subject to the terms and conditions of the merger agreement and in accordance with the DGCL, at the effective time, Merger Sub will merge with and into La Quinta, the separate corporate existence of Merger Sub will cease and La Quinta will survive the merger as a wholly owned subsidiary of Wyndham Worldwide.

Merger Consideration — What La Quinta Stockholders Will Receive in the Merger

Upon the terms and subject to the conditions of the merger agreement, at the effective time of the merger, each outstanding share of La Quinta common stock (other than any shares that may be held in the treasury of La Quinta, by Wyndham Worldwide or by any direct or indirect wholly-owned subsidiary of Wyndham Worldwide, and other than shares owned by stockholders who have properly made and not withdrawn a demand for appraisal rights under the DGCL) will be automatically converted into the right to receive $8.40 in cash per share prior to giving effect to the reverse stock split (or $16.80 in cash per share after giving effect to the reverse stock split), without interest. After the merger is completed, holders of La Quinta common stock will have only the right to receive a cash payment in respect of their shares of La Quinta common stock, and will no longer have any rights as holders of La Quinta common stock, including voting or other rights. Shares of La Quinta common stock held by us or by Wyndham Worldwide, Merger Sub or any of La Quinta’s or Wyndham Worldwide’s other direct or indirect wholly owned affiliates will be cancelled at the effective time.

The merger consideration received pursuant to the merger agreement will be in addition to the shares of common stock of CorePoint that La Quinta stockholders as of the spin-off record date will be entitled to receive in connection with the spin-off. Immediately after the spin-off, stockholders of La Quinta of record as of the spin-off record date will own 100% of the issued and outstanding shares of common stock of CorePoint. For additional information regarding the spin-off, please see CorePoint’s Form 10 filed with the SEC (File No. 001-38168).

Treatment of La Quinta Equity Awards

At the time of the spin-off, then-outstanding La Quinta equity-based awards granted prior to the date of the spin-off will be adjusted into La Quinta equity-based awards and CorePoint equity-based awards in proportion to the relative value of La Quinta (after giving effect to the spin-off) and CorePoint and in accordance with the terms of the employee matters agreement. Following the spin-off, all CorePoint equity-based awards will continue to vest in accordance with their terms based on their respective holders’ continued service with La Quinta or CorePoint, as applicable, and will not vest solely as a result of the merger.

The merger agreement provides that outstanding equity-based awards issued under La Quinta’s equity incentive plans will be treated as set forth below:

Except as otherwise agreed between a holder and Wyndham Worldwide in writing, immediately prior to the effective time of the merger, each then-outstanding La Quinta RSA will, automatically and without any required action on the part of the holder thereof, vest and become free of restrictions as of the effective time of the merger and be cancelled and terminated, and the holder of such La Quinta RSA will have the right to receive from the surviving corporation, in respect of such La Quinta RSA, an amount in cash, less any applicable withholding taxes, equal to the product of (i) the number of shares of La Quinta common stock previously subject to such La Quinta RSA and (ii) the merger consideration.

 

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Except as otherwise agreed between a holder and Wyndham Worldwide in writing, immediately prior to the effective time of the merger, any vesting conditions applicable to each then-outstanding La Quinta RSU will, automatically and without any required action on the part of the holder thereof, accelerate in full, and such La Quinta RSU will be cancelled and terminated, and the holder shall have the right to receive from the surviving corporation, in respect of such La Quinta RSU, an amount in cash, less any applicable withholding taxes, equal to the product of (i) the number of shares of La Quinta common stock previously subject to such La Quinta RSU and (ii) the merger consideration.

Effects on La Quinta if the Merger is Not Completed

If the merger proposal or the charter amendment proposals are not approved by La Quinta stockholders or if the merger is not completed for any other reason, La Quinta stockholders will not receive any payment for their shares in connection with the merger. Instead, La Quinta will remain an independent public company and shares of La Quinta common stock will continue to be listed and traded on the NYSE. In addition, if the merger is not completed, La Quinta expects that management will operate La Quinta’s business in a manner similar to that in which it is being operated today and that La Quinta stockholders will continue to be subject to the same risks and opportunities to which they are currently subject, including, without limitation, risks related to the highly competitive industry in which La Quinta operates and adverse economic conditions. The spin-off may still occur if the merger is not completed, but we cannot guarantee that the spin-off will occur if the merger is not completed. Furthermore, if the merger is not completed, and depending on the circumstances that would have caused the merger not to be completed, it is possible that the price of La Quinta’s common stock will decline significantly. If that were to occur, it is uncertain when, if ever, the price of La Quinta’s common stock would return to the price at which it trades as of the date of this proxy statement. Accordingly, if the merger is not completed, there can be no assurance as to the effect of these risks and opportunities on the future value of your shares of La Quinta’s common stock.

Further, if the merger agreement is terminated under certain specified circumstances, La Quinta may be required to pay Wyndham Worldwide a termination fee of  $37,000,000. See “The Merger Agreement — Termination Fees and Expenses” beginning on page 103 for a discussion of the circumstances under which such fees, expenses or damages may be payable.

Background of the Merger

La Quinta’s senior management and the La Quinta Board regularly review and assess La Quinta’s operations and financial performance and industry conditions and related developments as they may impact the Company’s long-term strategic goals and plans. In recent years, La Quinta has focused on various initiatives intended to drive consistency in La Quinta’s product, consistency in delivering an outstanding guest experience and engagement with the brand. Also as part of its ongoing evaluation of potential initiatives to enhance stockholder value, the La Quinta Board, together with the Company’s senior management team, has considered various potential strategic opportunities over the past several years, which have from time to time included evaluations of potential business combination transactions and other financial and strategic alternatives.

In furtherance of its consideration of potential strategic alternatives, La Quinta periodically engaged in preliminary discussions about the possibility of exploring a potential strategic transaction with a number of third parties in 2015 and 2016, in advance of La Quinta’s January 2017 public announcement, which is described further below, that La Quinta intended to pursue the separation of its businesses into two stand-alone publicly traded companies. The La Quinta Board, together with representatives of J.P. Morgan, its financial advisor, met from time to time throughout this period to discuss the inquiries the Company received in connection with such discussions. Representatives of Simpson Thacher & Bartlett LLP (“Simpson Thacher”), the Company’s outside legal advisor, also attended a number of these meetings. During this period, on November 29, 2016, Bidder 2 submitted a preliminary indication of interest to acquire La Quinta as a whole in a proposed transaction for cash and stock consideration (at a total estimated value per share that was at a modest premium to the then-current

 

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trading price of La Quinta’s common stock, which closed at $12.19 per share on such date). None of the other parties with whom La Quinta held discussions during this period made any actual transaction proposals at the time.

In mid-2016, La Quinta began to explore in greater detail the possibility of separating its real estate assets from its operating assets. At a meeting of the La Quinta Board held on July 20, 2016, the La Quinta Board, together with members of the senior management team, discussed various potential strategic alternatives, which included the possibility of exploring a potential sale of a portion of the Company’s asset portfolio as well as a potential sale of the whole Company. The La Quinta Board also discussed the possibility of separating La Quinta’s real estate assets into a real estate investment trust (“REIT”) in a taxable spin-off transaction. Representatives of J.P. Morgan attended this meeting and discussed with the La Quinta Board a range of potential strategic alternatives presenting the La Quinta Board with multiple perspectives on the real estate and hotel industries, the merger and acquisition landscape and strategic options available to the Company. The La Quinta Board discussed the various potential stockholder value creation opportunities, as well as potential timing and tax implications and other implications on the La Quinta brand relating to each of the potential strategic alternatives considered, and determined that such alternatives merited further consideration.

On October 4, 2016, the La Quinta Board held a meeting at which potential strategic alternatives were discussed further. Representatives of J.P. Morgan attended this meeting and discussed with the La Quinta Board the various strategic options that the Company had been considering, including certain potential change of control transactions with several different prospective purchasers (which included Bidder 2 and others), as well as certain industry and market trends. The La Quinta Board, together with members of the senior management team, also discussed in detail at this meeting the possibility of separating the Company’s real estate assets from its management and franchise businesses in a transaction pursuant to which (i) its management and franchise businesses would continue to be contained in the existing publicly traded company (referred to in this section of this proxy statement as “New La Quinta”), and (ii) its real estate assets would be transferred to a newly created entity that would intend to elect REIT status (referred to in this proxy statement as “CorePoint”) and be separated in a taxable spin-off. We sometimes refer to this transaction in this proxy statement as the “CorePoint spin-off.” Representatives of J.P. Morgan provided a preliminary financial analysis of the CorePoint spin-off and indicated their view, based on J.P. Morgan’s knowledge and understanding of the industries in which the Company operates and information regarding the Company provided by La Quinta management, that, in connection with the announcement of such a spin-off transaction, La Quinta might attract attention from potential acquirors interested in acquiring New La Quinta.

On October 21, 2016, the La Quinta Board again held a meeting at which the La Quinta Board further discussed with representatives of J.P. Morgan and Simpson Thacher various strategic alternatives, including the potential CorePoint spin-off. The La Quinta Board discussed various benefits and other considerations related to a potential spin-off transaction and the steps that would need to be taken to effect such a spin-off, including the reorganization of the Company. At this meeting, representatives of the Company also discussed the potential capital structure and related financing considerations for both CorePoint and New La Quinta that would need to be addressed in connection with the potential CorePoint spin-off, given that La Quinta’s existing debt would need to be refinanced as part of the CorePoint spin-off through new debt financings at both CorePoint and New La Quinta.

During the following two months, La Quinta, together with representatives of J.P. Morgan and Simpson Thacher, continued to develop plans regarding the potential CorePoint spin-off, including formulating steps to separate La Quinta’s management and franchise businesses from its real estate assets and evaluating potential transaction timelines and interim activities, such as employee communications and retention.

On December 15, 2016, at a meeting of the La Quinta Board, representatives of the senior management team and Simpson Thacher reviewed the status of the plans being developed in connection with the potential CorePoint spin-off. The La Quinta Board again discussed these plans on January 10, 2017. Also on January 10,

 

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2017, the Compensation Committee of the La Quinta Board recommended to the La Quinta Board an employee retention and severance plan for adoption in connection with a potential public announcement of the CorePoint spin-off.

On January 17, 2017, at a meeting of the La Quinta Board, the La Quinta Board again met with members of La Quinta senior management to further discuss the plans being developed in connection with the potential CorePoint spin-off and the public announcement thereof. Representatives of J.P. Morgan also attended this meeting and again reviewed with the La Quinta Board the potential CorePoint spin-off and the possibility that a public announcement of the possibility of such a transaction might attract attention from potential acquirors interested in acquiring New La Quinta. The La Quinta Board discussed a number of matters relating to the possible public announcement of the CorePoint spin-off, including an expected timeline of the potential transaction and a public communications strategy. Members of the senior management team reviewed for the La Quinta Board the preliminary 2016 financial results for each of the real estate and management and franchise businesses of the Company and discussed with the La Quinta Board the budgeted expectations for each of these businesses for 2017. Following further discussion, the La Quinta Board determined that it was in the Company’s and its stockholders best interests for the Company to formally pursue the CorePoint spin-off, authorized the Company’s management to take certain steps in connection with commencing the process for such transaction, including the preparation and filing of a Form 10 registration statement with the SEC to register the common stock of CorePoint under the Securities Exchange Act of 1934, as amended, and approved the issuance of a press release by the Company announcing the intent to pursue a spin-off transaction. The La Quinta Board also approved, upon the recommendation of the Compensation Committee of the Board, the adoption of an executive severance plan, a broad-based severance plan and a retention bonus plan and certain other compensation related matters to be put in place in connection with the announcement of the CorePoint spin-off.

On January 18, 2017, La Quinta issued a press release announcing its intention to pursue the separation of its businesses into two stand-alone publicly traded companies, which would involve spinning off its real estate assets as a separately traded public company.

Also on January 18, 2017, the Company and J.P. Morgan entered into an engagement letter pursuant to which J.P. Morgan would act as the Company’s financial advisor in connection with the CorePoint spin-off and certain other strategic alternatives involving the Company, including a potential sale of New La Quinta. The La Quinta Board made the decision to engage J.P. Morgan based on, among other things, J.P. Morgan’s qualifications, expertise and reputation and its knowledge of the business and affairs of the Company and the industries in which the Company conducts its business.

During the months following this announcement through the end of June 2017, La Quinta and its representatives received several inquiries from parties that expressed a potential interest in acquiring New La Quinta, either following the CorePoint spin-off or in a carve-out transaction from La Quinta prior to a spin-off. These parties, which included each of Wyndham Worldwide, Bidder 2 and Bidder 3, were informed that although La Quinta was focused at this time on the preparation and filing of the CorePoint Form 10 registration statement with the SEC relating to the CorePoint spin-off, the expressed interest would be reported to the La Quinta Board and it was possible that La Quinta would be interested in exploring potential sale alternatives with respect to New La Quinta after the CorePoint Form 10 was filed.

Also during this time period, the La Quinta Board met at a number of meetings, during which the La Quinta Board discussed various efforts undertaken to advance the CorePoint spin-off and potential timelines for the CorePoint spin-off. At a number of these meetings, the La Quinta Board, together with members of La Quinta’s senior management team and the Company’s financial and legal advisors, also discussed the inquiries received from third parties to potentially acquire New La Quinta upon the consummation of the CorePoint spin-off.

During July 2017, the La Quinta Board met twice (on July 11, 2017 and on July 20, 2017) to discuss the content and anticipated timing of the Form 10 registration statement to be filed in connection with the CorePoint

 

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spin-off, the status of the Company’s other efforts regarding the potential spin-off, various issues relating to the separation planning and assessment undertaken or planned to be undertaken by the Company’s management and advisors, including the potential capital structure and related financing considerations relating to both CorePoint and New La Quinta, as well as anticipated timelines and transition plans of CorePoint and New La Quinta following the potential spin-off. Also during these meetings, the La Quinta Board again discussed the inquiries received from third parties to potentially acquire New La Quinta upon the consummation of the CorePoint spin-off. Representatives of J.P. Morgan reported to the La Quinta Board that representatives of several parties, including Wyndham Worldwide and Bidder 2, continued to regularly inquire about the possibility of exploring an acquisition of New La Quinta following the CorePoint spin-off.

At the July 20, 2017 meeting of the La Quinta Board, representatives of J.P. Morgan also discussed various methods for conducting a strategic process in the event the La Quinta Board determined to commence a process to explore the possibility of a sale of New La Quinta. Following discussion, the La Quinta Board determined that it would be prudent and in the Company’s and its stockholders’ best interests to initiate a process to explore the possibility of a sale of New La Quinta to take place upon the consummation of the CorePoint spin-off. The La Quinta Board concluded that this should be an auction process to engage with those potential bidders who were expected to be most likely to have a willingness and ability to pursue an acquisition of New La Quinta, including parties that had previously approached the Company during the course of the previous year about the possibility of exploring a potential strategic transaction. The La Quinta Board instructed the senior management team, together with J.P. Morgan and Simpson Thacher, to begin preparations for an auction process, which should commence during the August to September 2017 time frame, following the filing of the CorePoint Form 10 registration statement with the SEC.

On July 26, 2017, the Company caused CorePoint to make the initial filing with the SEC of the Form 10 registration statement relating to the potential CorePoint spin-off.

Beginning in early September 2017, following further discussions with members of La Quinta senior management and members of the La Quinta Board, J.P. Morgan identified 14 parties, including Wyndham Worldwide, Bidder 2 and Bidder 3, who were most likely to have a willingness and ability to acquire New La Quinta upon consummation of the CorePoint spin-off. At the direction of the La Quinta Board, representatives of J.P. Morgan contacted each of these potential parties to offer them the opportunity to participate in La Quinta’s auction process for the potential sale of New La Quinta upon consummation of the CorePoint spin-off. During the month of September, six of those 14 parties agreed to enter into confidentiality agreements with La Quinta to further explore such opportunity, including Wyndham Worldwide, Bidder 2 and Bidder 3, and began making confidential information available to such parties, including through an electronic data room. The confidentiality agreements entered into with such parties contained a standstill arrangement restricting such parties from, among other things, making unsolicited acquisition proposals, with a provision that would prohibit the counterparty from asking La Quinta to waive such standstill arrangement (often referred to as a “don’t ask, don’t waive” provision), provided that the “don’t ask, don’t waive” aspect of the standstill provision did not apply after La Quinta executed and announced a merger agreement (or similar acquisition agreement).

On September 6, 2017, the Company caused CorePoint to file with the SEC an amendment to the Form 10 registration statement relating to the CorePoint spin-off.

On October 2, 2017, J.P. Morgan distributed to the six parties that had executed confidentiality agreements a bid instruction letter requesting the submission of first round proposals to J.P. Morgan, on behalf of La Quinta, by October 26, 2017.

Throughout the month of October 2017, representatives of J.P. Morgan, on behalf of the Company, maintained an active dialogue with these six parties and, with the assistance of the La Quinta senior management team, responded to questions and provided due diligence information to assist with such parties’ evaluation of a potential transaction with La Quinta. Also during this time, as well as throughout the remainder of the sale

 

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process, representatives of J.P. Morgan and La Quinta’s senior management team periodically provided updates on the status of discussions to members of the La Quinta Board, including Mitesh Shah, the chairman of the La Quinta Board, in between formal meetings of the La Quinta Board.

On October 19, 2017, at a meeting of the La Quinta Board at which representatives of La Quinta’s senior management team, Simpson Thacher and J.P. Morgan were present, representatives of management presented an overview of the performance of La Quinta and discussed the Company’s financial results during the third quarter, as well as an overview of the impact that hurricanes Harvey and Irma had and were expected to have on the Company’s financial results. At this meeting, the La Quinta Board, together with members of the senior management team and representatives of J.P. Morgan and Simpson Thacher, discussed the status of the Company’s effort regarding the CorePoint spin-off, and the various work streams and tasks involved. In addition, representatives of J.P. Morgan provided the La Quinta Board with a market update and initial feedback on the on-going first round of the Company’s auction process. Representatives of J.P. Morgan indicated that they were expecting to receive first round proposals from at least three of the six parties who had entered into confidentiality agreements and commenced due diligence. Members of the La Quinta management team discussed the status of the work stream relating to the potential pro forma CorePoint and New La Quinta capital structures following the CorePoint spin-off, and representatives of J.P. Morgan provided a preliminary overview of various financing alternatives for CorePoint in connection with the potential spin-off transaction, including a commercial mortgage-backed securities (“CMBS”) financing and a leveraged loan structure, and a leveraged loan structure for New La Quinta. Members of the La Quinta management team and representatives of J.P. Morgan further discussed the considerations around executing each potential financing alternative, the potential financial flexibility and the potential terms associated with the various financing alternatives. They also noted that the Company would require financing in connection with the CorePoint spin-off regardless of whether a sale of New La Quinta was consummated.

By October 30, 2017, representatives of J.P. Morgan had received preliminary proposals for an acquisition of New La Quinta from three parties. Each of Wyndham Worldwide and Bidder 2 submitted a preliminary proposal with a proposed enterprise value for New La Quinta (following the completion of the CorePoint spin-off). The proposed enterprise values of these bids were close, with the highest value proposal being $1.6 billion. Each of Wyndham Worldwide and Bidder 2 also proposed a number of changes to the forms of the management agreements and the franchise agreements that would be entered into between New La Quinta and CorePoint in connection with the CorePoint spin-off. Bidder 3 submitted a proposal that did not specify a valuation for New La Quinta and indicated instead an interest in acquiring only certain assets of La Quinta. Representatives of J.P. Morgan notified each party to expect feedback following a review of the proposals by the La Quinta Board.

On October 31, 2017, the La Quinta Board held a special meeting to discuss the preliminary proposals received, at which representatives of senior management, J.P. Morgan and Simpson Thacher were present. Members of the senior management team updated the La Quinta Board on recent events with respect to the potential sale process. They then reviewed and discussed with the Board management’s financial projections for New La Quinta’s operating business on a stand-alone basis following the CorePoint spin-off, and the key assumptions underlying such projections. Members of La Quinta’s senior management team also discussed again with the La Quinta Board the stand-alone strategy for New La Quinta following a CorePoint spin-off in comparison to a potential sale of New La Quinta, including various opportunities and risks inherent in each strategy, including with respect to the scale and capital structure of New La Quinta on a stand-alone basis. Representatives of Simpson Thacher then reviewed with the members of the La Quinta Board the fiduciary duties of directors under Delaware law in connection with a spin-off and a potential sale transaction. Representatives of Simpson Thacher also discussed key terms of the merger and spin-off related agreements that were being drafted and would be provided to the bidders if the La Quinta Board determined to continue the potential sale process. Representatives of J.P. Morgan then reviewed in detail with the La Quinta Board the preliminary proposals received from Wyndham Worldwide and Bidder 2, including the proposed changes to the forms of the management agreements and franchise agreements that each party had requested, as well as the preliminary

 

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proposal received from Bidder 3 to explore the possibility of acquiring certain select assets of La Quinta. The La Quinta Board discussed the implications that certain aspects of a buyer’s business and operations would have with respect to CorePoint, as any buyer of New La Quinta would become the franchisor and manager of the real estate assets to be held by CorePoint after the spin-off, and also discussed the relevance of such implications to La Quinta stockholders, as such stockholders would become stockholders of CorePoint upon completion of the CorePoint spin-off. Representatives of J.P. Morgan also reviewed with the La Quinta Board certain preliminary financial valuation analyses of New La Quinta on a standalone basis. Following further discussion, the La Quinta Board authorized J.P. Morgan and La Quinta management to continue the process of exploring a potential sale of New La Quinta and to invite each of Wyndham Worldwide, Bidder 2 and Bidder 3 into the second round of such process, noting that, if Bidder 3 remained determined to acquire only certain assets of New La Quinta while Wyndham Worldwide and Bidder 2 continued to be engaged in the process, the Company would focus its attention on Wyndham Worldwide and Bidder 2.

In the days following the La Quinta Board meeting, representatives of J.P. Morgan informed each of Wyndham Worldwide, Bidder 2 and Bidder 3 that the La Quinta Board had determined to continue the process of exploring a potential New La Quinta sale transaction, that the process was competitive and each of them was being invited to participate in the second round of the sales process.

Over the course of the following weeks, Wyndham Worldwide, Bidder 2 and Bidder 3 were provided with access to an expanded electronic data room containing additional diligence materials, and representatives of J.P. Morgan, La Quinta management, Simpson Thacher and La Quinta’s other advisors conducted a number of diligence calls with Wyndham Worldwide and Bidder 2. During this period, Bidder 3 reiterated that it was not interested in acquiring New La Quinta as a whole, and would only entertain acquiring certain assets of New La Quinta. Based on these discussions and the uncertainty with respect to the proposed composition and scale of such assets and the potential execution risks relating to such a transaction, representatives of La Quinta did not further pursue Bidder 3 and focused their attentions on a potential transaction for the whole of New La Quinta with Wyndham Worldwide and Bidder 2.

At a meeting of the La Quinta Board on November 18, 2017, Mitesh Shah, the chairman of the La Quinta Board, provided the La Quinta Board with an update of the search process for the chief executive officer of CorePoint, which had been ongoing following previous discussions, noting that the members of the Nominating/Corporate Governance Committee of the La Quinta Board and the Compensation Committee of the La Quinta Board had worked with an outside advisor in the search process, during which various candidates were interviewed, including Keith Cline, La Quinta’s current President and Chief Executive Officer, and that the committees had determined to recommend Mr. Cline for the position.

On November 20, 2017, each of Wyndham Worldwide and Bidder 2 separately participated in presentations by La Quinta management in Dallas, Texas regarding New La Quinta’s business, results and prospects. The members of La Quinta’s management team who presented at these meetings included, among others, Mr. Cline, James Forson, La Quinta’s Executive Vice President and Chief Financial Officer, and Mark Chloupek, La Quinta’s Executive Vice President, Secretary and General Counsel. Each of Wyndham Worldwide and Bidder 2 continued an extensive due diligence process during the months of November and December, 2017.

Between November 20, 2017 and December 4, 2017, representatives of Simpson Thacher finalized the draft merger agreement and spin-off related agreements, including revised drafts of the forms of the management and franchise agreements, which would be provided to the bidders. The draft merger agreement assumed that the Company would deliver commitment letters for the financing of CorePoint contemporaneously with the execution of the merger agreement, which financing contemplated a capital structure for CorePoint as a stand-alone company following the CorePoint spin-off regardless of whether a sale of New La Quinta was consummated. Accordingly, during this timeframe, at the request of the Company, JPMorgan Chase Bank prepared and provided to the Company proposed financing documents for a leveraged loan financing structure, which representatives of the Company’s management, Simpson Thacher and JPMorgan Chase Bank proceeded to negotiate during December 2017 and the beginning of January 2018.

 

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During the week of December 4, 2017, drafts of the merger agreement and the spin-off transaction agreements were provided to each of Wyndham Worldwide and Bidder 2.

On December 11, 2017, representatives of J.P. Morgan distributed a process letter with bid instructions to Wyndham Worldwide and Bidder 2, which requested that final offers be submitted to J.P. Morgan by January 4, 2018, which offer should include the bidder’s proposed valuation for New La Quinta, markups of the various transaction documents and evidence of committed financing. The process letter instructed the bidders to submit their proposals on a total enterprise value basis, while La Quinta would separately provide the bidders with (i) the proposed “tax reserve amount” that would reflect an estimate of the taxes expected to be incurred in connection with the taxable spin-off of CorePoint, and which amount would be set forth in a tax matters agreement, and (ii) the amount of estimated New La Quinta net debt following a cash payment to New La Quinta from the proceeds of the CorePoint financing that would be put in place in connection with the CorePoint spin-off. The bid instructions specified that the tax reserve amount and the estimated net debt would impact the calculation of the equity value of New La Quinta upon the completion of the CorePoint spin-off and would be required inputs in order to derive the per share merger consideration for New La Quinta from the total enterprise value proposed by a bidder.

At a special meeting of the La Quinta Board on December 18, 2017 at which representatives of senior management, J.P. Morgan and Simpson Thacher were present, representatives of J.P. Morgan reviewed with the La Quinta Board the status of the second round of the Company’s auction process, key communications with Wyndham Worldwide and Bidder 2 since the last La Quinta Board meeting, and proposed timelines and next steps. At this meeting, members of the senior management team also discussed with the La Quinta Board the status of the due diligence reviews being conducted by each of Wyndham Worldwide and Bidder 2. Members of senior management, together with representatives of J.P. Morgan and Simpson Thacher, also discussed with the La Quinta Board (i) various financing alternatives that they had considered during November and December 2017 with respect to the CorePoint financing that would need to be put in place in connection with the CorePoint spin-off, including both the size and structure of such financing, and (ii) materials prepared regarding the potential “tax reserve amount” and the amount of estimated New La Quinta net debt, following a cash payment to New La Quinta from the proceeds of the CorePoint financing, each of which would be set forth in the transaction agreements. Representatives of Simpson Thacher further reviewed with the La Quinta Board the terms of the draft merger agreement and spin-off transaction agreements that had been provided to bidders.

On December 22, 2017, a revised draft of the tax matters agreement was provided to each of Wyndham Worldwide and Bidder 2, which reflected updated assumptions with respect to the applicable tax rate in light of the recent enactment of tax reform legislation, and revised procedures associated with the payment that would be made either to or from CorePoint in the event that the amount of taxes incurred in connection with the taxable spin-off of CorePoint, as determined following the completion of the CorePoint spin-off, was either less than or greater than, respectively, the amount of the “tax reserve amount.”

On December 29, 2017, representatives of Simpson Thacher discussed La Quinta’s draft merger agreement and spin-off transaction agreements with representatives of Kirkland & Ellis LLP, outside legal advisor to Wyndham Worldwide (“Kirkland”). During this discussion, representatives of Kirkland indicated that Wyndham Worldwide expected, in connection with any potential transaction, that it would enter into a voting agreement with the Blackstone stockholders, which held, collectively, as of such date, approximately 30% of the issued and outstanding shares of La Quinta common stock. Later that day, representatives of Simpson Thacher discussed La Quinta’s draft merger agreement and spin-off transaction agreements with the outside legal advisor to Bidder 2, who also indicated that Bidder 2 would expect to enter into a voting agreement with the Blackstone stockholders in connection with a potential transaction.

On December 31, 2017, representatives of Bidder 2 submitted preliminary mark-ups of the merger agreement and ancillary spin-off transaction agreement to Simpson Thacher. On January 3, 2017, representatives of Simpson Thacher, following conversations with La Quinta senior management and representatives of J.P.

 

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Morgan, provided feedback on these comments to representatives of Bidder 2 for Bidder 2’s consideration in advance of submitting final mark-ups with Bidder 2’s proposal.

On January 1, 2018, following discussions among representatives of Simpson Thacher and La Quinta management and members of the La Quinta Board, the Company directed representatives of J.P. Morgan to inform Wyndham Worldwide and Bidder 2 that they should assume, for purposes of their final proposals, a New La Quinta net debt amount of $670 million and a tax reserve amount of $235 million, in order to derive the per share merger consideration from their proposed total enterprise value. Representatives of J.P. Morgan noted to each of Wyndham Worldwide and Bidder 2 that these amounts would remain subject to refinement by the Company in advance of the execution of any definitive agreements (and these amounts were subsequently further refined by the Company during the week preceding the announcement of the proposed merger to reflect a New La Quinta net debt amount of approximately $715 million and a tax reserve amount of $240 million).

On January 4, 2018, each of Wyndham Worldwide and Bidder 2 submitted revised proposals to representatives of J.P. Morgan, which included proposed enterprise values for La Quinta following the CorePoint spin-off, mark-ups to all of the draft transaction agreements and financing commitment letters. Wyndham Worldwide’s proposal provided for an enterprise value of $1.85 billion, which was modestly higher than the proposal submitted by Bidder 2.

Between January 4, 2018 and January 8, 2018, the La Quinta senior management team, together with representatives of J.P. Morgan and Simpson Thacher, evaluated the proposals submitted by Wyndham Worldwide and Bidder 2. Also during this time, a senior executive of Bidder 2 contacted and met with Mr. Shah to offer to answer questions regarding Bidder 2’s proposal and to discuss Bidder 2’s views on where it would expect to position the La Quinta brand within Bidder 2’s brand portfolio, as well as its related plans in the event it were to acquire New La Quinta. Subsequent to the meeting with Mr. Shah, the same senior executive of Bidder 2 contacted Mr. Cline to share Bidder 2’s perspectives on the expected positioning of La Quinta within Bidder 2’s brand portfolio. Similarly, and also during this time, Mr. Shah and Mr. Cline both had conversations with Geoff Ballotti, the President and Chief Executive Officer of Wyndham Hotel Group, during which Mr. Ballotti discussed where Wyndham Worldwide would expect to position the La Quinta brand within its portfolio and how Wyndham Worldwide would expect to pursue revenue growth.

On January 8, 2018, the La Quinta Board held a special meeting to discuss the potential strategic transaction and the terms of the proposals from Wyndham Worldwide and Bidder 2. Representatives of senior management, J.P. Morgan and Simpson Thacher were present at the meeting. Representatives of Simpson Thacher reviewed with the members of the La Quinta Board their fiduciary duties under Delaware law. Representatives of Simpson Thacher also reviewed with the La Quinta Board the disclosure statement provided by J.P. Morgan prior to the meeting, which identified certain prior engagements or relationships between J.P. Morgan and each of Wyndham Worldwide and Bidder 2 (see “The Merger Proposal (Proposal 1) — Opinion of J.P. Morgan Securities LLC”). Representatives of senior management updated the La Quinta Board on the process and the proposals received from Wyndham Worldwide and Bidder 2. They also discussed with the La Quinta Board their perspectives on the relative strengths of each bidder as a potential partner of CorePoint following the CorePoint spin-off (as a result of the fact any acquiror of New La Quinta would also become the parent to the party entering into various management and franchise agreements with CorePoint), as well as the potential implications that a bidder’s business and operations could have on the future value of CorePoint, and the relevance of such implications to La Quinta stockholders since the transactions being considered would result in La Quinta stockholders receiving both cash consideration in the merger, in connection with the potential sale of New La Quinta to a bidder, and shares of CorePoint common stock, in connection with the CorePoint spin-off. Also at this meeting, representatives of J.P. Morgan reviewed the details of each proposal, including the proposed adjustments made by each bidder to the definitions of indebtedness and transaction expenses that would be assumed by the bidder as part of its acquisition of New La Quinta, which review favored Wyndham Worldwide. Representatives of J.P. Morgan also reviewed with the La Quinta Board certain preliminary financial analyses with respect to the proposals, and representatives of Simpson Thacher and the La Quinta senior management team reviewed a comparison of key contractual terms set forth in the markups of the transaction agreements submitted with each bidder’s proposal.

 

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The La Quinta Board, together with its financial and legal advisors and members of the senior management team, further discussed the proposals and potential next steps at the January 8, 2018 meeting. The La Quinta Board noted that the proposal from Wyndham Worldwide represented the highest price proposal received by La Quinta during the strategic process, and was in excess of the price proposed by Bidder 2, and also concluded that in its judgment the Wyndham Worldwide proposal was favorable to the Company and its stockholders in other respects as well, such as the likely positioning of New La Quinta within the Wyndham Worldwide portfolio and the proposed economic and other terms of the merger agreement and spin-off related agreements set forth in Wyndham Worldwide’s proposal. The La Quinta Board then determined that it would allow Wyndham Worldwide a short window of opportunity to make a further substantial improvement to its proposal, with respect to both price and key terms in the definitive agreements, and if Wyndham Worldwide made such an improvement the Company would then work with Wyndham Worldwide in an effort to arrive at a mutually agreeable set of definitive documents for final consideration by the La Quinta Board. If, however, Wyndham Worldwide did not make a substantial improvement over this short period of time, the La Quinta Board would discuss engaging with Bidder 2 for a potential improved proposal.

On January 9, 2018, at the direction of the La Quinta Board, representatives of J.P. Morgan contacted representatives of Wyndham Worldwide, and invited Wyndham Worldwide to submit a revised proposal within 24 hours. In connection with this request, representatives of J.P. Morgan circulated to Wyndham Worldwide an issues list setting forth La Quinta’s responses to a number of material terms contained in Wyndham Worldwide’s proposed transaction agreement mark-ups, which included La Quinta’s request to, among other things, remove the proposed “marketing period” concept in the merger agreement (which would condition the closing on, among other things, the delivery of certain financial information), provide for a reduced “fiduciary” termination fee (which would be payable in certain circumstances in connection with the La Quinta Board’s exercise of its fiduciary right to change its recommendation for the merger or terminate the merger agreement for a superior proposal) of 3.5% of the equity consideration (approximately $37 million) in lieu of Wyndham Worldwide’s proposed amount of $45 million, expand Wyndham Worldwide’s obligations under the “regulatory efforts” provisions in the merger agreement (which defines Wyndham Worldwide’s obligations to take certain actions to obtain required regulatory approvals), provide for changes to the tax matters agreement with respect to the allocation of certain tax liabilities as well as CorePoint’s ability to issue common stock of CorePoint to New La Quinta in order to satisfy potential post-closing adjustment payment obligations of CorePoint, as well as a number of changes to the forms of the CorePoint management and franchise agreements to be entered into between the parties in connection with the CorePoint spin-off. Representatives of J.P. Morgan informed Wyndham Worldwide that the La Quinta Board would be willing to move forward towards the negotiation of definitive agreements with Wyndham Worldwide if the La Quinta Board received within the proposed time frame a meaningful improvement on valuation from the proposal Wyndham Worldwide submitted on January 4, 2018 and a satisfactory response from Wyndham Worldwide with respect to the contractual issues.

On January 10, 2018, representatives of Wyndham Worldwide contacted representatives of J.P. Morgan with a revised proposal, which reflected a total enterprise value of $1.95 billion (an increase of $100 million from the proposal Wyndham Worldwide submitted on January 4, 2018). The revised proposal also accepted most of the contractual proposals made by La Quinta, including the removal of the “marketing period”, the reduced “fiduciary” termination fee of $37 million, the changes to the regulatory efforts provisions in the merger agreement and several of the proposed changes to the spin-off related agreements, including the forms of the CorePoint management and franchise agreements. The La Quinta Board was updated as to the revised Wyndham Worldwide proposal, and consistent with the conclusion reached at the January 8, 2018 meeting of the La Quinta Board, the Company and its financial and legal advisors began working with representatives of Wyndham Worldwide in an effort to finalize the transaction agreements. On January 11, 2018, representatives of J.P. Morgan, pursuant to instructions from the La Quinta Board, contacted representatives of Bidder 2 to inform them that La Quinta was moving forward with another bidder. Following this contact, a senior executive of Bidder 2 contacted Mr. Shah, who reiterated the message delivered by J.P. Morgan. After these communications, there were no further material communications between representatives of La Quinta and representatives of Bidder 2.

 

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Over the course of the following days and until January 17, 2018, representatives of La Quinta, Simpson Thacher, Wyndham Worldwide and Kirkland negotiated to finalize the terms of the merger agreement, the distribution agreement, the employee matters agreement, the tax matters agreement, the transition services agreement and the forms of the CorePoint management agreements and franchise agreements and ancillary agreements, in an effort to resolve the remaining open items in such documents. Each of Simpson Thacher and Kirkland exchanged a number of drafts of these agreements during this period.

On January 11, 2018, representatives of Simpson Thacher, at the request of representatives of Venable LLP, outside legal advisor to the Blackstone stockholders (“Venable”), sent a draft of the voting agreement to Kirkland. On January 12, 2018, Kirkland sent a revised draft of the voting agreement to Venable and during the ensuing several days representatives of Venable and Kirkland negotiated to resolve the open issues in such voting agreement.

Also during the days leading up to January 17, 2018, the Company continued to work on obtaining committed financing for CorePoint, which was contemplated by the draft merger agreement. In connection with this process, the Company requested that representatives of the Blackstone stockholders, in light of their knowledge and experience with the financing markets, review the proposed terms of the CorePoint financing being provided by JPMorgan Chase Bank. On January 13, 2018, representatives of Blackstone informed the Company that following its review Blackstone believed that a CMBS financing structure, which was one of the options that the La Quinta Board and its advisors previously discussed, would be economically advantageous to La Quinta stockholders as compared to the leveraged loan financing structure that was then being pursued by La Quinta on behalf of CorePoint. Representatives of Blackstone further informed La Quinta that certain affiliates of Blackstone would be prepared to provide the CorePoint committed financing using a CMBS financing structure. La Quinta senior management discussed the potential CMBS structure as compared to the potential leveraged loan structure, including with Mr. Shah, and agreed that a CMBS financing structure merited further exploration, in that it provided lower up-front fees payable by CorePoint and a lower interest rate than was the case with the leveraged loan financing structure that La Quinta had been pursuing on behalf of CorePoint. La Quinta senior management then contacted representatives of JPMorgan Chase Bank to request a proposal to the Company with respect to the previously discussed preliminary terms of the CMBS financing structure, which such representatives of JPMorgan Chase Bank agreed to provide promptly.

By January 15, 2018, the parties had mutually agreed on the material terms of each of the merger agreement and the spin-off transaction agreements, other than the amount of a fee that Wyndham Worldwide proposed should be payable by La Quinta to Wyndham Worldwide if the merger agreement were to be terminated in certain circumstances involving a failure of the CorePoint financing to be available on the closing date. La Quinta’s initial draft of the merger agreement did not provide for such a “financing failure” termination fee. Upon Wyndham Worldwide’s insistence, La Quinta indicated a willingness to agree to such a construct and proposed that this “financing failure” termination fee be equal to $20 million. On January 15, 2018, Kirkland sent a revised draft of the merger agreement to Simpson Thacher, which proposed that the “financing failure” termination fee be equal to $74 million.

Later on January 15, 2018, the La Quinta Board held a special meeting at the offices of Simpson Thacher in New York to discuss the proposed transaction with Wyndham Worldwide. Representatives of senior management, J.P. Morgan and Simpson Thacher were present at the meeting. Representatives of Simpson Thacher again reviewed with the members of the La Quinta Board their fiduciary duties under Delaware law. Representatives of Simpson Thacher then reviewed with the La Quinta Board the principal terms of the merger agreement, the voting agreement and the spin-off agreements, all of which were by January 15, 2018 in near final form other than with respect to the “financing failure” termination fee that would be payable by La Quinta to Wyndham Worldwide under certain circumstances. This review included a discussion of the changes that had been made to such agreements from the time that they were previously discussed with the La Quinta Board at its meeting held on January 8, 2018. Representatives of Simpson Thacher also reviewed for the La Quinta Board the terms of the financing commitments being obtained by Wyndham Worldwide in connection with the transaction. Representatives of senior management reviewed and discussed with the La Quinta Board management’s financial

 

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projections for New La Quinta’s operating business on a stand-alone basis following the CorePoint spin-off, which the La Quinta Board directed J.P. Morgan to use and rely upon for its financial analyses. This review included a discussion of the key assumptions underlying such projections and the updates made to the projections previously discussed at the October 31, 2017 meeting of the La Quinta Board, which updates were primarily a result of more recent information regarding the timing by which a number of the Company’s owned hotels would be back to operating fully following the impact that hurricanes Harvey and Irma had in 2017, and the recent enactment of tax reform legislation. Representatives of J.P. Morgan then reviewed with the La Quinta Board certain preliminary financial analyses of the proposed transaction based on the most recent proposal made by Wyndham Worldwide on January 10, 2018.

Representatives of Simpson Thacher and J.P. Morgan then updated the La Quinta Board about the status of the negotiation of the final terms for the CorePoint financing commitments. In this regard, they discussed the developments over the previous days with respect to the potential change to a CMBS financing structure for CorePoint, which would also include a revolving credit facility. Representatives of J.P. Morgan reported that JPMorgan Chase Bank was prepared to provide committed financing to CorePoint on the basis of a CMBS structure, which structure may result in some customary additional limitations on CorePoint’s operational flexibility post spin-off, but would provide for lower up-front fees payable by CorePoint and a lower blended interest rate applicable to CorePoint following the spin-off, in each case as compared to the previously evaluated leveraged loan financing structure. Members of the La Quinta management team reported that they believed that the CMBS financing structure, in the aggregate, reflected an improvement from the previously discussed leveraged loan structure and that La Quinta, on behalf of CorePoint, should move forward with the CMBS financing structure. Representatives of La Quinta management also reported that they informed representatives of JPMorgan Chase Bank that certain affiliates of Blackstone would be willing to participate as a non-controlling party in the financing with respect to a portion of such financing expected to be no greater than 50% and that certain affiliates of Blackstone also would be prepared to participate in the revolving credit facility, which would provide CorePoint with an increased revolving credit facility beyond that which JPMorgan Chase Bank was prepared to provide on its own. Members of the La Quinta management team then informed the La Quinta Board that, following these discussions and further discussions with representatives of Blackstone, it was agreed that the parties would explore having JPMorgan Chase Bank provide 100% of the committed financing for CorePoint on the terms discussed and would be the sole party to the CorePoint financing commitment letters, but that JPMorgan Chase Bank would likely enter into arrangements with certain affiliates of Blackstone whereby such affiliates of Blackstone would participate as a non-controlling party in the financing with respect to a portion of such financing, including in the related revolving credit facility, and receive a portion of the fees payable to JPMorgan Chase Bank in exchange for such participation. The La Quinta Board, following discussions with representatives of Simpson Thacher, determined that directors Messrs. Shah, Abrahamson, Bergren and Bowers, none of whom had any affiliation to Blackstone, should continue to meet separately to further discuss the potential implications of a non-controlling participation by affiliates of the Blackstone stockholders in the CorePoint financing. The La Quinta Board further determined that, subject to any contrary views from such directors, the Company, together with its financial and legal advisors, should continue to seek to finalize a mutually agreeable set of definitive documents with Wyndham Worldwide for final consideration by the La Quinta Board and to work with JP Morgan Chase Bank to finalize the CorePoint financing on the basis of the CMBS structure. At this meeting, the La Quinta Board also discussed that La Quinta would amend its amended and restated certificate of incorporation in connection with the CorePoint spin-off to effect the reverse stock split, in order to obtain the desired tax treatment for the CorePoint spin-off.

From January 15, 2018 through January 17, 2018, representatives of Simpson Thacher and outside counsel to JPMorgan Chase Bank negotiated to finalize the terms of the CorePoint financing. During this time, including at the end of the January 15, 2018 meeting of the La Quinta Board, representatives of Simpson Thacher also met with Messrs. Shah, Abrahamson, Bergren and Bowers to further discuss the financing commitments, the role that affiliates of the Blackstone stockholders played in obtaining economic improvements for CorePoint to the terms of the financing commitments and any potential conflict of interest that may result from the possibility that affiliates of the Blackstone stockholders may participate in some form in the CorePoint financing.

 

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On January 16, 2018, representatives of Simpson Thacher sent a revised draft of the merger agreement to representatives of Kirkland, which reflected La Quinta’s willingness to agree to a “financing failure” termination fee equal to $37 million (as compared to the $20 million previously proposed by La Quinta and the $74 million previously proposed by Wyndham Worldwide).

During the course of January 17, 2018, representatives of Simpson Thacher and Kirkland continued to negotiate to finalize the remaining terms of the merger agreement, including the treatment of the “financing failure” termination fee, which the parties mutually agreed would be equal to $37 million. Representatives of Simpson Thacher and Kirkland also continued to finalize the remaining open terms of the ancillary documents relating to the merger and the CorePoint spin-off.

Later on January 17, 2018, the La Quinta Board held a special meeting. Representatives of La Quinta senior management, J.P. Morgan and Simpson Thacher were present at such meeting. Representatives of Simpson Thacher again reviewed with the members of the La Quinta Board their fiduciary duties under Delaware law. Representatives of Simpson Thacher then proceeded to update the La Quinta Board on the terms of the proposed merger agreement, spin-off agreements and related agreements, including the negotiated agreement regarding the “financing failure” fee that could be payable by La Quinta. Representatives of Simpson Thacher also summarized the voting agreement that would be entered into by the Blackstone stockholders and Wyndham Worldwide and the financing commitment letters that would be provided by JPMorgan Chase Bank, which reflected the CMBS financing structure previously discussed. Representatives of J.P. Morgan then reviewed with the La Quinta Board J.P. Morgan’s financial analysis of Wyndham Worldwide’s final offer price. Thereafter, at the request of the La Quinta Board, a representative of J.P. Morgan, on behalf of J.P. Morgan, rendered J.P. Morgan’s oral opinion to the La Quinta Board (which was subsequently confirmed in writing by delivery of J.P. Morgan’s written opinion dated January 17, 2018) that, as of January 17, 2018 and based on and subject to the assumptions made, matters considered and limitations on the scope of review undertaken as set forth in such opinion, the merger consideration to be received by the holders of La Quinta common stock was fair, from a financial point of view, to such holders. Messrs. Shah, Abrahamson, Bergren and Bowers then updated the La Quinta Board on their discussions regarding the CorePoint financing commitments and the possible participation by affiliates of the Blackstone stockholders in such financing. They reported that, following discussions, JPMorgan Chase Bank was prepared to enter into arrangements with certain affiliates of Blackstone to permit their participation in the financing, including in the related revolving credit facility. They further discussed that although such participation by affiliates of Blackstone may be viewed as a potential conflict of interest (see “The Merger Proposal (Proposal 1) — Interests of La Quinta’s Executive Officers and Directors in the Merger” beginning on page 64), JPMorgan Chase Bank was the counterparty responsible for 100% of the financing pursuant to the proposed commitment letters between CorePoint and JPMorgan Chase Bank, and that in the view of such directors, the terms of the revised financing reflecting the CMBS financing structure were favorable to La Quinta and constituted an improvement from La Quinta’s perspective relative to the terms of the previously discussed leveraged loan financing structure.

Following further discussion and consideration of all the matters raised, the La Quinta Board unanimously determined that the merger agreement, the separation agreement and related spin-off transaction agreements, and the transactions contemplated thereby, were in the best interests of the Company and its stockholders, approved the merger agreement and the merger as well as the separation agreement and related spin-off transaction agreements, and declared it advisable to enter into the merger agreement and the spin-off transaction agreements and resolved to recommend that the Company’s stockholders adopt the merger agreement and the related charter amendment proposals at a meeting of stockholders convened in accordance with the applicable provisions of Delaware law.

Later on the night of January 17, 2018, the Company and Wyndham Worldwide executed the merger agreement and certain ancillary agreements related thereto, including the Wyndham Worldwide financing commitments and the CorePoint financing commitments, and Wyndham Worldwide and the Blackstone stockholders executed the voting agreement.

 

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On the morning of January 18, 2018, the Company and Wyndham Worldwide issued a joint press release announcing the execution of the merger agreement. Also on January 18, 2018, La Quinta separately announced the appointment of Keith Cline to serve as President and Chief Executive Officer of CorePoint, with such appointment to take effect upon the completion of the CorePoint spin-off.

Recommendation of the La Quinta Board and Reasons for the Merger

The La Quinta Board unanimously recommends that La Quinta stockholders vote “FOR” the merger proposal.

By unanimous vote, the La Quinta Board, at a meeting held on January 17, 2018, determined that it is advisable and in the best interests of the Company and La Quinta stockholders to enter into the merger agreement, and unanimously approved the merger agreement and the transactions contemplated by the merger agreement, including the merger, and resolved to recommend the adoption of the merger agreement by La Quinta stockholders and that the adoption of the merger agreement be submitted to a vote at a meeting of La Quinta stockholders. The La Quinta Board unanimously recommends that La Quinta stockholders vote “FOR” the merger proposal, “FOR” the charter amendment proposals, “FOR” the named executive officer merger-related compensation proposal, and “FOR” the adjournment proposal.

When you consider the La Quinta Board’s recommendation, you should be aware that La Quinta’s directors and executive officers may have interests in the merger that may be different from, or in addition to, those of La Quinta stockholders. For more information about such interests, see below under the heading “—Interests of La Quinta’s Executive Officers and Directors in the Merger.”

In evaluating the merger agreement, the merger and the other transactions contemplated by the merger agreement and the related spin-off transaction documents, the La Quinta Board consulted with La Quinta’s senior management, its outside legal counsel and its financial advisor. In recommending that La Quinta stockholders vote their shares of La Quinta common stock in favor of adoption of the merger agreement, the La Quinta Board considered the following material factors and potential benefits of the merger and the other transactions contemplated by the merger agreement (not necessarily in order of relative importance), each of which it believed supported its decision:

 

    That the $1.95 billion enterprise valuation for New La Quinta represented the highest valuation ascribed to New La Quinta in the strategic process that La Quinta undertook, with the assistance of its financial advisor, to explore a potential sale of New La Quinta. In addition, the La Quinta Board’s assessment, taking into account a number of factors, including the prospects of New La Quinta and the range of implied per share equity values of New La Quinta presented in J.P. Morgan’s financial analysis (based on the Company’s projections described in the section titled “—Financial Projections”, as determined based upon and subject to the factors and assumptions set forth in J.P. Morgan’s written opinion more fully described under the heading “—Opinion of J.P. Morgan Securities LLC” and as set forth in the full text of such opinion attached to this proxy statement as Annex B”), that the consideration of $8.40 in cash per share prior to giving effect to the reverse stock split (or $16.80 in cash per share after giving effect to the reverse stock split) to be paid in the proposed merger was attractive in comparison to New La Quinta’s value on a standalone basis.

 

    That the merger consideration would be paid solely in cash, which, compared to non-cash consideration, provides certainty and immediate liquidity and value to La Quinta stockholders.

 

   

Following review and consideration of La Quinta’s business plan and the prospects of New La Quinta on a standalone basis, as well as the prospects of CorePoint after giving effect to the proposed transaction, including the competitive landscape and the business, financial and execution risks associated therewith, the La Quinta Board’s belief that the combined value of the merger consideration and the shares of CorePoint common stock that our stockholders will receive in the spin-off represent

 

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superior value to La Quinta stockholders when compared to La Quinta on a standalone basis (taking into account the risks inherent in the stand-alone strategy, including with respect to the capital structure and scale of New La Quinta on a stand-alone basis) and the pursuit of other potentially actionable strategies or financial transactions. In this regard, the La Quinta Board also considered that:

 

    The merger consideration enabled La Quinta stockholders to realize an attractive per share equity value without the market or execution risks associated with continued independence; while

 

    The common stock of CorePoint to be received by La Quinta stockholders in the spin-off would provide such stockholders with the opportunity to continue to participate in any future earnings or growth of La Quinta’s owned real estate business and to benefit from any appreciation in the value of such business, including any appreciation in value that could be realized as a result of improvements to the operations of such business or as a standalone strategic asset after the spin-off.

 

    That, prior to authorizing execution of the merger agreement, the La Quinta Board, with the assistance of management and La Quinta’s financial and legal advisors, had considered alternatives including: continuing to operate La Quinta under its current structure; implementing the spin-off with La Quinta and CorePoint operating as two standalone public companies; and the possibility of strategic transactions involving the entire business or only the management and franchise business with third parties other than Wyndham Worldwide and, in this regard, specifically considered the risks and uncertainties associated with the spin-off and such other alternatives; and the La Quinta Board’s belief that no other alternatives were reasonably likely to create greater certainty of value for La Quinta stockholders than the spin-off and merger, taking into account risk of execution as well as business, competitive, industry and market risk.

 

    The strategic process that La Quinta undertook, with the assistance of its financial advisor, to evaluate its strategic alternatives, during which the Company engaged with 14 parties, none of whom ultimately submitted an offer that set forth an enterprise value of New La Quinta greater than the $1.95 billion proposed by Wyndham Worldwide or merger consideration greater than the $8.40 in cash per share prior to giving effect to the reverse stock split (or $16.80 in cash per share after giving effect to the reverse stock split) to be paid in the proposed merger.

 

    The benefits that we and our advisors were able to obtain during our extensive negotiations with Wyndham Worldwide, including a significant increase in Wyndham Worldwide’s offer price per share and improved terms of the transaction agreements from the beginning of the sale process to the end of the negotiations.

 

    J.P. Morgan’s opinion rendered to the La Quinta Board, dated January 17, 2018, to the effect that, as of the date thereof and based upon and subject to the factors and assumptions set forth in J.P. Morgan’s written opinion, the merger consideration to be paid to the holders of shares of La Quinta common stock in the proposed merger was fair, from a financial point of view, to such holders, as more fully described below under the heading “—Opinion of J.P. Morgan Securities LLC” and as set forth in the full text of such opinion attached to this proxy statement as Annex B.

 

    The business reputation and capabilities of Wyndham Worldwide and its management, including the strength of Wyndham Worldwide’s existing relationships with its franchisees and managed property owners, its procurement relationships and its relationships with online travel agencies, as well as the resulting potential savings to CorePoint and other franchisees, all of which the La Quinta Board believed could contribute positively to the future prospects of CorePoint, which will be owned by the Company’s stockholders following the spin-off that precedes the merger.

 

    La Quinta’s public announcement in January 2017 of its intention to pursue a spin-off, which provided a significant amount of time for any third party wishing to engage in discussions with La Quinta to make its interest known.

 

   

The La Quinta Board’s view that other third parties would be unlikely to be deterred from making a superior proposal by the provisions of the merger agreement, including because the La Quinta Board

 

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may, under certain circumstances and subject to the terms of the merger agreement, furnish information to or enter into discussions with such other third parties in connection with a competing proposal. In this regard, the La Quinta Board considered that:

 

    The La Quinta Board can change its recommendation to La Quinta stockholders with respect to the adoption of the merger agreement prior to the adoption of the merger agreement by the vote of its stockholders and, subject to its compliance with the merger agreement, if it determines in good faith (after consultation with its legal counsel and financial advisor) that, with respect to a superior proposal, the failure to take such action would be reasonably likely to be inconsistent with the La Quinta Board’s fiduciary duties;

 

    The structure of the transaction as a merger should allow sufficient time for a third party to make a superior proposal if it desired to do so; and

 

    While the merger agreement contains a termination fee of $37 million that La Quinta would be required to pay to Wyndham Worldwide if (i) Wyndham Worldwide terminates the merger agreement in connection with an adverse change in the La Quinta Board’s recommendation to stockholders with respect to adoption of the merger agreement, (ii) under specified circumstances, if La Quinta terminates the merger agreement in connection with a superior proposal or (iii) under specified circumstances, if La Quinta enters into a competing proposal within twelve months following a termination of the merger agreement, the La Quinta Board believed that this fee is reasonable in light of the circumstances and the overall terms of the merger agreement, consistent with fees in comparable transactions, and not preclusive of other offers.

 

    The other terms of the merger agreement, including the conditions to the closing of the merger and the consummation of the spin-off, including the La Quinta Board’s belief that while the closing of the merger is subject to certain regulatory approvals, such approvals were not likely to prevent the closing of the merger. In this regard, the La Quinta Board also viewed the termination provisions of the merger agreement to be limited and in furtherance of its objective to achieve as much certainty of closing as was reasonably possible, including:

 

    That the outside date under the merger agreement (which may be extended by La Quinta or Wyndham Worldwide under specified circumstances) on which either party, subject to specified exceptions, can terminate the merger agreement, should provide sufficient time to consummate the transaction;

 

    That the merger agreement does not contain a financing condition with respect to Wyndham Worldwide’s financing and that (i) Wyndham Worldwide and Merger Sub have received commitments for the Wyndham Worldwide financing, including that such parties have delivered an executed debt financing commitment letter to provide the debt portion of the financing from reputable commercial banks and (ii) CorePoint has received commitments for its financing obligations, including that CorePoint has received a debt financing commitment letter to provide the portion of its financing obligations from a reputable commercial bank, in each instance of (i) and (ii), with significant experience in similar lending transactions and reputations for honoring the terms of their commitment letters, which increases the likelihood of such financings being completed;

 

    That the merger agreement permits La Quinta to seek specific performance remedies against Wyndham Worldwide and Merger Sub, including with respect to their obligation to use reasonable best efforts to obtain the debt financing commitments; and

 

    That Wyndham Worldwide agreed to use reasonable best efforts, subject to certain limitations, to take all steps necessary to eliminate any impediment and obtain all consents under regulatory laws in order to obtain regulatory approvals for the merger.

 

    That the merger agreement is subject to adoption by La Quinta stockholders.

 

    That La Quinta stockholders who vote against the merger will have the right to dissent from the merger and to demand appraisal of the fair value of their shares under the DGCL.

 

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    The CorePoint financing commitment and the La Quinta Board’s belief that, after giving effect to the spin-off and the merger, CorePoint would have sufficient capital flexibility to fund its initial operations as a standalone public company.

 

    That the merger agreement was unanimously approved by the La Quinta Board, which is comprised of a majority of independent directors who are not employees of La Quinta or any of its subsidiaries, and which retained and received advice from La Quinta’s outside financial and legal advisors in evaluating, negotiating and recommending the terms of the merger agreement.

The La Quinta Board also considered and balanced against the potential benefits of the merger and the other transactions contemplated by the merger agreement, a number of uncertainties and risks concerning the merger and the other transactions contemplated by the merger agreement, including the following (not necessarily in order of relative importance):

 

    That the spin-off of La Quinta’s real estate assets would be taxable to La Quinta, and that the spin-off and the merger may be taxable to La Quinta stockholders that are treated as U.S. holders for U.S. federal income tax purposes.

 

    That, as New La Quinta will no longer exist as an independent public company and La Quinta stockholders will forgo any future increase in New La Quinta’s value that might result from La Quinta’s earnings or possible growth as an independent company. The La Quinta Board was optimistic about the Company’s prospects on a standalone basis and the Company’s strategic plan following a spin-off, but concluded that the merger consideration constituted fair compensation for the loss of the potential stockholder benefits that could be realized by the Company’s strategic plan, particularly on a risk-adjusted basis.

 

    That it may not be possible to accurately estimate the value of CorePoint common stock in advance of an active trading market for it.

 

    That, under the terms of the merger agreement, La Quinta is unable to solicit other competing proposals during the pendency of the merger.

 

    That, under specified circumstances, La Quinta may be required to pay a termination fee and certain expenses in the event the merger agreement is terminated and the effect this could have on La Quinta, including:

 

    The possibility that the termination fee could discourage other potential parties from making a competing offer; although the La Quinta Board believed that the termination fee was reasonable in amount and would not unduly deter any other party that might be interested in making a competing proposal; and

 

    If the merger is not consummated, La Quinta may be required to pay its own expenses associated with the merger agreement and the transactions contemplated thereby.

 

    The significant costs involved in connection with entering into and completing the merger, the spin-off and the transactions contemplated thereby, and the substantial time and effort of management required to complete the merger, which may disrupt La Quinta’s business operations.

 

    The risk that the announcement and pendency of the merger may cause substantial harm to relationships with our employees, customers and strategic partners, including franchisees and potential franchisees, and may divert management and employee attention away from the day-to-day operation of our business, including the franchise business.

 

    The restrictions on the conduct of our business prior to the completion of the merger, which could delay or prevent us from realizing certain business opportunities or taking certain actions with respect to our operations we would otherwise take absent the pending merger.

 

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    That the merger and the related transactions require regulatory approval to complete such transactions and the risk that the applicable governmental agencies may seek to impose unfavorable terms or conditions, or otherwise fail to grant, such approvals.

 

    The possibility that the merger might not be consummated, including:

 

    That La Quinta stockholders may not approve the transaction;

 

    That, although Wyndham Worldwide must use reasonable best efforts to obtain the Wyndham Worldwide financing and La Quinta must use reasonable best efforts to obtain the CorePoint financing, there is a risk that such financings might not be obtained; and

 

    That, even if the merger agreement is adopted by La Quinta stockholders, there can be no assurance that all other conditions to the parties’ obligations to complete the merger will be satisfied.

 

    That, to the extent the income taxes (as computed on an estimated basis) due with respect to the spin-off and related transactions are greater than the reserve amount provided pursuant to the tax matters agreement, CorePoint will be obligated to pay to La Quinta an amount equal to the difference between such estimated taxes and the reserve amount following the closing of the merger and the spin-off.

 

    That La Quinta’s directors and executive officers may have interests in the merger that may be different from, or in addition to, those of La Quinta stockholders. For more information about such interests, see below under the heading “—Interests of La Quinta’s Executive Officers and Directors in the Merger.”

 

    Risks of the type and nature described under the section titled “Cautionary Statement Regarding Forward-Looking Statements.”

While the La Quinta Board considered potentially positive and potentially negative factors, the La Quinta Board concluded that, overall, the potentially positive factors outweighed the potentially negative factors. Accordingly, the La Quinta Board unanimously determined that the merger agreement and the merger are advisable and fair to, and in the best interests of, La Quinta and its stockholders.

The foregoing discussion is not intended to be an exhaustive list of the information and factors considered by the La Quinta Board in its consideration of the merger, but includes the material positive factors and material negative factors considered by the La Quinta Board in that regard. In view of the number and variety of factors and the amount of information considered, the La Quinta Board did not find it practicable to, and did not make specific assessments of, quantify, or otherwise assign relative weights to, the specific factors considered in reaching its determination. In addition, individual members of the La Quinta Board may have given different weights to different factors. Based on the totality of the information presented, the La Quinta Board collectively reached the unanimous decision to approve and declare advisable the merger agreement and the merger in light of the factors described above and other factors that the members of the La Quinta Board felt were appropriate.

Portions of this explanation of La Quinta’s reasons for the merger and other information presented in this section are forward-looking in nature and, therefore, should be read in light of the section entitled “Cautionary Statement Regarding Forward-Looking Statements.”

Opinion of J.P. Morgan Securities LLC

Pursuant to an engagement letter dated January 18, 2017, the Company retained J.P. Morgan Securities LLC (“J.P. Morgan”) as its financial advisor in connection with the proposed merger and the CorePoint spin-off.

At the meeting of the La Quinta Board on January 17, 2018, J.P. Morgan rendered its oral opinion to the La Quinta Board that, as of such date and based upon and subject to the factors and assumptions set forth in its

 

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opinion, the consideration to be paid to the holders of shares of La Quinta common stock (other than any shares that may be held in the treasury of La Quinta, by Wyndham Worldwide or by any direct or indirect wholly-owned subsidiary of Wyndham Worldwide, and other than shares owned by stockholders who have properly made and not withdrawn a demand for appraisal rights under the DGCL) in the proposed merger was fair, from a financial point of view, to such stockholders. J.P. Morgan has confirmed its January 17, 2018 oral opinion by delivering its written opinion to the La Quinta Board, dated January 17, 2018, that, as of such date, the consideration to be paid to the holders of shares of the Company’s common stock in the proposed merger was fair, from a financial point of view, to such holders.

The full text of the written opinion of J.P. Morgan, which sets forth, among other things, the assumptions made, matters considered and limits on the review undertaken, is attached as Annex B to this proxy statement and is incorporated herein by reference. The Company’s stockholders are urged to read the opinion in its entirety. J.P. Morgan’s written opinion was addressed to the La Quinta Board (in its capacity as such) in connection with and for the purpose of its evaluation of the proposed merger, was directed only to the consideration to be paid in the proposed merger and did not address any other aspect of the proposed merger. J.P. Morgan expressed no opinion as to the fairness of the consideration to the holders of any class of securities, creditors or other constituencies of the Company or as to the underlying decision by Company to engage in the proposed merger or the spin-off. The issuance of J.P. Morgan’s opinion was approved by a fairness committee of J.P. Morgan. The opinion does not constitute a recommendation to any stockholder of the Company as to how such stockholder should vote with respect to the proposed merger or any other matter. The summary of the opinion of J.P. Morgan set forth in this proxy statement is qualified in its entirety by reference to the full text of such opinion.

In arriving at its opinion, J.P. Morgan, among other things:

 

    reviewed the merger agreement, the separation agreement, and a draft dated January 17, 2018 of the tax matters agreement;

 

    reviewed certain publicly available business and financial information concerning La Quinta after giving effect to the CorePoint spin-off (which we sometimes refer to in this section of the proxy statement as “New La Quinta”) and the industries in which it operates;

 

    compared the financial and operating performance of New La Quinta with publicly available information concerning certain other companies J.P. Morgan deemed relevant;

 

    reviewed certain internal financial analyses and forecasts prepared by the management of the Company relating to New La Quinta; and

 

    performed such other financial studies and analyses and considered such other information as J.P. Morgan deemed appropriate for the purposes of its opinion.

In addition, J.P. Morgan held discussions with certain members of the management of the Company with respect to certain aspects of the proposed merger, the past and current business operations of New La Quinta, the financial condition and future prospects and operations of New La Quinta, and certain other matters J.P. Morgan believed necessary or appropriate to its inquiry.

In giving its opinion, J.P. Morgan relied upon and assumed the accuracy and completeness of all information that was publicly available or was furnished to or discussed with J.P. Morgan by the Company or otherwise reviewed by or for J.P. Morgan. J.P. Morgan did not independently verify any such information or its accuracy or completeness and, pursuant to J.P. Morgan’s engagement letter with the Company, J.P. Morgan did not assume any obligation to undertake any such independent verification. J.P. Morgan did not conduct or was not provided with any valuation or appraisal of any assets or liabilities, nor did J.P. Morgan evaluate the solvency of, La Quinta, New La Quinta or Wyndham Worldwide under any state or federal laws relating to bankruptcy, insolvency or similar matters. In relying on financial analyses and forecasts provided to it or derived therefrom,

 

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J.P. Morgan assumed that they were reasonably prepared based on assumptions reflecting the best currently available estimates and judgments by management of the Company as to the expected future results of operations and financial condition of New La Quinta to which such analyses or forecasts relate. J.P. Morgan expressed no view as to such analyses or forecasts or the assumptions on which they were based. J.P. Morgan also assumed that the proposed merger, the spin-off and the other transactions contemplated by the merger agreement will be consummated as described in the merger agreement, the separation agreement and the tax matters agreement, and that the definitive tax matters agreement will not differ in any material respects from the draft thereof provided to J.P. Morgan. J.P. Morgan assumed that the representations and warranties made by the Company, Merger Sub and Wyndham Worldwide in the merger agreement, the separation agreement and the tax matters agreement are and will be true and correct in all respects material to its analysis and that no adjustments, including adjustments as of or after the closing of the proposed merger for the amount of Closing Existing Net Indebtedness (as defined in the separation agreement) will result in any adjustment to the merger consideration that is material to its analysis. In addition, J.P. Morgan expressed no opinion on, and its opinion did not in any manner address the calculation of (i) the Tax Reserve Amount (as defined below) or (ii) the Estimated Existing Net Indebtedness (as defined in the separation agreement). J.P. Morgan is not a legal, regulatory or tax expert and relied on the assessments made by advisors to the Company with respect to such issues. J.P. Morgan further assumed that all material governmental, regulatory or other consents and approvals necessary for the consummation of the proposed merger and the spin-off will be obtained without any adverse effect on New La Quinta or on the contemplated benefits of the proposed merger.

The projections furnished to J.P. Morgan for New La Quinta were prepared by the management of the Company and are herein referred to as the “Company’s projections.” The Company does not publicly disclose internal management projections of the type provided to J.P. Morgan in connection with J.P. Morgan’s analysis of the proposed merger, and the Company’s projections were not prepared with a view toward public disclosure. The Company’s projections were based on numerous variables and assumptions that are inherently uncertain and may be beyond the control of management, including, without limitation, factors related to general economic and competitive conditions and prevailing interest rates. Accordingly, actual results could vary significantly from those set forth in such projections. For more information regarding the use of the Company’s projections, please refer to the section entitled “The Merger Proposal (Proposal 1)—Financial Projections” beginning on page 62.

J.P. Morgan’s opinion was necessarily based on economic, market and other conditions as in effect on, and the information made available to J.P. Morgan as of, the date of such opinion. J.P. Morgan’s opinion noted that subsequent developments may affect J.P. Morgan’s opinion, and that J.P. Morgan does not have any obligation to update, revise, or reaffirm such opinion. J.P. Morgan’s opinion is limited to the fairness, from a financial point of view, of the consideration to be paid to the holders of shares of the La Quinta common stock in the proposed merger, and J.P. Morgan has expressed no opinion as to the fairness of any consideration paid in connection with the proposed merger or the spin-off to the holders of any class of securities, creditors or other constituencies of the Company or as to the underlying decision by the Company to engage in the proposed merger or the spin-off. Furthermore, J.P. Morgan expressed no opinion with respect to the amount or nature of any compensation to any officers, directors, or employees of any party to the proposed merger or the spin-off, or any class of such persons relative to the merger consideration to be paid by Wyndham Worldwide in the proposed merger or the spin-off or with respect to the fairness of any such compensation. J.P. Morgan’s opinion did not in any way address, and it expressed no view as to, the spin-off or any other terms, conditions, implications or other aspects of the separation agreement or the tax matters agreement.

The terms of the merger agreement were determined through arm’s length negotiations between the Company and Wyndham Worldwide, and the decision to enter into the merger agreement was solely that of the La Quinta Board. J.P. Morgan’s opinion and financial analyses were only one of the many factors considered by the La Quinta Board in its evaluation of the proposed merger and should not be viewed as determinative of the views of the La Quinta Board or management with respect to the proposed merger or the consideration to be paid in the proposed merger.

 

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In accordance with customary investment banking practice, J.P. Morgan employed generally accepted valuation methodologies in rendering its opinion to the La Quinta Board on January 17, 2018 and contained in the presentation delivered to the La Quinta Board on such date in connection with the rendering of such opinion, and the summaries contained therein do not purport to be a complete description of the analyses or data presented by J.P. Morgan. Some of the summaries of the financial analyses include information presented in tabular format. The tables are not intended to stand alone, and in order to more fully understand the financial analyses used by J.P. Morgan, the tables must be read together with the full text of each summary. Considering the data set forth below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of J.P. Morgan’s analyses.

Pursuant to the merger agreement, the separation agreement and the tax matters agreement, in connection with the spin-off and the closing of the proposed merger, the Company’s net debt will be repaid (the “Net Debt Repayment”) and Wyndham Worldwide will set aside a reserve for certain estimated taxes expected to be incurred in connection with the spin-off (the “Tax Reserve Amount”). For the purposes of rending its opinion, J.P. Morgan assumed, at the direction of management of the Company, that the amount of the Net Debt Repayment would be $716 million and the Tax Reserve Amount would be $240 million. In performing its analyses and in the summaries of its financial analyses set forth below, J.P. Morgan refers to “per share equity value” which is calculated as the enterprise value of New La Quinta less the Net Debt Repayment and the Tax Reserve Amount, divided by the number of outstanding shares of common stock of the Company, as provided by the management of the Company. J.P. Morgan also refers to “New La Quinta common stock” which for the purposes of the below analyses means the outstanding shares of common stock of La Quinta after giving effect to the CorePoint spin-off.

Public Trading Multiples. Using publicly available information, J.P. Morgan compared selected financial data of New La Quinta with similar data for selected publicly traded companies engaged in businesses which J.P. Morgan judged to be analogous to New La Quinta. The companies selected by J.P. Morgan were:

 

    Choice Hotels International, Inc.

 

    Hilton Worldwide Holdings Inc.

 

    Hyatt Hotels Corporation

 

    InterContinental Hotels Group PLC

 

    Marriott International, Inc.

None of the selected companies reviewed is identical to New La Quinta. Certain of these companies may have characteristics that are materially different from those of New La Quinta. However, the companies were selected, among other reasons, because they are publicly traded companies with operations and businesses that, for purposes of J.P. Morgan’s analysis, may be considered sufficiently similar in certain respects to those of New La Quinta. The analysis necessarily involves complex considerations and judgments concerning differences in financial and operational characteristics of the companies involved and other factors that could affect the companies differently than they would affect New La Quinta.

 

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Using publicly available information, J.P. Morgan calculated, for each selected company, the ratio of enterprise value (calculated as the market value of La Quinta common stock on a fully diluted basis, plus any debt and minority interest, less cash and cash equivalents) as of January 16, 2018 to the consensus equity research analyst estimate for the company’s EBITDA (defined as earnings before interest, taxes, depreciation and amortization) for the fiscal year ended December 31, 2018, adjusted to exclude any stock-based compensation expense, or EV/2018E EBITDA. This analysis indicated the following EV/2018E EBITDA multiples:

 

     EV/2018E
EBITDA
 

Choice Hotels International, Inc.

     15.6x  

Hilton Worldwide Holdings Inc.

     16.0x  

Hyatt Hotels Corporation

     12.9x  

InterContinental Hotels Group PLC

     16.7x  

Marriott International, Inc.

     17.4x  

Based on the results of this analysis and other factors which J.P. Morgan considered appropriate based on its experience and judgment, J.P. Morgan selected a multiple reference range for New La Quinta of 13.0x–16.5x for EV/2018E EBITDA.

After applying this range to New La Quinta’s estimated EBITDA for the fiscal year ended December 31, 2018, based on the Company’s projections, as adjusted to exclude stock-based compensation and amortization of software service agreements in an aggregate amount of $117 million, the analysis indicated the following implied per share equity value ranges for New La Quinta, rounded to the nearest $0.10:

 

     Implied Per Share
Equity Value
 
     Low      High  

EV / adj. 2018E EBITDA

   $ 4.80      $ 8.20  

The range of implied per share equity value was compared to the proposed consideration of $8.40 per share of New La Quinta common stock.

Discounted Cash Flow Analysis. J.P. Morgan conducted a discounted cash flow analysis for the purpose of determining an implied equity value per share of New La Quinta. A discounted cash flow analysis is a method of evaluating an asset using estimates of the future cash flows generated by the asset and taking into consideration the time value of money with respect to those future cash flows by calculating their “present value.” “Present value” refers to the current value of the cash flows generated by the asset, and is obtained by discounting those cash flows back to the present using a discount rate that takes into account macro-economic assumptions and estimates of risk, the opportunity cost of capital and other appropriate factors. “Terminal value” refers to the present value of all future cash flows generated by the asset for periods beyond the projections period.

Based upon the Company’s projections and assumptions provided by the Company’s management, including the unlevered cash flows that New La Quinta is expected to generate during fiscal years 2017 through 2021, J.P. Morgan calculated a range of terminal values of New La Quinta at the end of the projection period ending December 31, 2021 by applying a terminal value growth rate ranging from 3.0% to 3.5% to the unlevered cash flow of New La Quinta during the terminal period, which range was based on discussions with, and reviewed by, La Quinta management. The cash flows and the range of terminal values were then discounted to present values as of December 31, 2017 using a range of discount rates from 7.75% to 8.25%, which range was chosen by J.P. Morgan based upon an analysis of the weighted average cost of capital of New La Quinta, taking into account macro-economic assumptions, estimates of risk, La Quinta’s capital structure and other appropriate factors.

 

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Based on the foregoing, this analysis indicated the following implied per share equity value range for New La Quinta, rounded to the nearest $0.10:

 

     Implied Per Share
Equity Value
 
     Low      High  

Discounted Cash Flow Analysis

   $ 4.70      $ 7.50  

The range of implied per share equity value was compared to the proposed consideration of $8.40 per share of New La Quinta common stock.

Miscellaneous.

The foregoing summary of certain material financial analyses does not purport to be a complete description of the analyses or data presented by J.P. Morgan. The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. J.P. Morgan believes that the foregoing summary and its analyses must be considered as a whole and that selecting portions of the foregoing summary and these analyses, without considering all of its analyses as a whole, could create an incomplete view of the processes underlying the analyses and its opinion. As a result, the ranges of valuations resulting from any particular analysis or combination of analyses described above were merely utilized to create points of reference for analytical purposes and should not be taken to be the view of J.P. Morgan with respect to the actual value of New La Quinta. The order of analyses described does not represent the relative importance or weight given to those analyses by J.P. Morgan. In arriving at its opinion, J.P. Morgan did not attribute any particular weight to any analyses or factors considered by it and did not form an opinion as to whether any individual analysis or factor (positive or negative), considered in isolation, supported or failed to support its opinion. Rather, J.P. Morgan considered the totality of the factors and analyses performed in determining its opinion.

Analyses based upon forecasts of future results are inherently uncertain, as they are subject to numerous factors or events beyond the control of the parties and their advisors. Accordingly, forecasts and analyses used or made by J.P. Morgan are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by those analyses. Moreover, J.P. Morgan’s analyses are not and do not purport to be appraisals or otherwise reflective of the prices at which businesses actually could be acquired or sold. None of the selected companies reviewed as described in the above summary is identical to New La Quinta. However, the companies selected were chosen because they are publicly traded companies with operations and businesses that, for purposes of J.P. Morgan’s analysis, may be considered sufficiently similar in certain respects to those of New La Quinta. The analyses necessarily involve complex considerations and judgments concerning differences in financial and operational characteristics of the companies involved and other factors that could affect the companies compared to New La Quinta.

As a part of its investment banking business, J.P. Morgan and its affiliates are continually engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, investments for passive and control purposes, negotiated underwritings, secondary distributions of listed and unlisted securities, private placements, and valuations for corporate and other purposes. J.P. Morgan was selected to advise the Company with respect to the merger on the basis of, among other things, such experience and its qualifications and reputation in connection with such matters and its familiarity with the Company and the industries in which it operates.

For services rendered in connection with the proposed merger and the spin-off, the Company agreed to pay J.P. Morgan a transaction fee of $33.5 million, of which $3 million became payable by the Company at the time J.P. Morgan delivered its opinion, and the remainder of which is contingent and payable upon the consummation of the proposed merger and the spin-off. J.P. Morgan may also receive a fee from the Company in the event the Company receives a break-up fee in connection with the termination or abandonment of the proposed merger, or

 

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the failure of the proposed merger to occur. In addition, the Company has agreed to reimburse J.P. Morgan for its reasonable expenses incurred in connection with its services, including the reasonable fees and disbursements of counsel, and will indemnify J.P. Morgan against certain liabilities arising out of J.P. Morgan’s engagement. During the two years preceding the date of J.P. Morgan’s opinion, J.P. Morgan and its affiliates have had commercial or investment banking relationships with the Company and Wyndham Worldwide, for which J.P. Morgan and such affiliates have received customary compensation. Such services during such period have included acting as joint lead arranger and joint bookrunner on Wyndham Worldwide’s credit facilities in March 2016 and November 2017 and as joint lead bookrunner on Wyndham Worldwide’s offering of debt securities in March 2017. In connection with the merger and spin-off, CorePoint entered into a commitment letter with J.P. Morgan’s commercial banking affiliate pursuant to which such affiliate committed, subject to customary conditions, to provide CorePoint with $1.085 billion in secured debt financing to facilitate cash payments to be made by CorePoint to the Company. J.P. Morgan expects to receive customary compensation in connection with this financing commitment. See “The Merger Proposal (Proposal 1) — Financing of the Merger” beginning on page 76 for more detail. J.P. Morgan also anticipates that J.P. Morgan and its affiliates may arrange and/or provide financing to Wyndham Worldwide and Wyndham Spinco in connection with the Wyndham Worldwide spin announced in August 2017 for customary compensation. In addition, J.P. Morgan’s commercial banking affiliate is an agent bank and a lender under outstanding credit facilities of an affiliate of the Company and Wyndham Worldwide, for which it receives customary compensation or other financial benefits. In addition, J.P. Morgan and its affiliates hold, on a proprietary basis, less than 1% of the outstanding common stock of each of the Company and Wyndham Worldwide. During the two-year period preceding delivery of its opinion ending on January 17, 2018, the aggregate fees received by J.P. Morgan from the Company were less than $500,000 and from Wyndham Worldwide were approximately $6 million. The commitment fee to be paid by the Company pursuant to the CorePoint commitment letter is approximately $11.35 million. In the ordinary course of their businesses, J.P. Morgan and its affiliates may actively trade the debt and equity securities or financial instruments (including derivatives, bank loans or other obligations) of the Company or Wyndham Worldwide for their own accounts or for the accounts of customers and, accordingly, J.P. Morgan and its affiliates may at any time hold long or short positions in such securities or other financial instruments and in the future may at any time hold long or short positions in such securities or other financial instruments of Wyndham Worldwide, New La Quinta or CorePoint.

Financial Projections

La Quinta does not as a matter of course make public projections as to future performance, earnings or other results and is especially cautious of making financial forecasts for extended periods because of the unpredictability of the underlying assumptions and estimates. Our management has prepared certain non-public, unaudited, stand-alone, financial forecasts regarding New La Quinta’s anticipated future operations following the consummation of the spin-off, which we refer to as “Projections,” described below. Our management provided the Projections to the La Quinta Board for review in connection with the La Quinta Board’s evaluation of the proposed merger, and directed J.P. Morgan, our financial advisor, to use and rely upon the Projections in connection with its financial analyses and opinion to the La Quinta Board as described above under “The Merger Proposal (Proposal 1) — Opinion of J.P. Morgan Securities LLC”. Our management also provided a portion of the Projections to the prospective purchasers, including Wyndham Worldwide, that participated in the Company’s strategic process to explore a potential sale of New La Quinta (the strategic process is described further above under “The Merger Proposal (Proposal 1) – Background of the Merger”). The portion of the Projections provided to the bidders is summarized in the note to the table set forth below.

The Projections were developed for internal use and for our financial advisors, and were not prepared with a view toward public disclosure and do not necessarily comply with published guidelines of the SEC, the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of financial forecasts or U.S. Generally Accepted Accounting Principles (“GAAP”). Our independent registered public accounting firm has not audited, reviewed, compiled or performed any procedures with respect to the Projections, and does not express an opinion or any form of assurance related thereto. The summaries of the Projections are not being included in this proxy statement to influence any La Quinta stockholder’s decision

 

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whether to vote for the merger proposal, but are being included because they were made available to the La Quinta Board and our financial advisors for their respective evaluation of the proposed merger.

The Projections, while presented with numerical specificity, necessarily were based on numerous estimates, variables and assumptions that are inherently uncertain and many of which are beyond our control. Because the Projections cover multiple years, by their nature, they become subject to greater uncertainty with each successive year. The assumptions upon which the Projections were based necessarily involve judgments with respect to, among other things, future economic, competitive and regulatory conditions and financial market conditions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. The Projections also reflect assumptions as to certain business decisions that are subject to change. Furthermore, the Projections do not take into account any circumstances or events occurring after the date they were prepared, including the announcement of the potential acquisition of La Quinta by Wyndham Worldwide pursuant to the merger agreement or our compliance with our covenants under the merger agreement. Important factors that may affect actual results and result in the Projections not being achieved include, but are not limited to, the risk factors described in our annual report on Form 10-K for the fiscal year ended December 31, 2016, subsequent quarterly reports on Form 10-Q and current reports on Form 8-K. In addition, the Projections may be affected by our ability to achieve strategic goals, objectives and targets over the applicable period.

The Projections are forward-looking statements. For information on factors that may cause our future financial results to materially vary, see the section entitled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 29 of this proxy statement.

Accordingly, there can be no assurance that the Projections would be realized following the consummation of the spin-off, and actual results may vary materially from those shown. The inclusion of the Projections in this proxy statement should not be regarded as an indication that we or any of our affiliates, advisors or representatives considered or consider the Projections to be predictive of actual future events, and they should not be relied upon as such. Neither we nor any of our affiliates, advisors, officers, directors or representatives can give any assurance that actual results will not differ from the Projections and none of them undertakes any obligation to update or otherwise revise or reconcile the Projections to reflect circumstances existing after the respective dates on which they were prepared or to reflect the occurrence of future events even in the event that any or all of the assumptions underlying the Projections are shown to be in error. We do not intend to make publicly available any update or other revision to the Projections, except as otherwise required by law. Neither we nor any of our affiliates, advisors, officers, directors or representatives has made or makes any representation to any La Quinta stockholder or other person regarding our ultimate performance compared to the information contained in the Projections or that the Projections will be achieved. We have made no representation to Wyndham Worldwide in the merger agreement or otherwise concerning the accuracy or reliability of the Projections.

The following table is a summary of the Projections:

 

     Historical*      Projected  
     2016      2017E(1)      2018E      2019E      2020E      2021E  
            (In millions)  

Total Fee Revenue

   $ 146      $ 151      $ 154      $ 164      $ 171      $ 182  

EBITDA

   $ 94      $ 96      $ 97      $ 106      $ 111      $ 120  

Adjusted EBITDA**

   $ 112      $ 115      $ 117      $ 126      $ 132      $ 141  

Unlevered Free Cash Flows

   $ 48      $ 50      $ 66      $ 73      $ 77      $ 84  

 

* We have included historical information for comparison purposes.
** Adjusted EBITDA excludes stock-based compensation and amortization of software service agreements.
(1)

La Quinta also provided prospective purchasers, including Wyndham Worldwide, financial projections for 2017. The 2017 financial projections provided to prospective purchasers included Total Fee Revenue ($149 million) and Adjusted EBITDA ($113 million) (the projections provided to prospective purchasers did not

 

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  contain a comparable line item to the EBITDA and Unlevered Free Cash Flow line items set forth in the table above). The immaterial difference between such projections provided to potential purchasers as compared to the Projections set forth in the table above are a result of refinements to the projections made by our management in early 2018 to reflect updated estimates regarding the timing by which a number of the Company’s owned hotels would be back to operating fully following the hurricanes in 2017.

Interests of La Quinta’s Executive Officers and Directors in the Merger

When considering the recommendation of the La Quinta Board that you vote “FOR” the merger proposal, you should be aware that, aside from their interests as La Quinta stockholders, La Quinta’s directors and executive officers have interests in the merger that are different from, or in addition to, the interests of other La Quinta stockholders generally. The La Quinta Board was aware of such interests during its deliberations on the merits of the merger and in deciding to recommend that La Quinta stockholders vote “FOR” the merger proposal at its meeting on January 17, 2018.

With regard to our directors serving on the La Quinta Board, these interests relate to the impact of the transaction on the directors’ outstanding La Quinta equity awards and the provision of indemnification and insurance arrangements pursuant to the merger agreement and La Quinta’s amended and restated certificate of incorporation and amended and restated bylaws, which reflect that such directors may be subject to claims arising from their service on the La Quinta Board.

With regard to our executive officers, these interests relate to the possible receipt of the following types of payments and benefits that may be triggered by or otherwise relate to the merger, assuming the merger occurs on June 1, 2018 and, where applicable, the executive officer’s employment was terminated by us without “cause” or by the executive for “good reason” (each as defined below) on June 1, 2018 (or before the merger if the executive officer’s termination is on or within the six month period prior to June 1, 2018):

 

    accelerated vesting of then-outstanding equity awards;

 

    possible cash severance payments and other termination benefits pursuant to the executive’s employment agreement or the La Quinta Holdings Inc. Executive Severance Plan, as applicable; and

 

    the provision of indemnification and insurance arrangements pursuant to the merger agreement and La Quinta’s amended and restated certificate of incorporation and amended and restated bylaws.

For the avoidance of doubt, our executive officers (including named executive officers) who begin employment with CorePoint prior to the effective time of the merger will not experience, as a result of the merger, a termination by us without “cause” or by the executive for “good reason” so as to trigger the corresponding payments and benefits.

In connection with JPMorgan Chase Bank’s provision of the CorePoint financing pursuant to the CorePoint financing commitments, JPMorgan Chase Bank may, in its sole discretion, agree to enter into certain arrangements with certain affiliates of Blackstone, pursuant to which such affiliates of Blackstone may participate in the CorePoint financing on a non-controlling basis with respect to a portion thereof expected to be no greater than 50% and, in exchange for such participation, may receive from JPMorgan Chase Bank a portion of the fees payable by CorePoint to JPMorgan Chase Bank pursuant to the CorePoint financing commitments. Two directors on the La Quinta Board are current employees of Blackstone (Messrs. Cutaia and Kim), and two directors on the La Quinta Board are former employees of Blackstone (Messrs. Alba and Sumers). While each of these directors disclaims beneficial ownership of the shares of La Quinta common stock beneficially owned by Blackstone or its affiliates, as a result of such potential participation by certain affiliates of Blackstone in the CorePoint financing such directors may have interests in the merger that are different from, or in addition to, the interests of our stockholders generally.

 

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Treatment of Director and Executive Officer Common Stock

As is the case for any stockholder of La Quinta, La Quinta’s directors and executive officers will receive the merger consideration in cash, without interest, for each share of La Quinta common stock that they own at the effective time. For information regarding beneficial ownership of La Quinta common stock by each of La Quinta’s current directors, La Quinta’s named executive officers and all directors and executive officers as a group, see the section entitled “Security Ownership of Certain Beneficial Owners and Management” beginning on page 114.

Treatment of Director and Executive Officer Equity Awards

As described under “The Merger Agreement — Treatment of La Quinta Equity Awards” beginning on page 87, the merger agreement provides that outstanding equity-based awards issued under La Quinta’s equity incentive plans will be treated as set forth below:

Treatment of La Quinta RSAs

Except as otherwise agreed between a holder and Wyndham Worldwide in writing, immediately prior to the effective time of the merger, each then-outstanding La Quinta RSA will, automatically and without any required action on the part of the holder thereof, vest and become free of restrictions as of the effective time of the merger and be cancelled and terminated, and the holder of such La Quinta RSA will have the right to receive from the surviving corporation, in respect of such La Quinta RSA, an amount in cash, less any applicable withholding taxes, equal to the product of (i) the number of shares of La Quinta common stock previously subject to such La Quinta RSA and (ii) the merger consideration.

The table below shows, as of February 20, 2018: (i) for each of the named executive officers, the number of shares of La Quinta common stock underlying such named executive officer’s outstanding La Quinta RSAs and, for illustrative purposes, the expected value such named executive officer would receive in respect of his La Quinta RSAs in connection with the merger, after giving effect to (A) the spin-off; and (B) the reverse stock split; and (ii) for the other executive officers, the aggregate number of shares of La Quinta common stock underlying their outstanding La Quinta RSAs and, for illustrative purposes, the aggregate expected value they would receive in respect of their La Quinta RSAs in connection with the merger, after giving effect to (A) the spin-off and (B) the reverse stock split. These La Quinta RSAs were granted as special retention awards in 2016 and 2017 and as part of La Quinta’s annual long-term incentive compensation plan for 2016 and 2017.

 

Executive Officer

   Shares of La Quinta
Common Stock
Underlying La
Quinta RSAs
(#)
     Value
($)
 

Named Executive Officers

     

Keith A. Cline

     133,826        2,194,746.40  

President and Chief Executive Officer

     

James H. Forson

     39,695        650,998.00  

Executive Vice President, Chief Financial Officer and Treasurer

     

John W. Cantele

     38,974        639,173.60  

Executive Vice President and Chief Operating Officer

     

Rajiv K. Trivedi

     63,288.50        1,037,931.40  

Executive Vice President and Chief Development Officer

     

Mark M. Chloupek

     45,326        743,346.40  

Executive Vice President, Secretary and General Counsel

     

Other Executive Officers

     16,978.50        278,447.40  
  

 

 

    

 

 

 

Total

     338,088        5,544,643.20  
  

 

 

    

 

 

 

 

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Treatment of La Quinta RSUs

Except as otherwise agreed between a holder and Wyndham Worldwide in writing, immediately prior to the effective time of the merger, any vesting conditions applicable to each then-outstanding La Quinta RSU will, automatically and without any required action on the part of the holder thereof, accelerate in full, and such La Quinta RSU will be cancelled and terminated, and the holder will have the right to receive from the surviving corporation, in respect of such La Quinta RSU, an amount in cash, less any applicable withholding taxes, equal to the product of (i) the number of shares of La Quinta common stock previously subject to such La Quinta RSU and (ii) the merger consideration.

The table below shows the outstanding La Quinta RSUs held by our directors as of February 20, 2018 and, for illustrative purposes, the expected value our directors would receive in respect of these La Quinta RSUs in connection with the merger, after giving effect to (i) the spin-off and (ii) the reverse stock split. These La Quinta RSUs were issued as part of the directors’ compensation for their service to La Quinta in 2017.

 

Director

   La Quinta
RSUs
(#)
     Value
($)
     Value of
Dividend
Equivalents
($)
 

James R. Abrahamson

     6,941        113,832.40        —    

Glenn Alba

     1,732.50        28,413.00        —    

Scott Bergren

     7,088.50        116,251.40        —    

Alan J. Bowers

     7,088.50        116,251.40        —    

Henry G. Cisneros

     7,088.50        116,251.40        —    

Giovanni Cutaia

     —          —          —    

Brian Kim

     —          —          —    

Mitesh B. Shah

     10,667        174,938.80        —    

Gary M. Sumers

     7,088.50        116,251.40        —    
  

 

 

    

 

 

    

 

 

 

Total

     47,694.50        782,189.80        —    
  

 

 

    

 

 

    

 

 

 

2018 Retention Plan

To encourage and reward the continued focus and energy of certain employees, including our named executive officers, on making objective business decisions that are in the best interests of the Company and its stockholders as we pursue the consummation of the merger, on January 30, 2018, the Board of Directors adopted and approved the La Quinta Holdings Inc. Project Longhorn Retention Bonus Plan (the “2018 Retention Plan”), effective as of April 18, 2018, which provides for the payment of retention bonus awards to specified eligible employees, including the named executive officers, upon the occurrence of a specified date or event.

Under the 2018 Retention Plan, each retention bonus award is payable on the earliest to occur of the following, subject, in each case, to the relevant participant’s continued employment through such date: (i) October 31, 2018; and (ii) the date of the relevant participant’s termination of employment (x) by the Company without “cause” (as defined in the 2018 Retention Plan) or (y) by the relevant participant for “good reason” (as defined in the 2018 Retention Plan), in each case, at any time on or after April 18, 2018 but prior to October 31, 2018. Any participant in the 2018 Retention Plan (including any named executive officer) who begins employment with CorePoint prior to October 31, 2018 will forfeit the value of his or her retention bonus award under the 2018 Retention Plan. The consummation of the merger will have no effect on the vesting of retention bonus awards granted under the 2018 Retention Plan.

The 2018 Retention Plan provides that if any payments and/or benefits due to a participant (including any named executive officer) under the 2018 Retention Plan and/or any other arrangements will constitute “excess parachute payments” (as defined in Code Section 280G), the Company will reduce the amount of any retention bonus award payable under the 2018 Retention Plan by the minimum amount necessary such that the present

 

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value of the participant’s “parachute payments” (as defined in Code Section 280G) is below 300% of such participant’s base amount” (as defined in Code Section 280G), calculated in accordance with the Treasury Regulations promulgated under Code Section 280G; provided, however, in no event will the amount of any retention bonus award be reduced unless (a) the net after-tax amount of such payments and benefits as so reduced is greater than or equal to (b) the net after-tax amount of such payments and benefits without such reduction (the “280G Best-Net Cutback”).

The table below quantifies such amounts payable with respect to awards under the 2018 Retention Plan, assuming that a merger occurs on June 1, 2018, which was the latest practicable date as of which we could estimate payments in connection with a merger, (i) for each of the named executive officers and (ii) for the other executive officers in the aggregate.

 

Executive Officer

   2018 Retention
Plan Award Payment
($)
 

Named Executive Officers

  

Keith A. Cline(1)

     —    

President and Chief Executive Officer

  

James H. Forson

     300,000  

Executive Vice President, Chief Financial Officer and Treasurer

  

John W. Cantele

     356,250  

Executive Vice President and Chief Operating Officer

  

Rajiv K. Trivedi

     235,000  

Executive Vice President and Chief Development Officer

  

Mark M. Chloupek

     365,000  

Executive Vice President, Secretary and General Counsel

  

Other Executive Officers

     111,500  
  

 

 

 

Total

     1,367,500  
  

 

 

 

 

(1) Participants in the 2018 Retention Plan (including named executive officers) who begin employment with CorePoint prior to October 31, 2018 will forfeit the value of their retention bonus awards under the 2018 Retention Plan. In this regard, as Mr. Cline will become a CorePoint employee prior to the effective time of the merger (i.e. prior to October 31, 2018), it is presumed that he will forfeit the value of his retention bonus award under the 2018 Retention Plan. Mr. Cline was awarded a retention bonus award under the 2018 Retention Plan in the amount of $750,000.

2017 Retention Plan

To encourage and reward the continued focus and energy of certain employees, including our named executive officers, on making objective business decisions that are in the best interests of the Company and its stockholders as we pursue the consummation of the spin-off, on January 17, 2017, the Board of Directors adopted and approved the La Quinta Holdings Inc. Retention Bonus Plan (the “2017 Retention Plan”), which provides for the payment of retention bonus awards to specified eligible employees, including the named executive officers, upon the occurrence of a specified date or event.

Under the 2017 Retention Plan, participants at the level of Executive Vice President or above were granted retention bonus awards payable 50% in cash and 50% in La Quinta RSAs. The cash portion of a retention award is payable, and La Quinta RSAs vest, on the earliest to occur of the following, subject, in each case, to a participant’s continued employment through such date: (i) April 17, 2018; (ii) the date that is six months from the date of the consummation of a significant corporate event (as defined in the 2017 Retention Plan); (iii) the date of the relevant participant’s termination of employment (x) by the Company without “cause” (as defined in the 2017

 

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Retention Plan) at any time following January 17, 2017 or (y) by the participant for “good reason” (as defined in the 2017 Retention Plan) within the six months prior to, or on or following, a significant corporate event; or (iv) the date of a change in control (as defined in the 2017 Retention Plan).

The 2017 Retention Plan contains the same 280G Best-Net Cutback as the 2018 Retention Plan.

Assuming that a merger occurs on June 1, 2018, which is the latest practicable date as of which we could estimate payments in connection with a merger, awards under the 2017 Retention Plan will have already become fully vested and payable and the named executive officers and other executive officers will not receive any payment in connection with a merger other than the merger consideration with respect to the vested shares of La Quinta common stock. The table below shows: (i) for each of the named executive officers, the amount of his retention bonus award amount under the 2017 Retention Plan; and (ii) for the other executive officers, the aggregate amount of their retention bonus award amounts under the 2017 Retention Plan.

 

Executive Officer

   2017 Retention
Plan Award
($)
 

Named Executive Officers

  

Keith A. Cline

     1,875,000  

President and Chief Executive Officer

  

James H. Forson

     750,000  

Executive Vice President, Chief Financial Officer and Treasurer

  

John W. Cantele

     890,625  

Executive Vice President and Chief Operating Officer

  

Rajiv K. Trivedi

     587,500  

Executive Vice President and Chief Development Officer

  

Mark M. Chloupek

     912,500  

Executive Vice President, Secretary and General Counsel

  

Other Executive Officers

     278,750  

Total

     5,294,375  
  

 

 

 

 

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Change in Control Severance Payments and Other Benefits

Each executive officer will receive certain severance payments and other benefits if terminated by us without “cause” or by the executive for “good reason” (each as defined below, and each such termination, a “qualifying termination”) in connection with a change in control (i.e., on or within the six-month period before, or within the two-year period following, a change in control), including the merger. The below payment estimates quantify such severance payments and other benefits, assuming that a merger occurs on June 1, 2018 and taking into account each executive officer’s La Quinta RSA and CorePoint restricted stock award ownership as of February 20, 2018, after giving effect to (i) the spin-off and (ii) the reverse stock split. The amounts quantified below are generally due only upon a qualifying termination in connection with a change in control, except that La Quinta RSAs awarded under La Quinta’s equity plan will fully vest upon a change in control. La Quinta employees (including named executive officers) who begin employment with CorePoint prior to the effective time of the merger will not experience, as a result of the merger, a qualifying termination in connection with the merger. The latest practicable date as of which we could estimate these payments was on June 1, 2018, and the amounts depict a payment scenario in 2018.

 

Executive Officer

   Payment
($)
 

Named Executive Officers

  

Keith A. Cline(1)

     3,633,837  

President and Chief Executive Officer

  

James H. Forson

     4,260,051  

Executive Vice President, Chief Financial Officer and Treasurer

  

John W. Cantele

     4,565,902  

Executive Vice President and Chief Operating Officer

  

Rajiv K. Trivedi

     5,672,290  

Executive Vice President and Chief Development Officer

  

Mark M. Chloupek

     4,055,330  

Executive Vice President, Secretary and General Counsel

  

Other Executive Officers

     3,573,353  
  

 

 

 

Total

     25,760,763  
  

 

 

 

 

(1) As Mr. Cline will become a CorePoint employee prior to the effective time of the merger, he will not undergo a qualifying termination in connection with a change in control and he will not be entitled to severance payments and other benefits pursuant to the Severance Plan (as defined below), nor will his CorePoint restricted stock awards accelerate. The amounts quantified in this chart for Mr. Cline solely reflect the value attributable to the La Quinta RSAs awarded to Mr. Cline under La Quinta’s equity plans, which will fully vest upon the consummation of the merger. If Mr. Cline did not become a CorePoint employee prior to the effective time of the merger and underwent a qualifying termination in connection with a change in control, he would be entitled to severance payments and other benefits pursuant to the Severance Plan in the amount of $5,021,250 and the value of his accelerated CorePoint restricted stock awards would be $5,005,179.

The La Quinta Holdings Inc. Executive Severance Plan

On January 17, 2017, the Board of Directors adopted and approved the La Quinta Holdings Inc. Executive Severance Plan (the “Severance Plan”) for employees of the Company at the level of Vice President and above, including the named executive officers. The Severance Plan provides for payment of severance and other benefits to eligible executive officers, including the named executive officers, in the event of a termination of employment with the Company without “cause” or for “good reason” (each as defined below), or in the event of a termination of employment with the Company as a result of “retirement”, death or “disability” (as such terms are defined in the Severance Plan), in each case, subject to the (i) executive officer’s timely execution and non-revocation of a general release of claims in favor of the Company and (ii) continued compliance with the executive officer’s confidentiality, non-interference and invention assignment obligations to the Company.

 

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In the event of a qualifying termination, in addition to certain accrued obligations, the Severance Plan provides for the following payments and benefits to the named executive officers:

 

    a lump-sum pro-rata annual bonus for the year of termination, determined based on actual performance and pro-rated based on the number of months of the named executive officer’s service up to and including the month of termination;

 

    a lump-sum cash payment equal to the product of (i) the sum of the named executive officer’s (x) annual base salary and (y) target annual bonus (the “cash severance amount”) times (ii) the multiplier applicable to such named executive officer (which is 1.5 for Messrs. Forson, Cantele, Trivedi and Chloupek and 2.0 for Mr. Cline);

 

    continued health insurance coverage at substantially the same level as provided immediately prior to such termination, at the same cost as generally provided to similarly situated active Company employees (the “welfare benefit”), for a period of 18 months for Messrs. Forson, Cantele, Trivedi and Chloupek and 24 months for Mr. Cline; and

 

    payment of, or reimbursement for, up to $10,000 in outplacement services within the three-year period following such termination (the “outplacement benefit”).

Notwithstanding the foregoing, in the event such qualifying termination occurs on or within the six-month period prior to, or within the two-year period following, the first to occur of (i) a change in control and (ii) a significant corporate event (each as defined below), the Severance Plan provides for the following payments and benefits to the named executive officers (in addition to certain accrued obligations):

 

    a lump-sum pro-rata annual bonus for the year of termination, determined based on target performance and pro-rated based on the number of months of the named executive officer’s service up to and including the month of termination;

 

    a lump-sum cash payment equal to the product of (i) the cash severance amount times (ii) the multiplier applicable to such named executive officer (which is 2.0 for Messrs. Forson, Cantele, Trivedi and Chloupek and 3.0 for Mr. Cline);

 

    the welfare benefit for a period of 24 months for Messrs. Forson, Cantele, Trivedi and Chloupek and 36 months for Mr. Cline; and

 

    the outplacement benefit.

Mr. Chloupek’s employment agreement provides that, if, within 12 months after a change in control, Mr. Chloupek’s employment is terminated without “cause” or for “good reason” (each as defined in his employment agreement), he is entitled to severance payments in an amount equal to the product of (i) one and one-half times (ii) the sum of his average (A) annual base salary and (B) incentive compensation, in each case over the three immediately preceding fiscal years, payable over the 18-month period after his date of termination of employment. Additionally, he, his spouse and his eligible dependents are entitled to receive continued healthcare coverage (that is substantially similar to the coverage they received prior to his termination) for one year following such termination.

Mr. Chloupek’s employment agreement provides for reimbursement by us on a “grossed up” basis for all taxes incurred in connection with all payments or benefits provided to him upon a change in control that are determined by us to be subject to the excise tax imposed by Section 4999 of the Code in an amount equal to the lesser of (i) the aggregate amount of all excise tax payments on a “grossed up” basis, or (ii) 1.25 times his then-current annual base salary.

While Mr. Chloupek’s employment agreement contains severance terms applicable to him, if the amount of the above benefits under the Severance Plan is greater than the amount due and payable to Mr. Chloupek under his employment agreement, he will receive such excess amount under the Severance Plan, in addition to receiving the amount due and payable to him under his employment agreement.

 

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In the event of a termination of employment with the Company as a result of the named executive officer’s death or disability, in addition to certain accrued obligations, the Severance Plan provides for the following payments and benefits to the named executive officer: (i) a lump-sum annual bonus for the year of termination, based on target performance; and (ii) solely in the case of the named executive officer’s disability, the welfare benefit for a period of 12 months. In the event of a termination with the Company as a result of the named executive officer’s retirement, in addition to certain accrued obligations, the Severance Plan provides for the payment of a lump-sum pro-rata annual bonus for the year of termination, determined based on actual performance and pro-rated based on the number of months of the named executive officer’s service up to and including the month of the termination.

Certain defined terms of the Severance Plan:

 

    “cause” means (i) “cause” as defined in any employment or consulting agreement between an executive officer and the Company in effect at the time of such termination; or (ii) in the absence of any such employment or consulting agreement (or the absence of any definition of “cause” contained therein), the executive officer’s (A) willful neglect in the performance of the executive officer’s duties for the Company or willful or repeated failure or refusal to perform such duties; (B) engagement in conduct in connection with the executive officer’s employment or service with the Company, which results in, or could reasonably be expected to result in, material harm to the business or reputation of the Company or any of its subsidiaries; (C) conviction of, or plea of guilty or no contest to, (I) any felony; or (II) any other crime that results in, or could reasonably be expected to result in, material harm to the business or reputation of the Company or any of its subsidiaries; (D) material violation of the written policies of the Company, including, but not limited to, those relating to sexual harassment or the disclosure or misuse of confidential information, or those set forth in the manuals or statements of policy of the Company; (E) fraud or misappropriation, embezzlement or misuse of funds or property belonging to the Company or any of its subsidiaries; or (F) act of personal dishonesty that involves personal profit in connection with the executive officer’s employment or service to the Company.

 

   

“change in control” means (i) the acquisition (whether by purchase, merger, consolidation, combination or other similar transaction) by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than 50% (on a fully diluted basis) of either (A) the then outstanding shares of common stock of the Company, taking into account as outstanding for this purpose such common stock issuable upon the exercise of options or warrants, the conversion of convertible stock or debt, and the exercise of any similar right to acquire such common stock; or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors; provided, however, that for purposes of the Severance Plan, the following acquisitions shall not constitute a change in control: (I) any acquisition by the Company or any affiliate, (II) any acquisition by any employee benefit plan sponsored or maintained by the Company or any affiliate, or (III) in respect of any award held by an executive or any group including the executive (or any entity controlled by the executive or any group including the executive); (ii) during any period of 24 months, individuals who, at the beginning of such period, constitute the Board (the “Incumbent Directors”) cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to the date hereof, whose election or nomination for election was approved by a vote of at least two-thirds of the Incumbent Directors then on the Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without written objection to such nomination) shall be an Incumbent Director; provided, however, that no individual initially elected or nominated as a director of the Company as a result of an actual or threatened election contest, as such terms are used in Rule 14a-12 of Regulation 14A promulgated under the Exchange Act, with respect to directors or as a result of any other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the Board shall be deemed to be an Incumbent Director; or (iii) the sale, transfer or other disposition of all or substantially all of the assets of the Company and its subsidiaries (taken as a

 

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whole) to any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) that is not an affiliate of the Company.

 

    “good reason” means, without the executive officer’s consent, (i) a material diminution in the executive officer’s authorities, duties, job responsibilities, status or reporting relationships, (ii) (A) a reduction in base salary or target bonus opportunity, (B) the failure to pay the base salary or the applicable bonus amount when due, or (C) for the two-year period following a “qualifying event” (as such term is defined in the Severance Plan), a reduction in equity compensation opportunity (based on the grant date fair value of such equity compensation, as determined under FASB Accounting Standards Codification Topic 718), (iii) the relocation of the principal place of the executive officer’s employment by more than 50 miles from the executive officer’s principal place of employment, (iv) the material breach of an existing agreement between the Company and the executive officer, or (v) the failure of (A) any purchaser (or an affiliate thereof) in an “asset sale” (as such term is defined in the Severance Plan), or (B) to the extent the employer is no longer the Company or one of its subsidiaries as a result of a significant corporate event, such employer, in either case, by agreement in writing, to expressly, absolutely and unconditionally assume and agree to perform the Severance Plan, in the same manner and to the same extent that the Company would be required to perform the Severance Plan if no such asset sale or significant corporate event, as applicable, had taken place; provided, that any of the events described in clauses (i) – (iv) above shall constitute good reason only if the Company (or applicable employer following a qualifying event) fails to cure such event within 30 days after receipt from the executive officer of written notice of the event which constitutes good reason; and provided further, that the executive officer shall cease to have a right to terminate due to any good reason event on the 90th day following the later of the occurrence of the event or the executive officer’s knowledge thereof, unless the executive officer has given the Company (or applicable employer following a qualifying event) written notice thereof prior to such date.

 

    “significant corporate event” means a reorganization, recapitalization, extraordinary stock dividend, merger, sale, spin-off or other similar transaction or series of transactions, which individually or in the aggregate, has the effect of resulting in the elimination from Company and its subsidiaries of all, or the majority of, either the Company’s operating units or the Company’s real property assets, in either case, so long as such transaction or transactions do not otherwise constitute a change in control.

The Severance Plan contains the same 280G Best-Net Cutback as the 2018 Retention Plan.

For a description of the treatment of the outstanding equity-based awards, see the section entitled “The Merger Proposal (Proposal 1) – Treatment of La Quinta Equity Awards” beginning on page 39.

Directors’ and Officers’ Indemnification and Insurance

From and after the effective time of the merger, Wyndham Worldwide agrees to cause the surviving corporation to indemnify, defend and hold harmless each present and former director, officer and employee of La Quinta (including in their capacity as fiduciary under the La Quinta equity plan) (the “indemnified parties”), against any costs or expenses (including reasonable attorneys’ fees), judgments, fines, losses, claims, damages, liabilities or awards paid in settlement incurred in connection with any actual or threatened proceeding, arising out of, relating to or in connection with matters existing or occurring at or prior to the effective time of the merger (including the fact that such person is or was a director, officer or employee of La Quinta or any acts or omissions occurring or alleged to occur prior to the effective time of the merger), whether asserted or claimed prior to, at or after the effective time of the merger, to the fullest extent permitted under the DGCL, and Wyndham Worldwide or the surviving corporation shall advance expenses (including reasonable legal fees and expenses) incurred in the defense of any proceeding, including any expenses incurred in enforcing such person’s rights, to the same extent as such indemnified parties are entitled to indemnification and advancement of expenses as of the date of the merger agreement under the amended and restated certificate of incorporation or amended and restated bylaws of La Quinta or the certificate of incorporation and bylaws, or equivalent organizational documents, of any of its retained subsidiaries.

 

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La Quinta shall (and, if La Quinta is unable to, Wyndham Worldwide shall cause the surviving corporation as of the effective time of the merger to) purchase and fully pay by the effective time of the merger, at no expense to the beneficiaries, “tail” policies to the current directors’ and officers’ liability insurance policies maintained at such time by La Quinta from an insurance carrier with the same or better credit rating as La Quinta’s current insurance carrier with respect to directors’ and officers’ liability insurance and fiduciary liability insurance, which tail policies (i) will be effective for a period from the effective time of the merger through and including the date six years after the effective time of the merger with respect to claims arising from facts or events that existed or occurred prior to or at the effective time of the merger (including in connection with the merger agreement, the spin-off transaction agreements or the transactions or actions contemplated thereby), and (ii) will contain coverage that is at least as protective to such directors and officers as the coverage provided by such existing policies. Wyndham Worldwide will cause such policies to be maintained in full force and effect for their full term, and cause all obligations thereunder to be honored by the surviving corporation.

The indemnification and insurance provisions of the merger agreement are intended to benefit, and are enforceable by, the indemnified persons and their respective successors, heirs and legal representatives.

Other Interests

As of the date of this proxy statement, other than the arrangements discussed in this proxy statement, none of our executive officers has entered into any agreement with Wyndham Worldwide regarding employment with, or compensation from, the surviving corporation or Wyndham Worldwide on a going-forward basis following the completion of the merger. However, Wyndham Worldwide (or its representatives) and some or all of our executive officers may have discussions from time to time with respect to such arrangements.

Quantification of Potential Merger-Related Payments to Named Executive Officers

The following table, “Golden Parachute Compensation,” along with its footnotes, shows the disclosure required by Item 402(t) of Regulation S-K regarding the amounts of payments and benefits payable to La Quinta’s named executive officers that are based on or otherwise relate to the merger. The amounts detailed below assume that the merger occurs on June 1, 2018 and, where applicable, the named executive officer’s employment was terminated by La Quinta without “cause” or by the named executive officer for “good reason” on June 1, 2018. The table below takes into account each named executive officer’s La Quinta RSA and CorePoint restricted stock ownership as of February 20, after giving effect to (i) the spin-off and (ii) the reverse stock split. The actual amounts payable will depend on the effective time of the merger and the date of such termination, as applicable. More detail on the payments and benefits are set forth above in this section of this proxy statement.

The information contained in the following table and accompanying footnotes are subject to a non-binding, advisory vote of La Quinta stockholders, as described under the section titled “Advisory Vote on Named Executive Officer Merger-Related Compensation Proposal (Proposal 3)” beginning on page 111.

Golden Parachute Compensation

 

Name

   Cash(1)(2)($)      Equity(3)
($)
     Perquisites
/
Benefits(4)
($)
     Tax
Reimbursements
($)(5)
     Other
($)(6)
     Total
($)(7)(8)
 

Keith A. Cline

     —          3,633,837        —          —          —          3,633,837  

James H. Forson

     1,912,500        2,304,187        43,364        —          300,000        4,560,051  

John W. Cantele

     2,227,500        2,290,204        48,198        —          356,250        4,922,152  

Rajiv K. Trivedi

     2,227,500        3,396,592        48,198        —          235,000        5,907,290  

Mark M. Chloupek

     1,800,000        2,213,898        41,432        391,083        365,000        4,811,414  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

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(1) The amounts in this column reflect:

 

  (a) The lump sum pro-rata annual bonus for 2018, based on target performance and pro-rated based on the number of months of the named executive officer’s service up to and including the month of termination, to which the named executive officer would be entitled assuming that the merger occurs on June 1, 2018 and the named executive officer’s employment was terminated in a qualifying termination on that date, as described under “—The La Quinta Holdings Inc. Executive Severance Plan” above. If the named executive officer experiences a qualifying termination on a date on or within the six-month period before, or within the two-year period following, the merger, the named executive officer’s lump-sum target bonus payout would be pro-rated based on the actual date of termination.

 

  (b) The lump-sum cash payment equal to two times the sum of the named executive officer’s annual base salary plus target annual bonus, to which the named executive officer would be entitled assuming that the merger occurs on June 1, 2018 and the named executive officer’s employment was terminated in a qualifying termination on that date, as described under “—The La Quinta Holdings Inc. Executive Severance Plan” above. The allocation of each named executive officer’s lump-sum cash payment is as follows: Mr. Forson: $850,000 for his base salary component and $850,000 for his target annual bonus component; Mr. Cantele: $990,000 for his base salary component and $990,000 for his target annual bonus component; Mr. Trivedi: $990,000 for his base salary component and $990,000 for his target annual bonus component; and Mr. Chloupek: $800,000 for his base salary component and $800,000 for his target annual bonus component.

Participants in the Severance Plan (including named executive officers) who begin employment with CorePoint prior to the effective time of the merger will not receive any amounts or benefits pursuant to the Severance Plan. In this regard, as Mr. Cline will become a CorePoint employee prior to the effective time of the merger, it is presumed that he will receive no amounts or benefits pursuant to the Severance Plan. If Mr. Cline did not become a CorePoint employee prior to the effective time of the merger and underwent a qualifying termination of employment in connection with the merger, he would have received a lump sum cash payment of $386,250 with respect to his pro-rata annual bonus for 2018, $2,317,500 for his base salary component and $2,317,500 for his target annual bonus component pursuant to the Severance Plan. There are no “single trigger” cash severance arrangements under which a named executive officer would receive payments or benefits solely upon a change in control.

(2) The Severance Plan provides that if any payments and/or benefits due to a named executive officer under the Severance Plan and/or any other arrangements will constitute “excess parachute payments” (as defined in Code Section 280G), the Company will reduce any cash severance payable under the Severance Plan by the minimum amount necessary such that the present value of the named executive officer’s “parachute payments” (as defined in Code Section 280G) is below 300% of such named executive officer’s base amount” (as defined in Code Section 280G), calculated in accordance with the Treasury Regulations promulgated under Code Section 280G; provided, however, in no event will payments or benefits be reduced unless (a) the net after-tax amount of such payments and benefits as so reduced is equal to or greater than (b) the net after-tax amount of such payments without such reduction. No named executive officers would be subject to such a cutback.
(3)

The amounts reported in the table for each named executive officer represent the sum of (a) the aggregate dollar value of the outstanding shares of La Quinta common stock underlying the named executive officer’s La Quinta RSAs, which vest upon a change of control under the applicable award agreement, as follows: Mr. Cline: $3,633,837 in respect of LQ RSAs; Mr. Forson: $969,212 in respect of LQ RSAs; Mr. Cantele: $963,331 in respect of LQ RSAs; Mr. Trivedi: $1,428,712 in respect of LQ RSAs; and Mr. Chloupek: $931,234 in respect of LQ RSAs; and (b) the aggregate dollar value of the outstanding shares of CorePoint restricted stock, which vest upon a qualifying termination in connection with the merger, as follows: Mr. Forson: $1,334,975; Mr. Cantele: $1,326,873; Mr. Trivedi: $1,967,880; and Mr. Chloupek: $1,282,664. The value of the LQ RSAs is based on the merger consideration; the value of the shares of CorePoint restricted stock is based on the average closing market price of La Quinta’s common stock over the first five business days following the first public announcement of the merger transaction. Mr. Cline will not experience a qualifying termination in connection with the merger as he will begin employment with CorePoint prior to the

 

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  effective time of the merger, so Mr. Cline’s CorePoint restricted stock (and the CorePoint restricted stock of any other named executive officer who begins employment with CorePoint prior to the effective time of the merger) will not vest as a result of the merger. If Mr. Cline did not begin employment with CorePoint prior to the effective time of the merger and underwent a qualifying termination of employment in connection with the merger, he would have been entitled to receive $5,005,179 in respect of his outstanding shares of CorePoint restricted stock.
(4) The amounts reflected in this column include: (a) as to Mr. Forson, $10,000 for outplacement services within the three-year period following his termination and $33,364 for continuation of health insurance benefits for 24 months following the date of termination; (b) as to Mr. Cantele, $10,000 for outplacement services within the three-year period following his termination and $38,198 for continuation of health insurance benefits for 24 months following the date of termination; (c) as to Mr. Trivedi, $10,000 for outplacement services within the three-year period following his termination and $38,198 for continuation of health insurance benefits for 24 months following the date of termination; and (d) as to Mr. Chloupek, $10,000 for outplacement services within the three-year period following his termination and $31,432 for continuation of health insurance benefits for 24 months following the date of termination. None of these amounts are subject to a single trigger payout.

Upon their covered terminations of employment in connection with a change in control, the named executive officers would each receive continued health insurance coverage at substantially the same level as provided immediately prior to such termination, at the same cost as generally provided to similarly situated active Company employees, for up to 24 months, in the case of Messrs. Forson, Cantele, Trivedi and Chloupek (the figures reflected above account for benefit continuation over such period). We estimated the expenses to determine the value of the health and welfare benefit continuation for purposes of this disclosure based on the expenses associated with coverage in 2017. Participants in the Severance Plan (including named executive officers) who begin employment with CorePoint prior to the effective time of the merger will not receive any amounts or benefits pursuant to the Severance Plan. In this regard, as Mr. Cline will become a CorePoint employee prior to the effective time of the merger, it is presumed that he will receive no amounts or benefits pursuant to the Severance Plan. If Mr. Cline did not begin employment with CorePoint prior to the effective time of the merger and underwent a qualifying termination of employment in connection with the merger, he would have been entitled to receive $10,000 for outplacement services within the three-year period following his termination and $47,418 for continuation of health insurance benefits for 36 months following the date of termination

(5) In the event of a termination in connection with a change in control, Mr. Chloupek’s employment agreement provides for reimbursement by us on a “grossed up” basis for all taxes incurred in connection with all payments or benefits provided to him upon a change in control that are determined by us to be subject to the excise tax imposed by Section 4999 of the Code in an amount equal to the lesser of (i) the aggregate amount of all excise tax payments on a “grossed up” basis, or (ii) 1.25 times his then-current annual base salary. As Mr. Chloupek is expected to be in an excise tax position, the amounts in this column reflect the amounts payable to Mr. Chloupek in respect of his excise tax gross-up payment.
(6)

The amounts in this column reflect the named executive officer’s retention bonus award under the 2018 Retention Plan, which becomes payable upon a termination of employment by us without “cause” or by the participant with “good reason” (as such terms are defined in the 2018 Retention Plan) following April 18, 2018 and prior to October 31, 2018. Any participant in the 2018 Retention Plan (including any named executive officer) who begins employment with CorePoint prior to October 31, 2018 will forfeit the value of his or her retention award under the 2018 Retention Plan. In this regard, as Mr. Cline will become a CorePoint employee prior to the effective time of the merger, it is presumed that he will receive no amounts pursuant to the 2018 Retention Plan. If Mr. Cline did not begin employment with CorePoint prior to the effective time of the merger, he would be entitled to a payment of $750,000 with respect to his 2018 Retention Plan award upon a termination of employment by us without “cause” or by him with “good reason” (as such terms are defined in the 2018 Retention Plan) following April 18, 2018 and prior to October 31, 2018. The amounts in this column do not reflect the payment of the named executive officer’s award under the 2017 Retention Plan as awards under the 2017 Retention Plan will have already become fully vested and payable prior to June 1, 2018 and the named executive officers and other executive officers

 

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  will not receive any payment in connection with the merger other than the merger consideration with respect to the vested shares of La Quinta common stock.
(7) If a named executive officer experiences a qualifying termination on or within the six-month period before, or within the two-year period following, the merger, the named executive officer would receive the same amounts reflected in the “Total” column in the table above, assuming that the named executive officer’s benefit costs and equity award holdings remain the same, except that the amounts relating to his lump-sum pro rata target bonus would be pro-rated based on the actual date of his termination and cash severance would be based on his then-current base salary and target bonus.
(8) Under the Severance Plan, the cash severance amounts would each be paid in a single lump sum within sixty (60) days following the termination and any additional benefits will be paid in accordance with the terms of the applicable plan, program or arrangement. The Company would pay the pro rata amounts for 2018 bonuses concurrently with the cash bonus payments to other similarly-situated employees under the annual bonus program (but in all events prior to March 15 of the calendar year immediately following the calendar year in which such termination occurs).

Financing of the Merger

Wyndham Worldwide Debt Financing

Wyndham Worldwide has obtained binding financing commitments for the transactions contemplated by the merger agreement, the aggregate proceeds of which, together with cash on hand at Wyndham Worldwide, will be used to consummate the merger and the other transactions contemplated by the merger agreement, including the payment of the merger consideration and all related fees and expenses, to repay certain existing indebtedness of La Quinta, and to pay any other amounts required to be paid by Wyndham Worldwide or Merger Sub in connection with the consummation of the transactions contemplated by the merger agreement. The consummation of the merger is not subject to any financing conditions (although funding of the Wyndham Worldwide financing is subject to the satisfaction of customary conditions specified in the binding financing commitments for the financing, as further described below).

On January 17, 2018, Wyndham Worldwide received a binding commitment letter (the “Wyndham Worldwide Commitment Letter”) from Barclays Bank PLC, Deutsche Bank AG Cayman Islands Branch and Deutsche Bank Securities Inc. (collectively, the “Wyndham Worldwide Commitment Parties”) pursuant to which, and subject to the terms and conditions set forth therein, the Wyndham Worldwide Commitment Parties committed to provide a $2,000,000,000 senior unsecured bridge term loan facility (the “Bridge Facility” or the “Wyndham Worldwide Debt Financing”). Wyndham Worldwide expects that some or all of the Bridge Facility will be replaced or refinanced by the issuance of senior unsecured debt securities and/or term loans (collectively, the “Wyndham Worldwide Permanent Financing”).

The Wyndham Worldwide Debt Financing is conditioned on the consummation of the merger in accordance with the merger agreement, as well as other customary conditions, including, but not limited to:

 

    execution and delivery by Wyndham Worldwide and, if applicable, guarantors of definitive documentation;

 

    delivery of certain audited, unaudited and pro forma financial statements;

 

    delivery of customary legal opinions, corporate organizational documents, good standings, resolutions and certificates (including a solvency certificate);

 

    accuracy of certain representations and absence of a material adverse effect on La Quinta since the date of the merger agreement;

 

    payment of all applicable fees and expenses;

 

    receipt of documentation and other information required under applicable “know your customer” and anti-money laundering rules and regulations (including the PATRIOT Act); and

 

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    engagement of one or more investment or commercial banks for the proposed Wyndham Worldwide Permanent Financing (which condition was satisfied as of the date of the Wyndham Worldwide Commitment Letter).

Subject to the terms and conditions in the Wyndham Worldwide Commitment Letter, the interest under the Bridge Facility will be, at the option of Wyndham Worldwide, either at a base rate plus a margin or a LIBOR rate plus a margin, in each case subject to step-downs based on achievement of certain public senior unsecured non-credit enhanced long-term debt ratings. Interest will be payable at the end of the selected interest period but no less frequently than quarterly. The Bridge Facility will mature on the date that is 364 days after the closing date with an election to extend the maturity for an additional 364 days subject to the satisfaction of certain limited conditions. The Bridge Facility will contain certain customary mandatory prepayments with the net cash proceeds of certain non-ordinary course asset sales or other dispositions of property (subject to customary reinvestment rights), certain debt incurrences (other than permitted debt) and certain equity issuances. The Bridge Facility will contain certain customary representations and warranties, affirmative and negative covenants, financial covenants and defaults substantially consistent with those set forth in Wyndham Worldwide’s existing revolving credit agreement dated November 21, 2017 among Wyndham Worldwide, Bank of America, N.A., as administrative agent and the lenders from time to time party thereto. The Bridge Facility will contain a maximum leverage ratio financial covenant and minimum interest coverage ratio financial covenant, in each case tested as of the last day of any fiscal quarter.

CorePoint Debt Financing

In connection with La Quinta’s entry into the merger agreement, CorePoint has obtained binding financing commitments to provide sufficient funds to make a cash payment to La Quinta of $983,950,000, subject to certain adjustments based on the actual amount of net indebtedness of La Quinta (as of immediately prior to the effective time of the distribution) and certain accrued but unpaid expenses incurred in connection with the spin-off and the merger, immediately prior to and as a condition of the spin-off. The consummation of the merger is subject to the consummation of the spin-off. Funding of the CorePoint financing is subject to the satisfaction of customary conditions specified in the binding financing commitments for the financing, as further described below.

On January 17, 2018, CorePoint received a binding commitment letter (the “CorePoint Commitment Letter”) from JPMorgan Chase Bank, N.A. (“JPMorgan Chase Bank”) pursuant to which, and subject to the conditions set forth therein, JPMorgan Chase Bank committed to provide a secured mortgage and, in certain circumstances mezzanine credit facility, in an aggregate principal amount of $1,035,000,000 (the “CMBS Facility”) and a $50,000,0000 secured revolving credit facility (the “CorePoint Revolving Facility” and, together with the CMBS Facility, collectively, the “CorePoint Debt Financing”). References to the “CorePoint Borrower” refer to the applicable borrower or borrowers under the CMBS Facility and/or CorePoint Revolving Facility, as the context may require.

The closing of the CorePoint Debt Financing is not permitted to occur prior to April 2, 2018 and is conditioned on the consummation of the merger in accordance with the merger agreement, as well as other customary conditions, including, but not limited to:

 

    execution and delivery by the CorePoint Borrower of definitive documentation, including the credit agreements, guarantees and security documents;

 

    delivery of certain audited, unaudited and pro forma financial statements;

 

    subject to certain exceptions, no indebtedness shall be outstanding on the closing date;

 

    delivery of customary title reports, organizational charts, environmental reports, material agreements, financial information and certificated ownership interests of the CorePoint Borrower;

 

    delivery of a customary solvency certificate;

 

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    accuracy of certain representations and absence of a material adverse effect on the CorePoint Borrower since the date of the merger agreement;

 

    payment of all applicable fees and expenses;

 

    receipt of documentation and other information required under applicable “know your customer” and anti-money laundering rules and regulations (including the PATRIOT Act);

 

    delivery of life of loan flood zone determinations;

 

    delivery of customary appraisals;

 

    delivery of first lien fee mortgages or leasehold mortgages on identified properties; and

 

    delivery of lender’s title insurance policy, relevant insurance and endorsement policies and customary opinions.

The CMBS Facility will be a $1,035,000,000 mortgage and, in certain circumstances, mezzanine, loan, secured primarily by approximately 315 owned and ground leased hotels and other collateral customary for mortgage and, in certain circumstances, mezzanine financings of this type. The CMBS Facility will have an initial term of two years, with five extension options of twelve months each exercisable at the CorePoint Borrower’s election provided that there is no event of default existing as of the commencement of the applicable extension period and the CorePoint Borrower either extends the current or purchases a new interest rate cap covering the extension period. The CMBS Facility will bear interest at a rate equal to the sum of (i) One-Month LIBOR (rounded to the nearest 1/1000th of a percent) and (ii) 2.75% per annum for the first 5 years of the term, 2.90% for the 6th year of the term and 3.00% for the 7th year of the term. The CMBS Facility will have no amortization payments. The CMBS Facility will be pre-payable in whole or in part subject to payment of (i) in the case of prepayments (other than in certain enumerated cases) made prior to or on the 18th full monthly payment date, a spread maintenance premium and in certain cases third party LIBOR breakage costs, and (ii) all accrued interest through the date of prepayment prior to a securitization and through the end of the applicable accrual period following a securitization. Mandatory prepayments are required in connection with certain casualties or condemnations of a property. Once repaid, no further borrowings will be permitted under the CMBS Facility. CorePoint Operating Partnership L.P. (the “CMBS Guarantor”), a subsidiary of CorePoint, will deliver a customary non-recourse guaranty in connection with the CMBS Facility. Under such guaranty, (i) the CMBS Guarantor will agree to indemnify the lender for certain losses arising out of customary “bad-boy” acts of the CMBS Guarantor and their affiliates, including the CorePoint Borrower; and (ii) the CMBS Facility will become fully recourse to the CMBS Guarantor upon the occurrence of certain bankruptcy events capped at 10% of the then outstanding principal balance of the loan. With respect to environmental matters, the loan will be recourse to the CorePoint Borrower only, provided that the required environmental insurance is delivered to the lender. At closing, the CorePoint Borrower will also be required to deposit with lender up to a maximum of $18,000,000 in upfront reserves for property improvement and immediate repair costs, which funds may be periodically disbursed to the CorePoint Borrower throughout the term of the loan to cover such costs. In addition, revenues to be distributed to the CorePoint Borrower will be required to be deposited first into a segregated account under the control of the CMBS Facility lender (the “Clearing Account”). All cash in the Clearing Account will be transferred to an account under the control of the CorePoint Borrower as long as (i) there is no event of default under the loan or (ii) the debt yield for the CMBS Facility (calculated based on the outstanding principal balance of the CMBS Facility) does not fall below (x) 75% of the debt yield determined as of the closing date for the first five years of the CMBS Facility loan term or (y) 75% of the debt yield determined as of the closing date plus twenty five basis points (0.25%) for the sixth and seventh years of the CMBS Facility loan term, in each case for two consecutive calendar quarters. Upon the occurrence and continuation of either (i) or (ii) above, all cash in the Clearing Accounts will be transferred to an account under the control of the lender to be applied to payment of all monthly amounts due under the CMBS Facility loan documents including, but not limited to, debt service, agent fees and expenses, required ongoing reserves, property operating expenses, sales and use taxes and custodial fees. The remaining funds will be deposited into an excess cash flow account, also under the control of the lender, which funds will be available to the CorePoint Borrower, provided there is no event of default under the loan for payment of, among other things, various operating expenses and dividends, distributions and redemptions

 

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sufficient to maintain certain tax-preferential treatment for CorePoint. The CMBS Facility will include certain customary affirmative and negative covenants and events of default, including, among other things, restrictions on the ability of the CorePoint Borrower to incur additional debt and transfer, pledge or assign certain equity interests or its assets, and covenants requiring the CorePoint Borrower to exist as “special purpose entities,” maintain certain ongoing reserve funds and comply with other customary obligations for commercial mortgage-backed securities loan financings.

The CorePoint Revolving Facility will be in an aggregate amount of $50,000,000, which amount may be increased to up to $100,000,000 if additional lender commitments are received prior to the closing date. The CorePoint Revolving Facility will provide for the ability to further increase the commitments under the CorePoint Revolving Facility after the closing date to an amount not to exceed $150,000,000, subject to the satisfaction of certain conditions. Up to the lesser of (i) $30,000,000 and (ii) 30% of the commitments in effect under the CorePoint Revolving Facility will be available in the form of letters of credit. The interest will be, at the option of the CorePoint Borrower, either at a base rate plus a margin or a LIBOR rate plus a margin. With respect to base rate loans, interest will be payable at the end of each quarter. With respect to LIBOR loans, interest will be payable at the end of the selected interest period but no less frequently than quarterly. Additionally, there is a commitment fee payable at the end of each quarter in respect of unused commitments under the CorePoint Revolving Facility and customary letter of credit fees. The CorePoint Revolving Facility will mature on the date that is two years after the closing date with an election to extend the maturity for one additional year subject to certain conditions, including that the maturity of the CMBS Facility be extended to a date no earlier than the maturity of the CorePoint Revolving Facility. The CorePoint Revolving Facility will contain customary representations and warranties, affirmative and negative covenants and defaults. The CorePoint Revolving Facility will also contain a maximum total net leverage ratio financial covenant and minimum interest coverage ratio financial covenant, in each case, tested as of the last day of any fiscal quarter in which borrowings under the CorePoint Revolving Facility and outstanding letters of credit exceed 10% of the aggregate commitments of the CorePoint Revolving Facility. The CorePoint Borrower’s obligations and any hedging or cash management obligations will be secured by (i) a perfected first-lien pledge of all equity interests in the CorePoint Borrower and all equity interests in certain other loan parties and (ii) a perfected first-priority security interest in the CorePoint Borrower’s deposit account.

Regulatory Clearances and Approvals Required for the Merger

U.S. Antitrust

Under the HSR Act, we cannot complete the merger until we have given notification and furnished information to the FTC and the Antitrust Division of the DOJ, and until the applicable waiting period has expired or has been terminated. On January 31, 2018 La Quinta and Wyndham Worldwide each filed a premerger notification and report form under the HSR Act, as a result of which the applicable waiting period would be expected to expire by March 2, 2018, at 11:59 p.m., Eastern Time, unless otherwise earlier terminated or extended by the antitrust authorities.

General

Under the merger agreement, La Quinta, Wyndham Worldwide and Merger Sub have agreed to use reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable law to complete the merger. Governmental entities with which filings are made may seek commitments or remedies as conditions for granting approval of the merger. Each of Wyndham Worldwide and Merger Sub, on the one hand, and La Quinta, on the other hand, is required to use reasonable best efforts to satisfy the closing conditions relating to required antitrust and regulatory consents, provided, however, that Wyndham Worldwide and Merger Sub shall not be obligated to take any actions, or agree to refrain from taking any actions, that, collectively, would have a material adverse effect on the combined business after giving effect to the transactions contemplated by the merger agreement, and La Quinta shall not be required to take any action which is not conditioned on the closing occurring.

 

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While we have no reason to believe it will not be possible to obtain regulatory approvals in a timely manner and without the imposition of a burdensome condition, there is no certainty that these approvals will be obtained within the period of time contemplated by the merger agreement, if at all, or without the imposition of a burdensome condition.

The approval of any regulatory application or completion of regulatory review merely implies the satisfaction of certain regulatory criteria, which do not include review of the merger from the standpoint of the adequacy of the consideration to be received by La Quinta stockholders. Further, regulatory approvals or reviews do not constitute an endorsement or recommendation of the merger.

Material U.S. Federal Income Tax Consequences of the Merger

As further described in CorePoint’s Form 10 filed with the SEC (File No, 001-38168), for U.S. federal income tax purposes, the spin-off and the merger are expected to be treated as in part a sale, to the extent of the cash received in the merger, and in part a redemption of La Quinta common stock in exchange for the CorePoint shares received in the spin-off, that together result in a complete termination of La Quinta stockholders’ interests in La Quinta in a fully taxable transaction. The exchange of La Quinta common stock for cash in the merger and the exchange of La Quinta common stock for CorePoint shares in the spin-off may also be taxable under state and local and other tax laws. In general, a U.S. holder (as defined in the section entitled “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 117) whose shares of La Quinta common stock are converted into the right to receive cash in the merger will recognize capital gain or loss for U.S. federal income tax purposes in an amount equal to the difference, if any, between the amount of cash received with respect to such shares and the U.S. holder’s adjusted tax basis in such shares (taking into account the reverse stock split implemented as part of the spin-off). For additional information regarding the U.S. federal income tax consequences of the reverse stock split and the spin-off generally, please see CorePoint’s Form 10 filed with the SEC (File No. 001-38168).

You should read the section entitled “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 117 and consult your tax advisors regarding the U.S. federal income tax consequences of the merger to you in your particular circumstances, as well as tax consequences arising under the laws of any state, local or foreign taxing jurisdiction.

Delisting and Deregistration of La Quinta Common Stock

As promptly as practicable following the completion of the merger, the La Quinta common stock currently listed on the NYSE will cease to be listed on the NYSE and will be deregistered under the Exchange Act.

Appraisal Rights

If the merger is completed, La Quinta stockholders will be entitled to appraisal rights under Section 262 of the DGCL, provided that they comply with the conditions and requirements established therein.

Under Section 262 of the DGCL, La Quinta stockholders of record who do not wish to accept the merger consideration provided for in the merger agreement have the right to demand appraisal of their shares of La Quinta common stock and to receive payment in cash of the fair value of their shares of La Quinta common stock as of the effective time of the merger, exclusive of any element of value arising from the accomplishment or expectation of the merger, as determined by the Delaware Court of Chancery, together with interest, if any, to be paid upon the amount determined to be such fair value (or, in certain circumstances described below, on the difference between the amount determined to be the fair value and the amount paid to each stockholder entitled to appraisal prior to the entry of judgment in the appraisal proceeding), provided that they comply with the conditions and requirements established in Section 262 of the DGCL. The “fair value” per share of your shares of La Quinta common stock as determined by the Delaware Court of Chancery in an appraisal proceeding may be more or less than, or the same as, the merger consideration that you are otherwise entitled to receive under the terms of the merger agreement. La Quinta stockholders who do not vote in favor of the merger proposal who

 

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properly demand appraisal for their shares in compliance with the provisions of Section 262 of the DGCL, who do not withdraw such demand or otherwise waive or lose their right to appraisal and who comply with the other requirements to exercise appraisal rights under the DGCL will be entitled to appraisal rights under the DGCL. Strict compliance with the statutory procedures in Section 262 of the DGCL is required. Failure to follow precisely any of the statutory requirements may result in the loss of your appraisal rights.

This section is intended only as a brief summary of certain provisions of the Delaware statutory procedures that a stockholder must follow in order to seek and perfect appraisal rights. We urge you to carefully read the Section 262 of the DGCL, which is attached to this proxy statement as Annex C, in its entirety, for a more complete understanding of the Delaware statutory procedures that a stockholder must follow in order to seek and perfect appraisal rights. The following summary does not constitute any legal or other advice, nor does it constitute a recommendation that stockholders exercise their appraisal rights under Section 262 of the DGCL.

Under Section 262 of the DGCL where a merger agreement is to be submitted for adoption at a meeting of stockholders, La Quinta must notify the stockholders who were stockholders of record on the record date for notice of such meeting with respect to shares for which appraisal rights are available, not less than 20 days before the meeting to vote on the merger, that appraisal rights will be available. A copy of Section 262 of the DGCL must be included with such notice. This proxy statement constitutes La Quinta’s notice to our stockholders that appraisal rights are available in connection with the merger and the full text of Section 262 of the DGCL is attached to this proxy statement as Annex C, in compliance with the requirements of Section 262 of the DGCL. If you wish to consider exercising your appraisal rights, you should carefully review the text of Section 262 of the DGCL contained in Annex C. Failure to comply timely and properly with the requirements of Section 262 of the DGCL may result in the loss of your appraisal rights under the DGCL. Moreover, because of the complexity of the procedures for exercising the right to seek appraisal of shares of La Quinta common stock, La Quinta believes that if a stockholder is considering exercising such rights, such stockholder should seek the advice of legal counsel.

If you wish to demand appraisal of your shares of La Quinta common stock, you must satisfy each of the following conditions:

 

    you must deliver to La Quinta a written demand for appraisal of your shares of La Quinta common stock before the vote is taken to approve the merger proposal, which must reasonably inform us of the identity of the holder of record of shares of La Quinta common stock who intends to demand appraisal of his, her or its shares of La Quinta common stock;

 

    you must not vote or submit a proxy in favor of the merger proposal;

 

    you must hold your shares on the date of making the demand for appraisal and must continuously hold such shares through the effective time of the merger; and

 

    you (or the surviving corporation) must file a petition in the Delaware Court of Chancery requesting a determination of the fair value of the shares of La Quinta common stock within 120 days after the effective time of the merger. The surviving corporation is under no obligation to file any such petition and has no present intention of doing so. Accordingly, it is your obligation to initiate all necessary action to perfect your appraisal rights in respect of your shares of La Quinta common stock within the time prescribed in Section 262 of the DGCL.

If you fail to comply with any of these three conditions and the merger is completed, your shares of La Quinta common stock will be converted into the right to receive payment of  the merger consideration for your shares of La Quinta common stock as provided for in the merger agreement, but you will lose your appraisal rights with respect to your shares of La Quinta common stock.

A holder of shares of La Quinta common stock wishing to exercise appraisal rights must hold of record the shares of La Quinta common stock on the date the written demand for appraisal is made and must continue to hold the shares of La Quinta common stock of record through the effective time of the merger. A proxy that is

 

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submitted and does not contain voting instructions will, unless revoked, be voted “FOR” the merger proposal, and it will result in the loss of the stockholder’s right of appraisal and will nullify any previously delivered written demand for appraisal. Therefore, a stockholder who submits a proxy and who wishes to exercise appraisal rights must either submit a proxy containing instructions to vote “AGAINST” the merger proposal or abstain from voting on the merger proposal. Voting against or failing to vote for the merger proposal by itself does not constitute a demand for appraisal within the meaning of Section 262 of the DGCL. The written demand for appraisal must be in addition to and separate from any proxy or vote on the merger proposal.

All demands for appraisal should be addressed to La Quinta Holdings Inc., Attention: General Counsel, 909 Hidden Ridge, Suite 600, Irving, Texas 75038, and must be delivered before the vote is taken to approve merger proposal at the special meeting, and must be executed by, or on behalf of, the record holder of the shares of La Quinta common stock for which appraisal is demanded. The demand must reasonably inform La Quinta of the identity of the stockholder and the intention of the stockholder to demand appraisal of his, her or its shares of La Quinta common stock in connection with the merger. A stockholder’s failure to deliver to La Quinta the written demand for appraisal prior to the taking of the vote on the merger proposal at the special meeting of stockholders will result in the loss of appraisal rights.

Only a holder of record of shares of La Quinta common stock is entitled to demand an appraisal of the shares registered in that holder’s name. Accordingly, to be effective, a demand for appraisal by a stockholder of La Quinta common stock must be made by, or on behalf of, the record stockholder. The demand should set forth, fully and correctly, the record stockholder’s name as it appears on the stockholder’s stock certificate(s) or in the transfer agent’s records, in the case of uncertificated shares, should specify the stockholder’s mailing address and the number of shares registered in the stockholder’s name. The demand must state that the person intends thereby to demand appraisal of the stockholder’s shares in connection with the merger. The demand cannot be made by the beneficial owner if he or she does not also hold the shares of La Quinta common stock of record. The beneficial holder must, in such cases, have the registered owner, such as a bank, brokerage firm or other nominee, submit the required demand in respect of those shares of La Quinta common stock. If you hold your shares of La Quinta common stock through a bank, brokerage firm or other nominee and you wish to exercise appraisal rights, you should consult with your bank, brokerage firm or the other nominee to determine the appropriate procedures for the making of a demand for appraisal by the nominee and obtaining notice of the effective date of the merger.

If shares of La Quinta common stock are owned of record in a fiduciary capacity, such as by a trustee, guardian or custodian, execution of a demand for appraisal must be made in that capacity. If the shares of La Quinta common stock are owned of record by more than one person, as in a joint tenancy or tenancy in common, the demand must be executed by or for all joint owners. An authorized agent, including an authorized agent for two or more joint owners, may execute the demand for appraisal for a stockholder of record; however, the agent must identify the record owner or owners and expressly disclose the fact that, in executing the demand, he or she is acting as agent for the record owner or owners. A record owner, such as a bank, brokerage firm or other nominee, who holds shares of La Quinta common stock as a nominee for others, may exercise his or her right of appraisal with respect to the shares of La Quinta common stock held for one or more beneficial owners, while not exercising this right for other beneficial owners. In that case, the written demand should state the number of shares of La Quinta common stock as to which appraisal is sought. Where no number of shares of La Quinta common stock is expressly mentioned, the demand will be presumed to cover all shares of La Quinta common stock held in the name of the record owner. If a stockholder holds shares of La Quinta common stock through a broker who in turn holds the shares through a central securities depository nominee such as Cede & Co., a demand for appraisal of such shares must be made by or on behalf of the depository nominee and must identify the depository nominee as record owner.

Within 10 days after the effective time of the merger, the surviving corporation in the merger must give notice of the date that the merger became effective to each of La Quinta’s record stockholders who has demanded appraisal in accordance with Section 262 of the DGCL and who did not vote in favor of the merger proposal. At

 

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any time within 60 days after the effective time of the merger, any stockholder who has not commenced an appraisal proceeding or joined a proceeding as a named party may withdraw the stockholder’s demand and accept the consideration specified by the merger agreement for that stockholder’s shares of La Quinta common stock by delivering to the surviving corporation a written withdrawal of the demand for appraisal. However, any such attempt to withdraw the demand made more than 60 days after the effective time of the merger will require written approval of the surviving corporation. No appraisal proceeding in the Delaware Court of Chancery will be dismissed as to any stockholder without the approval of the Delaware Court of Chancery, with such approval conditioned upon such terms as the Delaware Court of Chancery deems just. If the surviving corporation does not approve a request to withdraw a demand for appraisal when that approval is required, or, if the Delaware Court of Chancery does not approve the dismissal of an appraisal proceeding, the stockholder will be entitled to receive only the appraised value of his, her or its shares of La Quinta common stock determined in any such appraisal proceeding, plus interest, if any, which value could be less than, equal to or more than the consideration offered pursuant to the merger agreement.

Within 120 days after the effective time of the merger, but not thereafter, either the surviving corporation or any stockholder who has complied with the requirements of Section 262 of the DGCL and is entitled to appraisal rights under Section 262 of the DGCL may commence an appraisal proceeding by filing a petition in the Delaware Court of Chancery demanding a determination of the fair value of the shares of La Quinta common stock held by all such stockholders. Upon the filing of the petition by a stockholder, service of a copy of such petition shall be made upon the surviving corporation. The surviving corporation has no obligation to file such a petition, has no present intention to file a petition and holders should not assume that the surviving corporation will file a petition. Accordingly, it is the obligation of the holders of La Quinta common stock to initiate all necessary petitions to perfect their appraisal rights in respect of shares of La Quinta common stock within the time prescribed in Section 262 of the DGCL and the failure of a stockholder to file such a petition within the period specified in Section 262 of the DGCL could nullify the stockholder’s previous written demand for appraisal. In addition, within 120 days after the effective time of the merger, any stockholder who has properly complied with the requirements of Section 262 of the DGCL and who did not vote in favor of the merger proposal, will be entitled to receive from the surviving corporation, upon written request, a statement setting forth the aggregate number of shares of La Quinta common stock not voted in favor of the merger proposal and with respect to which demands for appraisal have been received and the aggregate number of holders of such shares. The statement must be mailed within 10 days after such written request has been received by the surviving corporation or within 10 days after the expiration of the period for delivery of demands for appraisal, whichever is later. A person who is the beneficial owner of shares of La Quinta common stock held either in a voting trust or by a nominee on behalf of such person for which appraisal has been properly demanded may, in such person’s own name, file a petition for appraisal or request from the surviving corporation such statement.

If a petition for appraisal is duly filed by a stockholder and a copy of the petition is delivered to the surviving corporation, then the surviving corporation will be obligated, within 20 days after receiving service of a copy of the petition, to file with the Delaware Register in Chancery a duly verified list containing the names and addresses of all stockholders who have demanded an appraisal of their shares of La Quinta common stock and with whom agreements as to the value of their shares of La Quinta common stock have not been reached. After notice to stockholders who have demanded appraisal from the Register in Chancery, if such notice is ordered by the Delaware Court of Chancery, the Delaware Court of Chancery will conduct a hearing upon the petition and determine those stockholders who have become entitled to the appraisal rights provided by Section 262 of the DGCL. The Delaware Court of Chancery may require stockholders who have demanded appraisal of their shares of La Quinta common stock to submit their stock certificates to the Register in Chancery for notation of the pendency of the appraisal proceedings; and if any stockholder fails to comply with that direction, the Delaware Court of Chancery may dismiss the proceedings as to that stockholder. In addition, the Delaware Court of Chancery will dismiss the proceedings as to all holders of such shares who are otherwise entitled to appraisal rights unless (1) the total number of shares of La Quinta common stock entitled to appraisal exceeds 1% of the outstanding shares of La Quinta common stock, or (2) the value of the consideration provided in the merger for such total number of shares of La Quinta common stock exceeds $1 million.

 

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After determination of the stockholders entitled to appraisal of their shares of La Quinta common stock, the Delaware Court of Chancery will appraise the shares of La Quinta common stock, determining their fair value as of the effective time of the merger after taking into account all relevant factors exclusive of any element of value arising from the accomplishment or expectation of the merger, together with interest, if any, to be paid upon the amount determined to be the fair value (or, in certain circumstances described below, on the difference between the amount determined to be the fair value and the amount paid to each stockholder entitled to appraisal prior to the entry of judgment in the appraisal proceeding). When the fair value has been determined, the Delaware Court of Chancery will direct the payment of such value (with interest, if any), in the case of holders of uncertificated stock forthwith, and in the case of holders of shares represented by certificates upon surrender by those stockholders of the certificates representing their shares of La Quinta common stock. Unless the Delaware Court of Chancery in its discretion determines otherwise for good cause shown, interest from the effective date of the merger through the date of payment of the judgment shall be compounded quarterly and shall accrue at 5% over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the effective time of the merger and the date of payment of the judgment. At any time before the entry of judgment in the proceedings, the surviving company may pay to each stockholder entitled to appraisal an amount in cash, in which case interest shall accrue thereafter as provided herein only upon the sum of (1) the difference, if any, between the amount so paid and the fair value of the shares as determined by the Delaware Court of Chancery, and (2) interest theretofore accrued, unless paid at that time.

You should be aware that an investment banking opinion as to the fairness from a financial point of view of the consideration to be received in a sale transaction, such as the merger, is not an opinion as to fair value under Section 262 of the DGCL. Although we believe that the per share merger consideration is fair, no representation is made as to the outcome of the appraisal of fair value as determined by the Delaware Court of Chancery and stockholders should recognize that such an appraisal could result in a determination of a value higher or lower than, or the same as, the per share merger consideration. Moreover, we do not anticipate offering more than the per share merger consideration to any stockholder exercising appraisal rights and reserve the right to assert, in any appraisal proceeding, that, for purposes of Section 262 of the DGCL, the “fair value” of a share of La Quinta common stock is less than the per share merger consideration. In determining “fair value,” the Delaware Court of Chancery is required to take into account all relevant factors. Section 262 of the DGCL provides that fair value is to be “exclusive of any element of value arising from the accomplishment or expectation of the merger.”

Costs of the appraisal proceeding (which do not include attorneys’ fees or the fees and expenses of experts) may be determined by the Delaware Court of Chancery and imposed upon the surviving corporation and the stockholders participating in the appraisal proceeding by the Delaware Court of Chancery, as it deems equitable in the circumstances. Upon the application of a stockholder, the Delaware Court of Chancery may order all or a portion of the expenses incurred by any stockholder in connection with the appraisal proceeding, including, without limitation, reasonable attorneys’ fees and the fees and expenses of experts used in the appraisal proceeding, to be charged pro rata against the value of all shares of La Quinta common stock entitled to appraisal. Any stockholder who demanded appraisal rights will not, after the effective time of the merger, be entitled to vote shares of La Quinta common stock subject to that demand for any purpose or to receive payments of dividends or any other distribution with respect to those shares of La Quinta common stock, other than with respect to payment as of a record date prior to the effective time of the merger. If no petition for appraisal is filed within 120 days after the effective time of the merger, or if the stockholder otherwise fails to perfect, successfully withdraws or loses such holder’s right to appraisal, then the right of that stockholder to appraisal will cease and that stockholder will be deemed to have been converted at the effective time of the merger into the right to receive the merger consideration (without interest) for his, her or its shares of La Quinta common stock pursuant to the merger agreement.

Failure to comply strictly with all of the procedures set forth in Section 262 of the DGCL may result in the loss of a stockholder’s appraisal rights.

In view of the complexity of Section 262 of the DGCL, La Quinta stockholders who may wish to pursue appraisal rights should consult their legal and financial advisors.

 

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THE MERGER AGREEMENT

The following discussion sets forth the principal terms of the merger agreement. The complete text of the merger agreement is attached to this proxy statement as Annex A and incorporated into this proxy statement by reference. The rights and obligations of the parties are governed by the express terms and conditions of the merger agreement and not by this discussion, which is summary by nature. You are encouraged to read the merger agreement carefully in its entirety, as well as this proxy statement and any documents incorporated by reference herein, before making any decisions regarding the merger. This section is not intended to provide you with any factual information about us. Such information can be found elsewhere in this proxy statement and in the public filings we make with the SEC, as described in the section entitled “Where You Can Find More Information,” beginning on page 122.

The Merger

Subject to the terms and conditions of the merger agreement and in accordance with the DGCL, Merger Sub will merge with and into La Quinta, the separate corporate existence of Merger Sub will cease, and La Quinta will survive the merger as a wholly owned subsidiary of Wyndham Worldwide (the “merger”) following which Wyndham Worldwide will own all of La Quinta’s management and franchise business. Immediately prior to the effective time of the merger, on the closing date of the merger, La Quinta will effect a pro rata distribution to La Quinta’s stockholders of common stock representing a 100% interest in CorePoint, a newly formed company that will become a public company upon the completion of the spin-off and that will own and operate La Quinta real estate assets and certain related assets and liabilities (the “spin-off”).

Closing and Effectiveness of the Merger

The closing of the merger and the spin-off will take place on no later than the fifth business day following the day on which the conditions to its completion have been satisfied or waived (other than those conditions that by their nature are to be satisfied at the closing), or such other time as La Quinta and Wyndham Worldwide may agree, provided that in no event may the closing of the merger occur prior to April 2, 2018, unless Wyndham Worldwide specifies an earlier date on no less than five business days’ written notice.

Reverse Stock Split

In connection with the merger and the spin-off, La Quinta will amend its certificate of incorporation to effect a reclassification and combination of the La Quinta common stock at a ratio of 1-for-2 and to amend the par value of the La Quinta common stock from $0.01 per share to $0.02 per share. Pursuant to the reclassification and par value amendments, immediately prior to the merger, each share of La Quinta common stock (par value $0.01) will be reclassified and combined into one half of a share of La Quinta common stock (par value $0.02).

Merger Consideration

Upon the terms and subject to the conditions of the merger agreement, at the effective time of the merger, La Quinta stockholders will have the right to receive, for each share of La Quinta common stock that they own immediately prior to the effective time of the merger (other than any shares of La Quinta common stock that may be held in the treasury of La Quinta, by Wyndham Worldwide or by any direct or indirect wholly-owned subsidiary of Wyndham Worldwide, and other than shares of La Quinta common stock owned by stockholders who have properly made and not withdrawn a demand for appraisal rights under the DGCL), $8.40 in cash per share prior to giving effect to the reverse stock split (or $16.80 in cash per share after giving effect to the reverse stock split), without interest (the “merger consideration”). Any fractional shares of La Quinta common stock issued and outstanding immediately prior to the effective time of the merger (other than any shares of La Quinta common stock that may be held in the treasury of La Quinta, by Wyndham Worldwide or by any direct or indirect wholly-owned subsidiary of Wyndham Worldwide, and other than shares of La Quinta common stock

 

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owned by stockholders who have properly made and not withdrawn a demand for appraisal rights under the DGCL), including any fractional shares of La Quinta common stock resulting from the reverse stock split, will be converted into the right to receive an amount in cash equal to (i) the fraction representing any such fractional share multiplied by (ii) the merger consideration applicable thereto, payable to the holder thereof, without interest and rounded down to the nearest whole cent, less any applicable withholding of taxes. After the merger is completed, holders of La Quinta common stock will have only the right to receive the merger consideration and will not evidence any interest in, or any right to exercise the rights of a stockholder or other equity holder of, La Quinta or the surviving corporation.

Shares of La Quinta common stock held immediately prior to the effective time of the merger by us as treasury stock or by Wyndham Worldwide or Merger Sub will be cancelled at the effective time of the merger and shares of La Quinta common stock held by stockholders who have properly made and not withdrawn a demand for appraisal rights under the DGCL will instead be entitled to such appraisal rights as provided under the DGCL and described under “The Merger Proposal (Proposal 1) — Appraisal Rights.” Pursuant to the merger agreement, Wyndham Worldwide, Merger Sub, La Quinta and the surviving corporation are entitled to deduct and withhold from any amounts payable or otherwise deliverable pursuant to the merger agreement to any holder or former holder of La Quinta common stock or Company equity awards or any other recipient of consideration pursuant to the merger agreement such amounts as are required to be deducted and withheld therefrom under the Code or the Treasury Regulations thereunder or pursuant to any other law.

The merger consideration received pursuant to the merger agreement will be in addition to the shares of common stock of CorePoint that La Quinta stockholders as of the spin-off record date will be entitled to receive in connection with the spin-off. Immediately after the spin-off, stockholders of La Quinta of record as of the spin-off record date will own 100% of the issued and outstanding shares of common stock of CorePoint. For additional information regarding the spin-off, please see CorePoint’s Form 10 filed with the SEC (File No. 001-38168).

Exchange Procedures

At or prior to the effective time of the merger, Wyndham Worldwide shall deposit (or cause to be deposited) with a paying agent cash in an amount in immediately available funds sufficient to pay the stockholders of La Quinta (other than any shares of La Quinta common stock that may be held in the treasury of La Quinta, by Wyndham Worldwide or by any direct or indirect wholly-owned subsidiary of Wyndham Worldwide, and other than shares of La Quinta common stock owned by stockholders who have properly made and not withdrawn a demand for appraisal rights under the DGCL) the aggregate consideration payable to such holders pursuant to the merger agreement. Promptly after the effective time of the merger (and in any event within two business days thereafter), the surviving corporation shall cause the paying agent to mail to each holder as of the record date whose shares were converted into the right to receive the merger consideration (i) a letter of transmittal (which shall specify that delivery will be effected, and risk of loss and title to the certificate or book-entry shares will pass only upon delivery of the certificates (or affidavits of loss in lieu thereof)) to the paying agent or, in the case of book-entry shares, upon adherence to the procedures set forth in such letter of transmittal, or (ii) instructions for effecting the surrender of the certificates or book-entry La Quinta common stock in exchange for payment of the merger consideration. Upon surrender of a certificate (or affidavit of loss in lieu thereof) or book-entry shares for cancellation to the paying agent, together with such letter of transmittal, properly completed and duly executed in accordance with the instructions thereto, and such other documents as may be required pursuant to such instructions, the holder of such certificate or book-entry share will be entitled to receive in exchange therefor the merger consideration (less any required withholding taxes) for each share of La Quinta common stock formerly represented by such certificate or book-entry share, and the certificate or book-entry share so surrendered will forthwith be cancelled. No interest shall be paid or accrued for the benefit of holders of the certificates or book-entry shares on the merger consideration payable in respect of such certificates or book-entry shares.

 

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Treatment of La Quinta Equity Awards

At the time of the spin-off, then-outstanding La Quinta equity-based awards granted prior to the date of the spin-off will be adjusted into La Quinta equity-based awards and CorePoint equity-based awards, in proportion to the relative value of La Quinta (after giving effect to the spin-off) and CorePoint, and in accordance with the terms of the employee matters agreement. Following the spin-off, all CorePoint equity-based awards will continue to vest in accordance with their terms, based on the respective holders’ continued service with La Quinta or CorePoint, as applicable, and will not vest solely as a result of the merger.

The merger agreement provides that outstanding equity-based awards issued under La Quinta’s equity incentive plans will be treated as set forth below:

La Quinta RSAs. Except as otherwise agreed between a holder and Wyndham Worldwide in writing, immediately prior to the effective time of the merger, each then-outstanding La Quinta RSA will, automatically and without any required action on the part of the holder thereof, vest and become free of restrictions as of the effective time of the merger and be cancelled and terminated, and the holder of such La Quinta RSA shall have the right to receive from the surviving corporation, in respect of such La Quinta RSA an amount in cash, less any applicable withholding taxes, equal to the product of (i) the number of shares of La Quinta common stock previously subject to such La Quinta RSA and (ii) the merger consideration.

La Quinta RSU. Except as otherwise agreed between a holder and Wyndham Worldwide in writing, immediately prior to the effective time of the merger, any vesting conditions applicable to each then-outstanding La Quinta RSU will, automatically and without any required action on the part of the holder thereof, accelerate in full, and such La Quinta RSU will be cancelled and terminated, and the holder shall have the right to receive from the surviving corporation, in respect of such La Quinta RSU, an amount in cash, less any applicable withholding taxes, equal to the product of (i) the number of shares of La Quinta common stock previously subject to such La Quinta RSU award and (ii)  the merger consideration.

Representations and Warranties

The merger agreement contains representations and warranties that we, on the one hand, and Wyndham Worldwide and Merger Sub, on the other hand, have made to one another (in some cases, as of specific dates) relating to our business (with certain limited exceptions, excluding CorePoint, its subsidiaries and assets, and the CorePoint business) and their respective businesses. The assertions embodied in those representations and warranties were made solely for purposes of the merger agreement, and may be subject to important qualifications and limitations agreed to by the parties in connection with negotiating the terms of the merger agreement. Accordingly, La Quinta stockholders should not rely on representations and warranties as characterizations of the actual state of facts or circumstances, and should bear in mind that the representations and warranties were made solely for the benefit of the parties to the merger agreement, were negotiated for purposes of allocating contractual risk among the parties to the merger agreement rather than to establish matters as facts, and may be subject to contractual standards of materiality different from those generally applicable to stockholders. Moreover, information concerning the subject matter of such representations and warranties may change after the date of the merger agreement, which subsequent information may or may not be reflected in our public disclosures. This description of the representations and warranties is included to provide La Quinta stockholders with information regarding the terms of the merger agreement. The representations and warranties in the merger agreement and their description in this proxy statement should be read in conjunction with the other information contained in the reports, statements and filings we publicly file with the SEC.

Our representations and warranties relate to, among other things:

 

    our and our subsidiaries’ due organization, valid existence, good standing, qualification to do business and similar corporate matters;

 

    our organizational documents;

 

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    our and our subsidiaries’ capitalization and capital structure;

 

    our corporate power and authority to enter into and perform our obligations under the merger agreement and certain agreements relating to the spin-off and to complete the merger, and the enforceability and due execution and delivery of the merger agreement and certain agreements relating to the spin-off;

 

    the absence of conflicts with our (and our subsidiaries’) organizational documents, applicable law (assuming that certain regulatory filings are made and certain regulatory consents are obtained) or our and our subsidiaries’ contracts, in each case as a result of the execution, delivery and performance of the merger agreement or certain agreements relating to the spin-off and the consummation of the transactions contemplated thereby, including the spin-off;

 

    the absence of rights of termination, cancellation, amendment or acceleration of, or other material right of a counterparty or any other material liability or obligation of La Quinta or any of its subsidiaries under our and our subsidiaries’ contracts, in each case as a result of the execution, delivery and performance of the merger agreement or certain agreements relating to the spin-off and the consummation of the transactions contemplated thereby, including the spin-off;

 

    consents, approvals, authorizations, permits, actions, filings and notifications required by governmental entities to enter into the merger agreement, perform thereunder and complete the merger and the spin-off;

 

    financial statements and SEC filings, disclosure controls and procedures, and undisclosed liabilities;

 

    our and our subsidiaries’ material contracts;

 

    real property;

 

    intellectual property;

 

    our and our subsidiaries’ compliance with applicable law;

 

    the absence of certain material changes and events since September 30, 2017;

 

    the absence of material suits, claims, actions, litigation or other proceedings pending or threatened against us and our subsidiaries;

 

    our employee benefit plans;

 

    labor and employment matters affecting us and our subsidiaries;

 

    our insurance policies;

 

    certain tax matters;

 

    environmental matters;

 

    affiliate transactions;

 

    this proxy statement and the CorePoint spin-off registration statement;

 

    our receipt of an opinion from J.P. Morgan Securities LLC regarding the fairness, from a financial point of view, to holders of La Quinta common stock of the consideration to be received by such holders pursuant to the merger agreement;

 

    brokers, finders and investment bankers;

 

    the required vote to adopt the merger agreement, the transactions contemplated thereby and the charter amendment proposals;

 

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    the absence of restrictions in any “fair price,” “moratorium,” “control share acquisition” or other similar antitakeover statute or regulation; and

 

    the CorePoint financing.

Some of our representations and warranties are qualified as to materiality or by exceptions related to the absence of a material adverse effect. Under the merger agreement, a “material adverse effect” with respect to La Quinta means any fact, change, effect, event or occurrence that has had, or would reasonably be expected to have, individually or in the aggregate, (a) a material adverse effect on the business, financial condition, assets, operations or results of operations of La Quinta and the retained subsidiaries (excluding CorePoint and its subsidiaries), taken as a whole, or (b) a material adverse effect on the ability of La Quinta to timely perform its obligations under the merger agreement or to timely consummate the transactions contemplated thereby; provided, however, that, for the purposes of clause (a) above, none of the following, and no change, effect, event or occurrence arising out of, or resulting from, any of the following will constitute or be taken into account, individually or in the aggregate, in determining whether a material adverse effect has occurred or may occur:

 

    changes generally affecting the economy, credit or financial or capital markets in the United States or elsewhere in the world, including changes in interest or exchange rates;

 

    changes generally affecting the industries in which La Quinta or any of its subsidiaries operates;

 

    the negotiation, execution, announcement, pendency or performance of the merger agreement, the spin-off transaction agreements or the transactions contemplated hereby or thereby, or the identity of the parties to the merger agreement (including any impact thereof on relationships, contractual or otherwise, with customers, suppliers, distributors, lenders, partners or employees of La Quinta and the retained subsidiaries);

 

    acts of war (whether or not declared) or terrorism (or the escalation or worsening of any of the foregoing), natural disasters or any change in general national or international political or social conditions;

 

    changes or prospective changes in any laws applicable to La Quinta or any other applicable accounting rules, regulations, principles or standards, or any changes or prospective changes in the interpretation of any of the foregoing;

 

    any action taken by the Company or any of its subsidiaries that is specifically required by the merger agreement or at the written request or with the prior written consent of Wyndham Worldwide or Merger Sub, or the failure to take any action by the Company or any of its subsidiaries if that action is prohibited by the merger agreement;

 

    any actions required under the merger agreement to obtain any approval or authorization under applicable antitrust laws for the consummation of the merger;

 

    changes in the market price or trading volume of the shares of La Quinta common stock or any changes or prospective changes in the La Quinta’s credit ratings; or

 

    any failure by La Quinta to meet any internal or analyst projections or forecasts, guidance, estimates, milestones, budgets or internal or published financial or operating predictions of revenues, earnings, cash flow, cash position or other financial metrics for any period;

provided, that the exceptions in the two immediately preceding bullets shall not prevent or otherwise affect a determination that the underlying cause of any such change or failure referred to therein (to the extent not otherwise falling within any of the exceptions provided the first through the sixth bullets above) is, may be, contributed to, or may contribute to a material adverse effect); provided further, that any change, effect, event or occurrence referred to in the first, second and fourth bullets above may be taken into account in determining whether or not there has been or may be a material adverse effect to the extent that such change, effect, event or occurrence is disproportionately adverse to La Quinta and its retained subsidiaries, taken as a whole, as compared

 

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to other participants in the industries in which La Quinta and its retained subsidiaries operate (in which case solely the incremental disproportionate adverse effect may be taken into account in determining whether there has been a material adverse effect). The determination of “material adverse effect” shall in all events not take into account any changes, effects, events and occurrences to extent related to CorePoint, the other separated real estate entities, the separated real estate business, the separated real assets or the separated real liabilities (all of which will be part of CorePoint’s business following the spin-off).

Wyndham Worldwide and Merger Sub also make a number of representations and warranties to us regarding various matters pertinent to the merger and their respective businesses. Such representations and warranties relate to, among other things:

 

    due organization, valid existence, good standing, qualification to do business and similar corporate matters;

 

    corporate power and authority to enter into and perform their respective obligations under the merger agreement and to complete the merger, and the enforceability and due execution and delivery of the merger agreement;

 

    the absence of conflicts with their respective organizational documents or applicable law (assuming that certain regulatory filings are made and certain regulatory consents are obtained), in each case as a result of the execution, delivery and performance of the merger agreement and the consummation of the transactions contemplated thereby;

 

    the absence of conflicts, breaches or violations of or defaults that would result in the loss of a benefit under, give rise to any right of termination, cancellation, amendment or acceleration of, or give rise to any other material right of a counterparty or any other material liability or obligation of Wyndham Worldwide or Merger Sub under any contract to which Wyndham Worldwide or Merger Sub is a party or by which Wyndham Worldwide or Merger Sub or its or any of their respective properties, assets or rights are bound, or of any licenses, in each case as a result of the execution, delivery and performance of the merger agreement and the consummation of the transactions contemplated thereby;

 

    the absence of any proceeding pending or, to the knowledge of Wyndham Worldwide, threatened against Wyndham Worldwide or any of its subsidiaries, or any threatened order, writ, injunction or decree;

 

    information for inclusion or incorporation by reference in this proxy statement;

 

    brokers, finders and investment bankers;

 

    operations of Merger Sub;

 

    the absence of Wyndham Worldwide’s and its affiliates’ beneficial ownership of La Quinta common stock;

 

    the vote or consent of Wyndham Worldwide as sole stockholder of Merger Sub to approve the merger agreement and the transactions contemplated thereby;

 

    contracts, agreements or understandings between or among, Wyndham Worldwide, Merger Sub or any subsidiary of Wyndham Worldwide, on the one hand, and any member of the La Quinta Board or officers or employees of La Quinta or the retained subsidiaries, on the other hand, relating in any way to La Quinta, the transactions contemplated by the merger agreement or the spin-off transaction Agreements or the operations of the Company after the effective time of the merger;

 

    Wyndham Worldwide’s financing; and

 

    La Quinta’s eligible independent contractor status with respect to CorePoint at the effective time of the merger.

Some of Wyndham Worldwide’s and Merger Sub’s representations and warranties are qualified as to materiality or by exceptions related to the absence of any change, effect, event or occurrence which has, or would reasonably be expected to have, a material adverse effect on the ability of Parent or Merger Sub to timely perform their obligations under the merger agreement or to timely consummate the transactions contemplated thereby.

 

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The representations and warranties of each of the parties to the merger agreement will expire upon the completion of the merger or the termination of the merger agreement.

Conduct of Business Pending the Merger

We have agreed to restrictions on the operation of our business until the earlier of the effective time of the merger and the termination of the merger agreement. Such restrictions only apply to CorePoint and its business, assets and liabilities to the extent that any action taken or not taken would reasonably be expected to adversely affect La Quinta (other than CorePoint), La Quinta’s management and franchise business, or Wyndham Worldwide as the owner and operator thereof following the closing in any material respect and, further, such restrictions do not apply with respect to actions expressly contemplated by the merger agreement or the spin-off transaction agreements (including the restructuring transactions set forth in the plan of reorganization related to the spin-off). Subject to the foregoing, in general, we have agreed to conduct our business in all material respects in the ordinary course of business consistent with past practice and use commercially reasonable efforts, and cause our subsidiaries to use their commercially reasonable efforts, to preserve our business organization and maintain existing relations and goodwill with governmental entities, employees, customers, suppliers, franchisees, creditors, lessors and all other persons having material business relationships with La Quinta or any of its retained subsidiaries. In addition, we have agreed that, subject to specified exceptions or as required by law, neither we nor our subsidiaries will, during the period from the date of the merger agreement to the earlier of the date of the effective time of the merger and the termination of the merger agreement, without the prior written consent of Wyndham Worldwide (which consent will not be unreasonably withheld, conditioned or delayed):

 

    amend or otherwise change our certificate of incorporation or bylaws or any similar governing instruments;

 

    issue, deliver, sell, pledge, dispose of or encumber any of our securities or other rights of any kind to acquire or receive any of our securities or capital stock or other equity interests of any of our subsidiaries, except for (i) the issuance of shares of La Quinta common stock upon the settlement of La Quinta equity awards outstanding as of the date of the merger agreement, in accordance with their terms as in effect on the date of the merger agreement, and (ii) the issuance of shares of La Quinta common stock pursuant to the existing terms of the ESPP;

 

    declare, set aside, make or pay any dividend or other distribution, with respect to any of our capital stock (except by one of our retained subsidiaries to La Quinta or another retained subsidiary);

 

    adjust, recapitalize, reclassify, combine, split, subdivide, redeem, purchase or otherwise acquire any shares of capital stock or other securities or equity interests of La Quinta, other than the acquisition of shares of La Quinta common stock from current or former directors, employees, employees or independent contractors upon the vesting of La Quinta equity awards outstanding as of the date of the merger agreement in order to pay taxes due in connection with the vesting of La Quinta equity awards outstanding as of the date of the Agreement or pursuant to the ESPP;

 

    incur, or modify in any material respect the terms of, any indebtedness of La Quinta or any of its retained subsidiaries, issue any debt securities or any right to acquire any debt securities, assume, guarantee or endorse, or otherwise as an accommodation become responsible for, any indebtedness of any other person, or make any loans, advances or capital contributions to, or investments in, any other person, other than (i) in the ordinary course of business consistent with past practice, including under La Quinta’s credit agreement and not to exceed $30,000,000 in the aggregate, (ii) by La Quinta of indebtedness of the retained subsidiaries or by the retained subsidiaries of indebtedness of La Quinta, or (iii) any letters of credit entered into in the ordinary course of business consistent with past practice not to exceed $5,000,000 in the aggregate;

 

   

except as required by the terms of any La Quinta employee benefit plan as in effect on, and provided to Wyndham Worldwide prior to, the date of the merger agreement or as required by

 

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applicable laws, (i) grant or increase or agree to increase, in any material respect, compensation, severance, perquisites or other benefits, whether or not in cash, to current or former directors, officers or employees of La Quinta or any of its retained subsidiaries with annual base compensation in excess of $150,000, (ii) enter into, establish, adopt, amend or terminate any La Quinta employee benefit plan (including any plan, program or arrangement that would be a La Quinta employee benefit plan if in effect on the date hereof), (iii) take any action to accelerate the vesting, payment or funding of compensation or benefits or (iv) hire (other than to fill vacant positions, in which case the compensation for such employee will not materially exceed that of the previous employee to occupy such position) or terminate (other than for “cause”) any employee with annual compensation in excess of $200,000;

 

    modify, amend or terminate, or waive any material rights under any material contract, or enter into any new contract which would have been a material contract if entered into prior to the effective date of the merger agreement, in each case other than in the ordinary course of business consistent with past practice;

 

    acquire any person or business with a value exceeding $10,000,000 in the aggregate, except in connection with any transaction among La Quinta and its wholly owned subsidiaries or among La Quinta’s wholly owned subsidiaries;

 

    make any material change to the terms of La Quinta’s or its subsidiaries’ policies or procedures with respect to its relationship with any of its current or prospective franchisees, including any material change to the terms of policies relating to royalties, brand marketing fees or reservations fees or any new material program or plan, or any material modification to any existing program or plan providing any franchisee incentives or franchisee economic assistance;

 

    adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of La Quinta, other than as expressly contemplated by the merger agreement and the spin-off transaction agreements, or enter into any joint venture, strategic alliance, collaboration, material co-promotion, material co-marketing or similar partnerships;

 

    authorize, make or incur any material capital expenditures;

 

    sell, lease, permit to lapse or become abandoned (other than the expiration of intellectual property in accordance with its maximum statutory term), license, transfer, or otherwise dispose of or encumber any material intellectual property or any other properties or assets with a value in excess of $5,000,000 in the aggregate; or disclose any material trade secrets (other than in the ordinary course of business consistent with past practice and subject to confidentiality restrictions);

 

    make any material change in any accounting principles (except as may be appropriate to conform to changes in statutory or regulatory accounting rules or GAAP or regulatory requirements with respect thereto) or delay or postpone the payment of payables and other liabilities or accelerate the collection of receivables;

 

    compromise, settle or agree to settle any material legal proceedings, other than compromises, settlements or agreements that relate to the merger agreement or in which the amount to be paid does not exceed $1,000,000 individually or $5,000,000 in the aggregate and that do not involve admission of wrongdoing or equitable relief;

 

    other than as required by law, enter into any labor or collective bargaining agreement with any labor organization or other representative of any La Quinta employees;

 

   

other than as required by law: make or change any material tax election of La Quinta or its retained subsidiaries; settle or compromise any material tax liability of La Quinta or any of its retained subsidiaries or settle or compromise any tax liability that could have a material effect on

 

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La Quinta or its retained subsidiaries in future taxable years; make any material change in any method of tax accounting; file any material amendment to a material tax return; or waive or extend any statute of limitations in respect of any material taxes except as required by law;

 

    enter into any new line of business outside of the management and franchise business; or

 

    agree, authorize, resolve or commit to take any of the actions described above.

Restrictions on Solicitation of Acquisition Proposals

Non-Solicitation Provisions and Exceptions

From the date of the merger agreement until the earlier of the effective time of the merger and the termination of the merger agreement, we are subject to restrictions on our ability to initiate, solicit or knowingly facilitate third party proposals relating to alternative transactions or to provide information to and engage in discussions or negotiations with a third party in relation to an alternative transaction (subject to certain exceptions prior to the approval of the merger proposal by La Quinta stockholders at the special meeting described further in this proxy statement). Specifically, La Quinta shall not, nor will it authorize or permit any of its subsidiaries, directors, officers, or employees to, and the Company shall not permit its representatives to:

 

    initiate, solicit or knowingly facilitate or encourage any inquiries with respect to, or the making of, any acquisition proposal (as defined below);

 

    engage in any negotiations or discussions concerning, or provide access to its or its subsidiaries’ properties, books and records or any confidential information or data to, any person relating to an acquisition proposal or any proposal, offer or inquiry that would reasonably be expected to lead to, an acquisition proposal;

 

    amend or grant any waiver or release under or fail to enforce any standstill or similar agreement;

 

    approve, endorse or recommend, or propose publicly to approve, endorse or recommend, any acquisition proposal; or

 

    execute or enter into, any letter of intent, merger agreement, acquisition agreement or other agreement relating to any acquisition proposal (other than an acceptable confidentiality agreement).

Notwithstanding the foregoing, nothing in the provisions of the merger agreement relating to acquisition proposals prevents us from:

 

    taking and disclosing a position contemplated by Rule 14d-9 or Rule 14e-2(a) under the Exchange Act (or any similar communication to stockholders in connection with the making or amendment of a tender offer or exchange offer), making any “stop-look-and-listen” communication to our stockholders pursuant to Rule 14d-9(f) under the Exchange Act or making any legally required disclosure to our stockholders with regard to an acquisition proposal;

 

    prior to obtaining our stockholders’ approval of the merger proposal and our stockholders’ approval of the charter amendment proposals, contacting and engaging in discussions with any person or group and their respective representatives who has made an unsolicited acquisition proposal after the date of the merger agreement, solely for the purpose of clarifying such acquisition proposal and the terms thereof;

 

   

prior to obtaining our stockholders’ approval of the merger proposal and our stockholders’ approval of the charter amendment proposals, providing access to our properties, books and records and providing information or data in response to a request therefor by a person or group who has made an acquisition proposal after the date of the merger agreement that was not solicited in breach of the foregoing paragraph and bullets related thereto, if the La Quinta Board shall have

 

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determined in good faith, after consultation with its legal counsel and financial advisor, that such acquisition proposal constitutes or would reasonably be expected to constitute, result in or lead to a superior proposal (as defined below), we have received from the person so requesting such information an executed confidentiality agreement on terms no less favorable in the aggregate to us to those contained in the confidentiality agreement between us and Wyndham Worldwide (such confidentiality agreement need not prohibit the making or amendment of an acquisition proposal and may not include any provision calling for an exclusive right to negotiate with us or any other provision that would restrict the Company from complying with our non-solicitation obligations under the merger agreement), and promptly (and in any event within 24 hours) after furnishing or making available any such non-public information, we furnish or make available such information to Wyndham Worldwide or its representatives;

 

    prior to obtaining our stockholder’s approval of the merger proposal and of the charter amendment proposals, contacting and engaging in any negotiations or discussions with any person or group and their respective representatives who has made an unsolicited acquisition proposal after the date of the merger agreement (which negotiations or discussions need not be solely for clarification purposes) if the La Quinta Board shall have determined in good faith, after consultation with its legal counsel and financial advisor, that such acquisition proposal constitutes or would reasonably be expected to constitute, result in or lead to a superior proposal; or

 

    prior to obtaining our stockholders’ approval of the merger proposal, making a change of board recommendation in accordance with the merger agreement, as further described below.

Pursuant to the merger agreement, we and our subsidiaries and representatives immediately ceased any solicitations, discussions or negotiations with any person (other than Wyndham Worldwide and Merger Sub) in connection with an acquisition proposal, in each case that existed as of the date of the merger agreement. We also promptly requested each person (other than Wyndham Worldwide and Merger Sub) that prior to the date of the merger agreement executed a confidentiality agreement in connection with its consideration of an acquisition proposal to return or destroy all confidential information furnished to such person prior to the date of the merger agreement.

We will promptly (but in no event later than 48 hours after receipt thereof) notify Wyndham Worldwide in writing of the receipt of any acquisition proposal or any proposal, offer or inquiry that could reasonably be expected to lead to an acquisition proposal after the date hereof, which notice will include a summary of the material terms of and the identity of the person or group making such acquisition proposal, other proposal, offer or inquiry and we will thereafter keep Wyndham Worldwide reasonably informed in all material respects on a reasonably current basis of any substantive developments (including any material change to the terms thereof) regarding any such acquisition proposal and will promptly (but in no event later than 48 hours after receipt) provide to Wyndham Worldwide copies of all substantive written requests, proposals, offers or proposed agreements received by us or any of our subsidiaries that describe any terms or conditions of any such acquisition proposal.

However, we may grant a waiver, amendment or release under any confidentiality or standstill agreement to the extent necessary to allow for a confidential acquisition proposal to be made to us or the La Quinta Board if the La Quinta Board determines after consultation with legal counsel that the failure to waive or release such provision would be reasonably likely to be inconsistent with its fiduciary duties under applicable law.

La Quinta Board Recommendation and Change of Recommendation

Under the terms of the merger agreement, subject to certain exceptions, the La Quinta Board has agreed to recommend that La Quinta stockholders vote in favor of the merger proposal. Under the merger agreement, a “change of recommendation” of the La Quinta Board has occurred if the La Quinta Board directly or indirectly

 

    fails to include such recommendation in this proxy statement,

 

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    approves, endorses or recommends, or proposes publicly to approve, endorse or recommend, any acquisition proposal,

 

    withholds or withdraws (or modifies in a manner adverse to Wyndham Worldwide) or formally resolves to announces an intention to withhold or withdraw (or modify in a manner adverse to Wyndham Worldwide), such recommendation,

 

    following the date on which any acquisition proposal made after the date of the merger agreement, or any material modification to such proposal, is publicly disclosed, fails to issue a press release that reaffirms such recommendation within five business days following our receipt of Wyndham Worldwide’s written request to do so (which request may only be made once with respect to any such acquisition proposal and each material modification thereto),

 

    fails to recommend against any acquisition proposal that is a tender or exchange offer within ten business days after the commencement (within the meaning of Rule 14d-2 under the Exchange Act) of such tender or exchange offer or

 

    resolves, agrees or publicly does any of the foregoing.

The La Quinta Board may effect a change of recommendation in connection with a superior proposal or an intervening event, subject to specified terms as further described below.

If, at any time prior to obtaining our stockholders’ approval of the merger proposal, the La Quinta Board determines in good faith, after consultation with its legal counsel and financial advisor, in response to an acquisition proposal received after the date of the merger agreement that did not result from a material breach of the obligations described above under the heading “Restrictions on Solicitation of Acquisition Proposals”, that such acquisition proposal constitutes a superior proposal, we or the La Quinta Board may make a change of board recommendation or terminate the merger agreement to enter into a definitive agreement with respect to such superior proposal, provided that we:

 

    have delivered to Wyndham Worldwide a written notice advising Wyndham Worldwide that the La Quinta Board proposes to take such action and containing the material terms and conditions of the superior proposal that is the basis of the proposed action by the La Quinta Board and all material documents relating thereto;

 

    in the event of any material revisions to the acquisition proposal that the La Quinta Board has determined to be a superior proposal, we deliver a new written notice to Wyndham Worldwide (the notice period described below with respect to such material revisions will expire at 5:00 pm New York City time on the second business day immediately following the day on which we delivered such new written notice);

 

    the La Quinta Board shall have determined in good faith, after consultation with legal counsel, that failure to effect a change of board recommendation or terminate the merger agreement to enter into a superior proposal, as applicable, would be reasonably likely to be inconsistent with the La Quinta Board’s fiduciary duties under applicable law;

 

   

(A) the La Quinta Board shall have considered in good faith any proposed changes to the merger agreement proposed in writing by Wyndham Worldwide no later than 5:00 p.m., New York City time, on the third business day immediately following the day on which we delivered the notice described in the first bullet (or the second business day immediately following the day on which we delivered the notice described in the second bullet), and the La Quinta Board, taking into account any proposed changes to the merger agreement during such three business day period, shall have again made the determination in good faith, after consultation with legal counsel, that failure to effect a change of board recommendation or terminate the merger agreement to enter into a superior proposal, as applicable, would be reasonably likely to be inconsistent with the La Quinta Board’s fiduciary duties under applicable law and (B) in the case of any termination of the

 

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merger agreement in order to cause or permit La Quinta or any of its subsidiaries to enter into an acquisition agreement relating to a superior proposal, we shall have complied in all material respects with our obligations described above under the heading “Restrictions on Solicitation of Acquisition Proposals” and our obligations described under the heading “La Quinta Board Recommendation and Change of Recommendation” and, concurrently with such termination or prior thereto, we shall have paid the termination fee described below in accordance with the merger agreement; and

 

    if requested by Wyndham Worldwide, we shall have engaged, and shall have caused our representatives to engage, in good faith negotiations with Wyndham Worldwide and its representatives during such two or three business day period (as applicable) to make such adjustments proposed by Wyndham Worldwide to the terms and conditions of the merger agreement so that such acquisition proposal would cease to constitute a superior proposal.

The La Quinta Board may at any time prior to obtaining our stockholders’ approval of the merger agreement, directly or indirectly, (i) fail to include its recommendation in this proxy statement, or (ii) withhold or withdraw (or modify in a manner adverse to Wyndham Worldwide) or formally resolve to effect or publicly announce an intention to withhold or withdraw (or modify in a manner adverse to Wyndham Worldwide), its recommendation (and we shall not be required to include such recommendation in this proxy statement) in response to an intervening event (as defined below) if the La Quinta Board shall have determined in good faith, after consultation with its legal counsel, that the failure to take such action would be reasonably likely to be inconsistent with the La Quinta Board’s fiduciary duties under applicable law, provided, that:

 

    we have notified Wyndham Worldwide in writing at least three business days before taking such action of the La Quinta Board’s intention to do so, attaching a reasonably detailed description of the basis of such proposed action; and

 

    after such three business day period, the La Quinta Board shall have determined in good faith, after consultation with its legal counsel, and taking into account any proposal by Wyndham Worldwide to amend the terms of the merger agreement made during such period, that the failure to take such action would still be reasonably likely to be inconsistent with its fiduciary duties under applicable law.

If requested by Wyndham Worldwide, we will engage, and will cause our representatives to engage, during such three business day period, in good faith negotiations with Wyndham Worldwide and its representatives to make such adjustments in the terms and conditions of the merger agreement so that such intervening event would cease to warrant a change of board recommendation.

Certain Definitions

In this proxy statement, an “acquisition proposal” refers to any proposal or offer from any person or group of persons (other than Wyndham Worldwide or Merger Sub) with respect to (a) any direct or indirect acquisition, by a person or group of persons in a single transaction or series of related transactions, of (i) twenty percent or more of (x) the assets of La Quinta and its subsidiaries, including CorePoint (including the capital stock of the subsidiaries) taken as a whole or (y) the retained assets of La Quinta, excluding CorePoint (including the capital stock of the retained subsidiaries) taken as a whole or (ii) shares or other equity securities (including securities exercisable, convertible, redeemable or exchange for shares) of La Quinta which, together with any other shares or other equity securities of La Quinta beneficially owned by such person or group, would equal twenty percent or more of the aggregate voting power of La Quinta, (b) any tender offer or exchange offer that, if consummated, would result in any person or group owning, directly or indirectly, twenty percent or more of the aggregate voting power of La Quinta, or (c) any merger, consolidation, business combination, binding share exchange or similar transaction involving La Quinta pursuant to which any person or group (or the shareholder of any person) would own, directly or indirectly, twenty percent or more of the aggregate voting power of La Quinta or of the

 

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surviving entity in a merger or the resulting direct or indirect parent of La Quinta or such surviving entity, other than, in each case, the transactions contemplated by the merger agreement.

In this proxy statement, a “superior proposal” refers to (x) any bona fide acquisition proposal with respect to any direct or indirect acquisition in a single transaction or series of related transactions of eighty percent or more of the assets of La Quinta and its subsidiaries, including CorePoint (including the capital stock of the subsidiaries) taken as a whole, made in writing after the date hereof that is on terms that the La Quinta Board determines in its good faith reasonable judgment (after consultation with its legal counsel and financial advisor) (a) would be reasonably likely to be consummated if accepted and (b) is superior to the holders of shares of La Quinta common stock, from a financial point of view, to the spin-off and the other transactions contemplated by the merger agreement and, taking into account at the time of determination all financial, legal, regulatory and other aspects of such acquisition proposal as the La Quinta Board considers to be appropriate (including the ability of the person making such proposal to consummate the transactions contemplated by such proposal) and of the merger agreement (including any changes to the terms of the merger agreement committed to by Wyndham Worldwide to La Quinta in writing in response to such proposal or otherwise) or (y) any bona fide proposal with respect to any direct or indirect acquisition, by a person or group of persons in a single transaction or series of related transactions, of eighty percent or more of the retained assets of La Quinta, excluding CorePoint (including the capital stock of the retained subsidiaries or any other entity holding the retained assets of La Quinta, excluding CorePoint), made in writing after the date hereof that is on terms that the La Quinta Board determines in its good faith reasonable judgment (after consultation with legal counsel and financial advisors) (a) would be reasonably likely to be consummated if accepted and (b) is superior to the holders of shares of La Quinta common stock, from a financial point of view, to the merger and, taking into account at the time of determination all financial, legal, regulatory and other aspects of such acquisition proposal as the La Quinta Board considers to be appropriate (including the ability of the person making such proposal to consummate the transactions contemplated by such proposal) and of the merger agreement (including any changes to the terms of the merger agreement committed to by Wyndham Worldwide to La Quinta in writing in response to such proposal or otherwise).

In this proxy statement, an “intervening event” refers to any event, fact, change, effect, condition, development, circumstance or occurrence (but specifically excluding any acquisition proposal or superior proposal) that (i) does not relate to Wyndham Worldwide or Merger Sub and (ii) was not known by the La Quinta Board and was not reasonably foreseeable (or the implications and effects of which were not fully known) to the La Quinta Board on the date of the merger agreement (or if known, the magnitude or material consequences of which were not known or reasonably foreseeable to the La Quinta Board as of the date of the merger agreement), which event, fact, change, effect, condition, development, circumstance or occurrence, or any consequence thereof, becomes known to the La Quinta Board prior to obtaining our stockholders’ approval of the merger proposal.

Efforts to Complete the Merger

Each of the parties will use reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable law to complete the merger, the spin-off and the other transactions contemplated by the merger agreement, including effecting, as promptly as practicable (and within the time limits set forth in the merger agreement) the regulatory filings and obtaining clearances in the U.S. pursuant to the HSR Act and described under “The Merger Proposal (Proposal 1) — Regulatory Clearances and Approvals Required for the Mergerbeginning on page 79, provided that Wyndham Worldwide and Merger Sub shall not be obligated to take any actions, or agree to refrain from taking any actions, that, collectively, would have a material adverse effect on the combined business after giving effect to the transactions contemplated by the merger agreement and the proposed separation of Wyndham Worldwide’s hotel group business, and La Quinta will not be required to take any action which is not conditioned on the closing occurring. Each of Wyndham Worldwide, Merger Sub and La Quinta will cooperate and provide the other with a reasonable opportunity to review and comment on any regulatory filing and approval, and on any amendment or supplement thereto and each will provide the other with a copy of all such filings made.

 

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Employee Benefits

Without limiting any additional rights that any La Quinta employee may have under any La Quinta employee benefit plan, from the effective time of the merger until the second anniversary thereof, Wyndham Worldwide shall cause the surviving corporation and each of La Quinta’s retained subsidiaries to maintain for each individual employed by La Quinta or its retained subsidiaries at the effective time of the merger and who remains employed by the surviving corporation or La Quinta’s retained subsidiaries or becomes employed by Wyndham Worldwide or any of its affiliates (other than the surviving corporation or La Quinta’s retained subsidiaries), in each case, following the effective time of the merger (each, a “current employee”): (A) base compensation and annual target cash incentive compensation at least as favorable to such current employee as at the effective time of the merger and (B) benefits provided under employee benefit plans of Wyndham Worldwide or its affiliates that in the aggregate are substantially similar to the benefits (excluding any equity or equity-based, nonqualified deferred compensation, change in control or retention arrangements) maintained for and provided to such current employee immediately prior to the effective time of the merger, and to maintain the severance-related provisions of existing La Quinta employee benefit plans, as in effect on, and in the form provided to Wyndham Worldwide prior to, the date of the merger agreement. Wyndham Worldwide will also provide employees with full credit for purposes of eligibility and vesting under any employee benefit plans, waive any pre-existing condition or eligibility limitation, and credit claims incurred and amounts paid or reimbursed before the effective time of the merger under similar plans for purposes of determining deductibles and out-of-pocket limitations.

From and after the effective time of the merger, Wyndham Worldwide shall honor, and shall cause La Quinta’s retained subsidiaries to honor, in accordance with their terms as in effect on, and to the extent disclosed to Wyndham Worldwide prior to, the date of the merger agreement, (i) each existing employment, change in control, severance and termination protection plan, policy or agreement of or between La Quinta or any of its retained subsidiaries and any officer, director or employee, (ii) existing equity-based plans, programs or agreements, bonus plans or programs and (iii) all obligations outstanding thereunder pursuant to outstanding restoration plans, equity-based plans, programs or agreements, bonus plans or programs, bonus deferral plans, vested and accrued benefits under any employee benefit plan, program or arrangement of La Quinta or its subsidiaries and similar employment compensation and benefit arrangements and agreements still in effect as of the effective time of the merger.

Directors’ and Officers’ Indemnification and Insurance

From and after the effective time of the merger, Wyndham Worldwide agrees to cause the surviving corporation to indemnify, defend and hold harmless each present and former director, officer and employee of La Quinta (including in their capacity as fiduciary under the La Quinta equity plan) (the “indemnified parties”), against any costs or expenses (including reasonable attorneys’ fees), judgments, fines, losses, claims, damages, liabilities or awards paid in settlement incurred in connection with any actual or threatened proceeding, arising out of, relating to or in connection with matters existing or occurring at or prior to the effective time of the merger (including the fact that such person is or was a director, officer or employee of La Quinta or any acts or omissions occurring or alleged to occur prior to the effective time of the merger), whether asserted or claimed prior to, at or after the effective time of the merger, to the fullest extent permitted under the DGCL, and Wyndham Worldwide or the surviving corporation shall advance expenses (including reasonable legal fees and expenses) incurred in the defense of any proceeding, including any expenses incurred in enforcing such person’s rights, to the same extent as such indemnified parties are entitled to indemnification and advancement of expenses as of the date of the merger agreement under the amended and restated certificate of incorporation or amended and restated bylaws of La Quinta or the certificate of incorporation and bylaws, or equivalent organizational documents, of any of its retained subsidiaries.

La Quinta shall (and, if La Quinta is unable to, Wyndham Worldwide shall cause the surviving corporation as of the effective time of the merger to) purchase and fully pay by the effective time of the merger, at no expense to the beneficiaries, “tail” policies to the current directors’ and officers’ liability insurance policies maintained at such time by La Quinta from an insurance carrier with the same or better credit rating as

 

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La Quinta’s current insurance carrier with respect to directors’ and officers’ liability insurance and fiduciary liability insurance, which tail policies (i) will be effective for a period from the effective time of the merger through and including the date six years after the effective time of the merger with respect to claims arising from facts or events that existed or occurred prior to or at the effective time of the merger (including in connection with the merger agreement, the spin-off transaction agreements or the transactions or actions contemplated thereby), and (ii) will contain coverage that is at least as protective to such directors and officers as the coverage provided by such existing policies. Wyndham Worldwide will cause such policies to be maintained in full force and effect for their full term, and cause all obligations thereunder to be honored by the surviving corporation.

The indemnification and insurance provisions of the merger agreement are intended to benefit, and are enforceable by, the indemnified persons and their respective successors, heirs and legal representatives.

Other Covenants and Agreements

The merger agreement contains other covenants and agreements relating to, among other things:

Wyndham Spin. Wyndham Worldwide is contemplating a previously announced potential spin-off of Wyndham Hotel & Resorts, Inc., a Delaware corporation (“Wyndham Spinco”), which, following the consummation of such spin-off and related transactions by Wyndham Worldwide, would hold Wyndham Worldwide’s hotel group businesses (the “Wyndham spin”). Pursuant to the merger agreement, Wyndham Worldwide has agreed not to consummate the Wyndham spin unless (i) prior to the consummation thereof, Wyndham Spinco has entered into a replacement commitment letter with respect to the Wyndham Worldwide financing in accordance with the merger agreement (and provided a copy of the same to us), (ii) prior to the consummation of the Wyndham spin, Wyndham Worldwide has delivered to us a certificate, dated as of the date of the consummation of the Wyndham spin, of a senior officer of Wyndham Worldwide certifying to the effect that certain representations and warranties made by Wyndham Worldwide in the merger agreement with respect to the Wyndham Worldwide financing are true and correct, as of such date, with respect to Wyndham Spinco, and (iii) the consummation of the Wyndham spin would not reasonably be expected to impair in any material respect the ability of Wyndham Worldwide to perform its obligations under the merger agreement or the ability of Wyndham Spinco to perform its obligations under the merger agreement following an assignment of the merger agreement by Wyndham Worldwide to Wyndham Spinco in accordance with the merger agreement, or prevent or materially impede, interfere with, hinder or delay the consummation of the merger or the transactions contemplated by the merger agreement, and Wyndham Worldwide has delivered to us a certificate, dated as of the date of the consummation of the Wyndham spin, of a senior officer of Wyndham Worldwide certifying to this effect.

Financing. We have agreed to use our reasonable best efforts to take (and cause CorePoint to take), or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to arrange, obtain and complete CorePoint’s debt financing on or before the closing on the terms and conditions described in CorePoint’s financing commitments. Wyndham Worldwide has agreed to use its reasonable best efforts to take (and cause Merger Sub to take), or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to arrange, obtain and complete Wyndham Worldwide’s debt financing on or before the closing on the terms and conditions described in Wyndham Worldwide’s financing commitments. For purposes of the merger agreement, references to Wyndham Worldwide’s financing commitments include the financing commitments to be entered into by Wyndham Spinco, in the event Wyndham Worldwide’s financing commitments are assigned to Wyndham Spinco prior to the merger. We have agreed to provide, and cause each of the retained subsidiaries to provide, and to use our reasonable best efforts to have each of our and our retained subsidiaries’ respective representatives, in each case, to use their respective reasonable best efforts to provide, in each case, to Wyndham Worldwide and Merger Sub, at Wyndham Worldwide’s sole expense, all cooperation reasonably necessary in connection with the arrangement of Wyndham Worldwide’s debt financing (including customary high-yield non-convertible debt securities offering to be issued or incurred in lieu of all or a portion of any bridge facility contemplated by Wyndham Worldwide’s financing commitments) or in connection with the Wyndham spin.

 

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Spin-Off. We have agreed to use reasonable best efforts to effect the transactions set forth in the spin-off transaction agreements in accordance with the terms thereof so that they occur following the special meeting of our stockholders and the receipt of our stockholders’ approval of the merger proposal, but prior to the effective time of the merger. Prior to the effective time of the merger, any changes proposed by any party to the merger agreement to any of the spin-off transaction agreements from the forms agreed upon as of the date of the merger agreement will be subject to the prior written approval of the other party to the merger agreement (which approval shall not be unreasonably withheld, conditioned or delayed). We have agreed to, and to cause our applicable subsidiaries to, prior to the spin-off, enter into (a) management agreements in agreed form between CorePoint or certain of its subsidiaries, on the one hand, and La Quinta or certain of its retained subsidiaries, on the other hand, (b) franchise agreements in agreed form between CorePoint or certain of its subsidiaries, on the one hand, and La Quinta or certain of its retained subsidiaries, on the other hand, (c) certain related subordination, non-disturbance, and attornment agreements and comfort letters and related agreements and (d) the tax matters agreement and the transition services agreement, between CorePoint or certain of its subsidiaries, on the one hand, and La Quinta or certain of its retained subsidiaries, on the other hand.

Separation Committee. Each of Wyndham Worldwide and La Quinta has agreed to form a special separation committee with an equal number of representatives from Wyndham Worldwide and La Quinta to discuss and monitor the restructuring transactions set forth in the plan of reorganization for the transfer of the separated real estate business in accordance with the terms of the separation agreement and the other spin-off transaction agreements.

Conditions to the Closing of the Merger

Each party’s obligation to effect the merger is subject to the satisfaction or, to the extent permitted, waiver of various conditions, which include the following:

 

    the merger agreement shall have been adopted, and the charter amendment proposals shall have been approved, by La Quinta stockholders at the special meeting and such approval must continue to be in full force and effect;

 

    the CorePoint registration statement in connection with the spin-off shall have been declared effective by the SEC and shall not be the subject of any stop order or proceedings seeking a stop order, all necessary permits and authorizations under state securities or “blue sky” laws, the Securities Act and the Exchange Act relating to the issuance and trading of shares of CorePoint common stock shall have been obtained and be in effect, and such shares of CorePoint common stock shall have been approved for listing on the NYSE;

 

    the spin-off shall have been consummated in all material respects in accordance with the terms of the separation agreement;

 

    any applicable waiting period (and any extension thereof) under the HSR Act shall have expired or been terminated, and no proceeding shall be pending before, or threatened in writing by, the Antitrust Division of the DOJ or the FTC wherein an unfavorable judgment, decree, injunction, order or ruling would prevent the performance of the merger agreement or the spin-off transaction agreements or any of the transactions under such agreements, declare unlawful the transactions contemplated by the merger agreement or the spin-off transaction agreements or cause such transactions to be rescinded; and

 

    no order, injunction or decree issued by any governmental entity of competent jurisdiction preventing the consummation of the merger or the distribution shall be in effect, and no statute, rule, regulation, order, injunction or decree shall have been enacted, entered, promulgated or enforced (and still be in effect) by any governmental entity that prohibits, restrains, enjoins or makes illegal the consummation of the merger or the distribution.

Wyndham Worldwide and Merger Sub will not be obligated to effect the merger unless the following conditions are satisfied or waived:

 

   

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matters; (ii) our organizational documents; (iii) our corporate power and authority to enter into and perform our obligations under the merger agreement and complete the merger, and the enforceability and due execution and delivery of the merger agreement; and (iv) our brokers, finders or investment bankers must be true and correct in all material respects, in each case, as of the date of the merger agreement and as of the closing date (unless any such representation or warranty was made only as of a specified date, in which event such representation and warranty shall have been true and accurate as of such specified date);

 

    our representations and warranties in the merger agreement regarding (i) our capitalization and capital structure and (ii) absence of certain events shall be true and correct in all respects at and as of the closing date as if made at and as of such time (except to the extent expressly made as of an earlier date, in which case such representation and warranty shall be so true and correct as of such earlier date), except, in the case of clause (i) only, for such inaccuracies as are de minimis in nature and amount;

 

    all our other representations and warranties in the merger agreement shall be true and correct (disregarding any qualifications as to materiality or material adverse effect contained therein), in each case, at and as of the closing as if made at and as of such time (except to the extent expressly made as of an earlier date, in which case such representation and warranty shall be so true and correct as of such earlier date), except where the failure of any such representations and warranties to be so true and accurate, has not had and would not reasonably be expected to have, a material adverse effect;

 

    performance in all material respects of our obligations, and compliance in all material respects with the agreements and covenants, required to be performed by or complied with by us under the merger agreement at or prior to the closing of the merger;

 

    absence of a material adverse effect since the date of the merger agreement;

 

    execution of each spin-off transaction agreement by the parties thereto, and performance of the covenants set forth therein required to be performed prior to the effective time of the merger in all material respects;

 

    receipt by Wyndham Worldwide of a certificate executed by a senior officer of La Quinta confirming that the conditions described in the first through the fourth bullets above have been satisfied; and

 

    receipt by La Quinta or the applicable retained subsidiary of the cash payment (as defined in the separation agreement).

We will not be obligated to effect the merger unless the following conditions are satisfied or waived:

 

    the representations and warranties of Wyndham Worldwide and Merger Sub in the merger agreement regarding (i) their respective due organization, valid existence, good standing, qualification to do business and similar corporate matters; (ii) their respective corporate power and authority to enter into and perform their obligations under the merger agreement and complete the merger, and the enforceability and due execution and delivery of the merger agreement; (iii) brokers, finders or investment bankers; and (iv) La Quinta’s eligible independent contractor status with respect to CorePoint as of the effective time of the merger, shall be true and correct in all material respects, in each case, as of the date of the merger agreement and as of the closing date (unless any such representation or warranty was made only as of a specified date, in which event such representation and warranty shall have been true and accurate as of such specified date);

 

   

each of Wyndham Worldwide’s and Merger Sub’s other representations and warranties in the merger agreement shall be true and correct (disregarding any qualifications as to materiality or material adverse effect contained therein), in each case, as of the date of the merger agreement and as of the closing date as though made on and as of such date (unless any such representation or

 

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warranty is made only as of a specific date, in which event such representation and warranty shall be so true and accurate as of such specified date), except where the failure of any such representations and warranties to be so true and accurate, individually or in the aggregate, would not, and would not reasonably be expected to, have a material adverse effect on the ability of Wyndham Worldwide or Merger Sub to timely perform their obligations under the merger agreement or to timely consummate the transactions contemplated thereby;

 

    performance by Wyndham Worldwide and Merger Sub in all material respects of each of their obligations, and compliance in all material respects with the agreements and covenants, required to be performed by them or complied with by them under the merger agreement prior to the closing of the merger; and

 

    receipt by us of a certificate of a senior officer of each of Wyndham Worldwide and Merger Sub, certifying that the conditions described in the bullets above have been satisfied.

Termination of the Merger Agreement

The merger agreement can be terminated by La Quinta or Wyndham Worldwide under the following circumstances, notwithstanding the adoption of the merger agreement by the stockholders of La Quinta or Merger Sub at any time prior to the effective time of the merger:

 

    by mutual written consent of La Quinta and Wyndham Worldwide;

 

    if any court of competent jurisdiction or other governmental entity has issued a final order, decree or ruling or taken any other final action restraining, enjoining or otherwise prohibiting the merger and such order, decree, ruling or other action is or shall have become final and nonappealable, provided that the party seeking to terminate under this circumstance used its reasonable best efforts as required by the merger agreement (and as described above under the heading “Efforts to Complete the Merger”) to prevent, oppose and remove such order, decree, ruling or other action and the issuance of such final, non-applicable order, decree or ruling or other action was not primarily due to the failure of such party to perform any of its obligations under the merger agreement;

 

    if approval of the merger proposal and the charter amendment proposals by La Quinta stockholders has not been obtained at the special meeting or at any adjournment or postponement thereof at which a vote on the approval of the merger proposal and the charter amendment proposals was taken; or

 

    if the merger has not occurred on or prior to July 17, 2018 (as such date may be extended as described below, the “outside date”), provided that the right to terminate the merger agreement under this circumstance will not be available to any party if any action of such party (and, in the case of Wyndham Worldwide, including Merger Sub) or failure by such party to fulfill any obligation under the merger agreement has been the primary cause of, or resulted in, the failure of the merger to be consummated on or before the outside date and such action or failure to perform constitutes a breach of the merger agreement, provided, further, that if prior to the outside date all of the conditions to the closing have been satisfied or waived, as applicable, other than the condition that any applicable waiting period (and any extension thereof) under the HSR Act shall have expired or been terminated, and no proceeding relating thereto shall be pending, and those conditions that by their nature are to be satisfied at the closing, but subject (with exceptions) to such conditions being capable of being satisfied, either La Quinta or Wyndham Worldwide may extend the outside date by 90 days.

 

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La Quinta may also terminate the merger agreement, notwithstanding the adoption of the merger agreement by the stockholders of La Quinta or Merger Sub:

 

    if there shall have been a breach of any representation, warranty, covenant or agreement contained in the merger agreement on the part of Wyndham Worldwide or Merger Sub and such breach would cause the failure of a closing condition to be satisfied by the outside date, and such breach is incapable of being cured by Wyndham Worldwide or Merger Sub within 20 days of written notice provided by La Quinta (or by the outside date if less than 20 days prior to the outside date), provided that La Quinta may not terminate the merger agreement pursuant to this provision if it is then in breach of the merger agreement in any material respect; or

 

    in compliance with the non-solicitation provisions set forth in the merger agreement, in order to enter into a definitive agreement with respect to a superior proposal, subject to payment of a termination fee to Wyndham Worldwide prior to or concurrently with such termination.

Wyndham Worldwide may also terminate the merger agreement, notwithstanding the adoption of the merger agreement by the stockholders of La Quinta or Merger Sub:

 

    if there shall have been a breach of any representation, warranty, covenant or agreement contained in the merger agreement on the part of La Quinta and such breach would cause the failure of a closing condition to be satisfied by the termination date, and such breach is incapable of being cured by La Quinta within 20 days of written notice provided by Wyndham Worldwide (or by the outside date if less than 20 days prior to the outside date), provided that Wyndham Worldwide may not terminate the merger agreement pursuant to this provision if it is then in breach of the merger agreement in any material respect; or

 

    if prior to the approval by La Quinta stockholders of the merger proposal and the charter amendment proposals, the La Quinta Board or any committee thereof (a) has made a change of recommendation with respect to the merger, or (b) has otherwise failed to include its recommendation in this proxy statement.

Termination Fees and Expenses

We will be required to pay Wyndham Worldwide a termination fee equal to $37,000,000 in cash in the following circumstances:

 

    if the merger agreement is terminated by La Quinta in compliance with the non-solicitation provisions set forth in the merger agreement, in order to enter into a definitive agreement with respect to a superior proposal;

 

    if the merger agreement is terminated by Wyndham Worldwide as a result of the fact that, prior to the approval by La Quinta stockholders of the merger proposal and the charter amendment proposals, the La Quinta Board or any committee thereof (i) has made a change of recommendation with respect to the merger, or (ii) has otherwise failed to include its recommendation in this proxy statement;

 

   

(i) at any time after the date of the merger agreement and prior to the taking of a vote to adopt the merger agreement at the special meeting or any postponement or adjournment thereof, an acquisition proposal shall have been made directly to La Quinta stockholders, or an acquisition proposal shall have otherwise become publicly known, and in each case such acquisition proposal shall have not been withdrawn in a bona fide manner prior to such taking of a vote to adopt the merger agreement, (ii) thereafter, the merger agreement is terminated by Wyndham Worldwide or La Quinta due to our stockholders’ approval not having been obtained at the special meeting or the merger not having been completed by the outside date, or by Wyndham Worldwide due to a breach by La Quinta that has not been cured within 20 days or, if earlier, the outside date

 

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(with respect to a breach of the non-solicitation obligations or the provisions relating to this proxy statement and the special meeting), and (iii) La Quinta enters into a definitive agreement (other than an acceptable confidentiality agreement) with respect to a transaction contemplated by any acquisition proposal or a proposal to acquire fifty percent or more of the CorePoint business or the shares or other equity securities of CorePoint (which is subsequently consummated), or a transaction in respect of any acquisition proposal or a proposal to acquire fifty percent or more of the CorePoint business or the shares or other equity securities of CorePoint is consummated, in each case within twelve months of the date of such termination; or

 

    if (i) the merger agreement is terminated by Wyndham Worldwide or La Quinta due to our stockholders’ approval not having been obtained at the special meeting and we have not delivered a CorePoint financing certificate to Wyndham Worldwide on the date that is two business days prior to the special meeting or (ii) the merger agreement is terminated (x) by La Quinta due to the merger not having been completed by the outside date and we have not delivered a CorePoint financing certificate to Wyndham Worldwide on the date of such termination or the date that is one business day prior to such termination or (y) by Wyndham Worldwide due to the merger not having been completed by the outside date and (a) on the date that is three business days prior to such termination, Wyndham Worldwide shall have requested in writing a CorePoint financing certificate and (b) we shall not have delivered such CorePoint financing certificate to Wyndham Worldwide on the date of such request or on the date that is two business days prior to such termination. For purposes of the merger agreement, a “CorePoint financing certificate” refers to a certificate of the CFO or another senior officer of La Quinta that, as of the date of such certificate, to the knowledge of La Quinta, no event (including any notice or other communication from any party to the CorePoint financing commitments) has occurred that, assuming the satisfaction of the conditions to La Quinta’s obligation to close the merger, would reasonably be expected to cause the CorePoint financing commitments to terminate or to be withdrawn, modified, repudiated or rescinded, or otherwise cause the funds contemplated to be available thereunder on the closing date not to be available to CorePoint on a timely basis to permit the closing to occur as of the closing date.

If we fail to pay Wyndham Worldwide a termination fee within the specified time period, we will be required to reimburse Wyndham Worldwide’s reasonable out-of-pocket costs and expenses incurred in connection with any action taken to collect payment of such amounts.

Except for the termination fee, out-of-pocket expenses and monetary damages payable by La Quinta under the circumstances described above, whether or not the merger is completed, we and Wyndham Worldwide are each responsible for all respective costs and expenses incurred in connection with the merger and the other transactions contemplated by the merger agreement. We are not required to pay the applicable termination fee on more than one occasion.

Amendment and Waiver of the Merger Agreement

Subject to the provisions of applicable law, the merger agreement may be amended by the parties at any time prior to the effective time of the merger with the approval of the respective boards of directors of La Quinta, Wyndham Worldwide and Merger Sub. The merger agreement may only be amended by written agreement, executed and delivered by duly authorized officers of the respective parties.

At any time prior to the effective time of the merger, any party may extend the time for performance of any obligation or act of the other parties, waive any inaccuracies in the representations or warranties in the merger agreement or any document delivered in connection therewith, or waive the other party’s compliance with any of the agreements or conditions contained in the provisions of the merger agreement (subject to compliance with applicable law). Such waivers are only valid if set forth in a written instrument signed by the party or parties to be bound thereby.

 

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Certain provisions of the merger agreement may not be amended, modified, waived or terminated in a manner that is materially adverse to the respective debt financing sources providing the debt financing of Wyndham Worldwide or CorePoint, as applicable, without the prior written consent of the relevant debt financing sources of such debt financing.

Assignment of the Merger Agreement; Wyndham Spinco

The merger agreement may not be assigned by operation of law or otherwise without the prior written consent of each of the other parties thereto; provided that (a) Wyndham Worldwide may assign all or any portion of its rights and obligations pursuant to the merger agreement to its debt financing sources pursuant to the terms of the Wyndham Worldwide financing commitments for purposes of creating a security interest therein or otherwise assigning as collateral in respect of Wyndham Worldwide’s debt financing and (b) subject to the provisions described above governing the Wyndham spin, Wyndham Worldwide may assign all of its right, title and interest under the merger agreement to Wyndham Spinco concurrently with the consummation of the Wyndham spin, and following any such assignment Wyndham Spinco shall become “Wyndham Worldwide” for all purposes thereunder, subject to certain exceptions, and Wyndham Worldwide shall have no further liability or obligation thereunder except that (i) in the case of a breach by Wyndham Worldwide or Merger Sub of any of their respective covenants or agreements under the merger agreement or the spin-off transaction agreements prior to such assignment, Wyndham Worldwide shall have liability for such breach, (ii) Wyndham Worldwide shall guarantee the payment of any amounts owed by Wyndham Spinco under the merger agreement or the spin-off transaction agreements and not paid by Wyndham Spinco when due on a prompt and timely basis (other than the merger consideration) and (iii) upon the reasonable written request of La Quinta, Wyndham Worldwide shall use its reasonable best efforts to provide such information and to execute such documents, instruments and papers as may be reasonably required or appropriate in order for Wyndham Spinco and La Quinta, subject to the terms of the merger agreement, to carry out the merger or the other transactions contemplated thereby.

Specific Performance

The parties are entitled to seek injunction, specific performance and other equitable remedies to prevent breaches of the merger agreement and to enforce the terms thereof.

 

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SPIN-OFF TRANSACTION AGREEMENTS

Concurrently with the execution of the merger agreement, La Quinta and CorePoint have entered into the separation agreement and the employee matters agreement. The tax matters agreement will be executed in connection with the spin-off. The summary of the material provisions of the separation agreement, the employee matters agreement and the tax matters agreement, a copy of each of which is attached to this proxy statement as Annex E, Annex F and Annex G, respectively, and each of which is hereby incorporated by reference into this proxy statement, does not purport to be complete and may not contain all of the information about these agreements that is important to you. We encourage you to read carefully each of these agreements in its entirety.

Separation Agreement

The separation agreement governs the terms and conditions regarding the reverse stock split, the transfer of La Quinta’s real estate assets and certain related assets and liabilities (the “CorePoint business”) from La Quinta to CorePoint (the “separation”) and the spin-off. In connection with the separation, the separation agreement provides, among other things, for the transfer by La Quinta to CorePoint of certain assets, and the assumption by CorePoint of certain liabilities, related to the CorePoint business.

The separation agreement provides that, immediately prior to and as a condition of the spin-off, CorePoint will make a cash payment to La Quinta of $983,950,000, subject to certain adjustments based on the actual amount of net indebtedness at La Quinta (as of immediately prior to the effective time of the spin-off) and certain accrued but unpaid expenses incurred in connection with the separation, the spin-off and the merger (the “cash payment”). In connection with La Quinta’s entry into the merger agreement, CorePoint entered into a commitment letter (the “debt commitment letter”) with JPMorgan Chase Bank (the “debt commitment party”) pursuant to which the debt commitment party has committed, subject to customary conditions specified in the debt commitment letter, to provide CorePoint with $1.085 billion in secured debt financing to provide sufficient funds to make the cash payment.

The separation agreement provides that the spin-off is subject to the satisfaction or waiver of various conditions, including receipt of the cash payment by La Quinta, the receipt of an opinion of counsel regarding CorePoint’s status as a real estate investment trust for U.S. federal income tax purposes and the effectiveness of CorePoint’s Form 10 in connection with the spin-off. The separation agreement also sets forth certain other covenants and agreements between La Quinta and CorePoint related to the separation, including provisions concerning the termination and settlement of intercompany accounts and obtaining certain governmental approvals and third party consents. The separation agreement also sets forth certain covenants and agreements that govern certain aspects of the relationship between La Quinta and CorePoint following the spin-off, including provisions with respect to release of claims and indemnification provisions.

Employee Matters Agreement

The employee matters agreement generally allocates liabilities and responsibilities relating to employee compensation and benefit plans and programs between La Quinta and CorePoint. The employee matters agreement, in conjunction with the merger agreement, will provide for the treatment of La Quinta’s outstanding equity awards in connection with the spin-off (as described more fully above in the section titled “Treatment of La Quinta Equity Awards” on page 39). In addition, the employee matters agreement sets forth the general principles relating to various employee matters, including with respect to the assignment of employees and the transfer of employees from La Quinta to CorePoint, the assumption and retention of liabilities and related assets, workers’ compensation, and related matters. Generally, other than with respect to certain specified compensation and benefit plans and liabilities, (i) La Quinta will retain sponsorship of, and the liabilities relating to, La Quinta compensation and benefit plans and be solely responsible for employee-related liabilities relating to current and former employees of La Quinta, whether arising prior to or after the spin-off, and employee-related liabilities of CorePoint employees, to the extent arising on or prior to the spin-off, and (ii) CorePoint will assume sponsorship

 

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of, and the liabilities relating to, compensation and benefit plans and agreements with respect to CorePoint employees and be solely responsible for employee-related liabilities relating to CorePoint employees, to the extent arising following the spin-off.

La Quinta and Wyndham Worldwide encourage you to read the employee matters agreement carefully.

Tax Matters Agreement

The tax matters agreement will govern the respective rights, responsibilities and obligations of La Quinta and CorePoint after the spin-off with respect to tax liabilities and benefits, tax attributes, tax returns, tax contests, and tax sharing regarding U.S. federal, state, local and foreign taxes for periods prior to the spin-off. The tax matters agreement also will provide special rules for allocating tax liabilities resulting from the spin-off and related transactions.

Under the tax matters agreement, La Quinta will generally provide an indemnity to CorePoint for pre-closing taxes, provided, however, that CorePoint will be responsible for 50% of any taxes and losses attributable to any failure to comply with taxes imposed by the Affordable Care Act under Section 4980H of the Code by La Quinta and/or its subsidiaries for the taxable years ending December 31, 2015 and December 31, 2016. CorePoint will also be responsible for any taxes and losses resulting from certain audits identified in the tax matters agreement.

The tax matters agreement also provides that to the extent the income taxes (as computed on an estimated basis) due with respect to the spin-off and related transactions are (i) less than $240,000,000 (the “reserve amount”), which reflects an estimate of the taxes expected to be incurred in connection with the taxable spin-off of CorePoint, La Quinta will pay to CorePoint an amount equal to the difference between the reserve amount and such estimated taxes, or (ii) greater than the reserve amount, CorePoint will pay to La Quinta an amount equal to the difference between such estimated taxes and the reserve amount.

 

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THE VOTING AGREEMENT

The following describes the material provisions of the voting agreement, which is incorporated by reference into this proxy statement. We encourage you to read carefully the voting agreement in its entirety.

Concurrently with and as a condition to Wyndham Worldwide’s execution of the merger agreement, certain entities affiliated with The Blackstone Group, L.P. (such entities, collectively, the “Blackstone stockholders”), have entered into a support agreement with Wyndham Worldwide (the “voting agreement”) covering shares of La Quinta common stock legally or beneficially owned by the Blackstone stockholders (the “voting party shares”), which constituted, in the aggregate, approximately 29.97% of La Quinta’s issued and outstanding shares as of January 17, 2018.

Pursuant to and subject to the terms and conditions of the voting agreement, the Blackstone stockholders have agreed to vote, or cause the holder of record to vote, the voting party shares in favor of the merger proposal and the charter amendment proposals and certain related transactions and against certain other actions. The Blackstone stockholders have also agreed, subject to certain exceptions, not to (i) solicit or knowingly encourage any inquiries with respect to certain alternative business combination transactions with respect to La Quinta or (ii) engage in any acquisitions or discussions concerning, or provide any confidential information to, any person relating to certain alternative business combination transactions with respect to La Quinta, and not to, subject to certain exceptions, transfer or dispose of the voting party shares.

The voting agreement will terminate upon the earliest of (i) the closing of the merger, (ii) the termination of the merger agreement in accordance with its terms, or (iii) any material change to the terms of the merger without the prior written consent of the Blackstone stockholders that (A) reduces the per-share merger consideration (other than certain adjustments in compliance with the merger agreement, including with respect to the reverse stock split) or (B) changes the form of consideration payable in the merger.

 

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CHARTER AMENDMENT PROPOSALS

(PROPOSAL 2)

On January 17, 2018, the La Quinta Board adopted resolutions (1) approving and declaring advisable and in the best interest of La Quinta and its stockholders certain amendments to La Quinta’s Amended and Restated Certificate of Incorporation set forth on Annex D to this proxy statement to (a) effect a reverse stock split of the La Quinta common stock at a ratio of 1-for-2 and (b) change the par value of the La Quinta common stock in connection with the reverse stock split from $0.01 per share to $0.02 per share, (2) directing that the charter amendment proposals be submitted to our stockholders for their approval and (3) recommending that our stockholders approve the charter amendment proposals.

Upon approval by La Quinta stockholders of the charter amendment proposals comprising the amendment set forth on Annex D to this proxy statement, which has been approved by La Quinta’s Board, La Quinta would be authorized to file with the Secretary of State of the State of Delaware the certificate of amendment as set forth on Annex D to this proxy statement, and the certificate of amendment will thereafter become effective upon such filing. Except as contemplated by the certificate of amendment set forth on Annex D to this proxy statement, the provisions of La Quinta’s amended and restated certificate of incorporation would remain unchanged.

La Quinta will issue fractional shares of our La Quinta common stock (par value $0.02) in the reverse stock split.

Tax Consequences of the Reverse Stock Split

The distribution of CorePoint common stock in connection with the reverse stock split is intended to be treated as a redemption of the shares of La Quinta common stock that are no longer outstanding as a result of the reverse stock split for U.S. federal income tax purposes. We expect that such redemption of stock, combined with the merger as part of a prearranged, integrated plan, will be viewed together as a complete termination of La Quinta stockholders’ interests in La Quinta, and that each of the redemption and the merger transactions will be integrated and be treated as a sale or exchange of La Quinta common stock for U.S. federal income tax purposes. We have agreed in the merger agreement to treat the redemption in connection with the reverse stock split and the merger in a manner consistent with this expectation for tax purposes.

Board Rationale

The La Quinta Board has adopted resolutions approving the reverse stock split in recognition of the value delivered to La Quinta stockholders in connection with the distribution of CorePoint common stock in the spin-off and in furtherance of the tax treatment described above.

Effect of the Reverse Stock Split on Holders of Outstanding Common Stock

If approved and effected, the reverse stock split will take effect simultaneously for all outstanding shares of our common stock and in the same ratio for all outstanding shares of La Quinta common stock. The reverse stock split will affect all of our stockholders uniformly and will not affect any stockholder’s percentage ownership interest in us. In addition, the reverse stock split will not affect any stockholder’s proportionate voting power. The principal effects of the reverse stock split will be that:

 

    each 2 shares of common stock, par value $0.01 per share, owned by a stockholder will be combined into one share of common stock, par value $0.02 per share;

 

    the aggregate number of equity-based awards that remain available to be granted under our equity incentive plans and other benefit plans will be reduced proportionately to reflect such reverse stock split ratio;

 

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    proportionate adjustments will be made to the number of shares that would be owned upon vesting of restricted stock awards and restricted stock units, as well as to the pre-share exercise price and the number of shares issuable upon the exercise of outstanding options (if any);

 

    the aggregate number of shares issuable pursuant to outstanding restricted stock awards, restricted stock units or other equity-based awards made under our equity incentive plans will be reduced proportionately based upon the reverse stock split ratio; and

 

    the merger consideration of $8.40 in cash per share prior to giving effect to the reverse stock split, without interest, will, upon completion of the reverse stock split immediately prior to the effective time of the merger, be converted into the merger consideration of $16.80 in cash, without interest. Accordingly, the aggregate merger consideration that any La Quinta stockholder will be entitled to receive upon the effective time of the merger will not be affected by the reverse stock split.

Fractional Shares

We will issue fractional shares in connection with the reverse stock split. Stockholders entitled to receive the merger consideration upon the effective time of the merger pursuant to the merger agreement who would hold fractional shares as a result of the reverse stock split because the number of shares of La Quinta common stock they hold before the reverse stock split is not evenly divisible by two will have such fractional share converted, at the effective time of the merger, into the right to receive an amount in cash equal to (i) the fraction representing any such fractional share multiplied by (ii) the merger consideration.

No Appraisal Rights

Under Delaware law, our stockholders will not be entitled to dissenters’ rights or appraisal rights with respect to the charter amendment proposals.

Interests of Certain Persons in Proposal 2

Certain of our officers and directors have an interest in Proposal 2 as a result of their ownership of shares of La Quinta common stock. However, we do not believe that our officers or directors have interests in Proposal 2 that are different from or greater than those of any of our other stockholders.

Abandonment

By approving Proposal 2, the stockholders will be authorizing the La Quinta Board to abandon the charter amendment proposals in the event that the spin-off or the merger will not be consummated.

Approval of the charter amendment proposals requires the affirmative vote of a majority of the voting power of the outstanding shares of La Quinta common stock entitled to vote thereon. Abstentions, broker non-votes and failures to vote will have the same effect as a vote “AGAINST” the proposals.

The La Quinta Board unanimously recommends that La Quinta stockholders vote “FOR” the charter amendment proposals.

 

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ADVISORY VOTE ON NAMED EXECUTIVE OFFICER MERGER-RELATED

COMPENSATION PROPOSAL

(PROPOSAL 3)

In accordance with Section 14A of the Exchange Act, La Quinta is providing its stockholders with the opportunity to cast a non-binding, advisory vote on the compensation that will be paid or may become payable to the named executive officers of La Quinta in connection with the merger, the value of which is set forth in the table entitled “Golden Parachute Compensation” on page 73. This proposal, commonly known as “say-on-golden parachute,” is referred to in this proxy statement as the named executive officer merger-related compensation proposal. As required by Section 14A of the Exchange Act, La Quinta is asking its stockholders to vote on the adoption of the following resolution:

“RESOLVED, that the compensation that may be paid or become payable to La Quinta’s named executive officers in connection with the merger, as disclosed under “The Merger Proposal (Proposal 1) — Interests of La Quinta’s Executive Officers and Directors in the Merger — Quantification of Potential Merger-Related Payments to Named Executive Officers,” as reflected in the table captioned “Golden Parachute Compensation,” the associated footnotes and narrative discussion, is hereby APPROVED.”

The vote on the named executive officer merger-related compensation proposal is a vote separate and apart from the vote on the merger proposal. Accordingly, you may vote to approve the merger proposal and vote not to approve the named executive officer merger-related compensation proposal, and vice versa. Because the vote to approve the named executive officer merger-related compensation proposal is only advisory in nature, it will not be binding on La Quinta, Wyndham Worldwide or the surviving corporation. Because La Quinta is contractually obligated to make the potential merger-related payments to the executive officers, the compensation will be payable, subject only to the conditions applicable thereto, if the merger proposal is approved and regardless of the outcome of the advisory vote.

Approval of the named executive officer merger-related compensation proposal requires a majority of the votes cast in favor of such proposal at the special meeting at which quorum is present. Abstentions will not count as votes cast on the named executive officer merger-related compensation proposal, but will still count for the purpose of determining whether a quorum is present. Assuming a quorum is present at the special meeting, abstentions, broker non-votes and failures to vote will have no effect on the outcome of the named executive officer merger-related compensation proposal.

The La Quinta Board unanimously recommends that La Quinta stockholders vote “FOR” the named executive officer merger-related compensation proposal.

 

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ADJOURNMENT PROPOSAL

(PROPOSAL 4)

La Quinta stockholders are being asked to approve a proposal that will give us authority from the stockholders to adjourn the special meeting for the purpose of soliciting additional proxies in favor of the merger proposal and the charter amendment proposals if there are not sufficient votes at the time of the special meeting to approve the merger proposal and the charter amendment proposals. If a quorum is not present, the chairman of the meeting or the stockholders, by the affirmative vote of a majority of the voting power of the shares of La Quinta common stock present at the special meeting, in person or by proxy, may adjourn the special meeting to another place, date or time.

In addition, the La Quinta Board could postpone the special meeting before it commences. If the special meeting is adjourned or postponed for the purpose of soliciting additional proxies, stockholders who have already submitted their proxies will be able to revoke them at any time prior to the final vote on the proposals. If you sign and return a proxy and do not indicate how you wish to vote on any proposal, your shares will be voted in favor of the adjournment proposal. La Quinta does not intend to call a vote on this proposal if the merger proposal and the charter amendment proposals have been approved at the special meeting.

Approval of the adjournment proposal requires a majority of the votes cast in favor of such proposal at the special meeting at which quorum is present. If no quorum is present at the special meeting, the chairman of the meeting or the stockholders, by the affirmative vote of the holders of a majority of the shares of La Quinta common stock present or represented by proxy at the special meeting, may adjourn the special meeting. Abstentions will not count as votes cast on the adjournment proposal, but will still count for the purpose of determining whether a quorum is present. Assuming a quorum is present at the special meeting, abstentions, broker non-votes and failures to vote will have no effect on the outcome of the adjournment proposal.

The La Quinta Board unanimously recommends that La Quinta stockholders vote “FOR” the adjournment proposal.

 

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MARKET PRICES OF LA QUINTA COMMON STOCK

Market Information

La Quinta common stock trades on the NYSE under the symbol “LQ”. The following table shows the intraday high and low sales price of La Quinta common stock for our first quarter of fiscal 2018 (through February 20, 2018) and each of our preceding fiscal quarters in 2017 and 2016.

 

Fiscal Year

   High      Low  

2016

     

First Quarter

   $ 13.50      $ 9.42  

Second Quarter

   $ 13.75      $ 10.25  

Third Quarter

   $ 12.79      $ 10.40  

Fourth Quarter

   $ 14.51      $ 9.73  

2017

     

First Quarter

   $ 15.05      $ 11.76  

Second Quarter

   $ 15.39      $ 13.07  

Third Quarter

   $ 17.74      $ 14.21  

Fourth Quarter

   $ 18.57      $ 16.41  

2018

     

First Quarter (through February 20, 2018)

   $ 21.06      $ 17.92  

The closing sales price of La Quinta common stock on the NYSE on [●], the latest practicable date before the printing of this proxy statement, was $[●] per share. The closing sales price of La Quinta common stock on the NYSE on January 17, 2018, the last trading day prior to the public announcement of the proposed merger, was $19.45 per share. You are urged to obtain current market quotations for La Quinta common stock when considering whether to approve the merger proposal. The merger consideration, consisting of $8.40 in cash per share prior to giving effect to the reverse stock split (or $16.80 in cash per share after giving effect to the reverse stock split), without interest, is in addition to the shares of CorePoint that our stockholders will receive in the spin-off.

Holders

As of February 20, 2018, there were 155 record holders of La Quinta common stock.

Dividends

In 2017, 2016 and 2015, La Quinta did not pay any stockholder dividends. Under the merger agreement, described in “The Merger Agreement — Conduct of Business Pending the Merger” on page 91, we are prohibited from declaring, setting aside, making or paying any dividend or other distribution on our common stock (other than any dividends or distributions to a subsidiary of La Quinta and other than as contemplated by the spin-off) prior to the completion of the merger.

 

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The table below shows how much of our common stock was beneficially owned as of February 20, 2018 (unless another date is indicated) by (i) each person known by La Quinta to beneficially own more than 5% of our common stock, (ii) each director (who was serving as a director as of that date) and nominee for director, (iii) each named executive officer, and (iv) all current directors and executive officers as a group. In furnishing the information below, the Company has relied on information filed with the SEC by the beneficial owners reflecting beneficial ownership as of February 20, 2018.

 

Name of Beneficial Owner

   Number      Percentage of
Common Stock
 

Beneficial Owners of More than 5%:

     

Blackstone(1)

     35,173,076        29.97

Eminence Funds(2)

     9,608,081        8.19

Iridian Asset Management(3)

     8,937,686        7.62

The Vanguard Group(4)

     6,664,511        5.68

Directors and Executive Officers:

     

Keith A. Cline(5)

     498,449        *  

James H. Forson(6)

     113,990        *  

John W. Cantele(7)

     112,604        *  

Rajiv K. Trivedi(8)

     322,311        *  

Mark M. Chloupek(9)

     193,528        *  

James R. Abrahamson

     5,059        *  

Glenn Alba

     —          —    

Scott Bergren

     5,648        *  

Alan J. Bowers

     15,038        *  

Henry G. Cisneros

     10,996        *  

Giovanni Cutaia(10)

     —          —    

Brian Kim(10)

     —          —    

Mitesh B. Shah

     14,819        *  

Gary M. Summers

     6,864        *  

Directors and executive officers as a group (15 persons)(11)

     1,469,151        1.25

 

* Less than 1% of shares of common stock outstanding.
(1) Reflects shares of our common stock directly held by BRE/LQJV-NQ L.L.C., BRE/ Prime Mezz 2 L.L.C., Blackstone Real Estate Partners IV L.P., Blackstone Real Estate Partners IV.F L.P., Blackstone Real Estate Partners IV.TE.2 L.P., Blackstone Real Estate Partners (DC) IV.TE.1 L.P., Blackstone Real Estate Partners (DC) IV.TE.2 L.P., Blackstone Real Estate Partners (DC) IV.TE.3-A L.P., Blackstone Real Estate Holdings IV L.P., Blackstone Real Estate Partners V L.P., Blackstone Real Estate Partners V.F L.P., Blackstone Real Estate Partners V.TE.1 L.P., Blackstone Real Estate Partners V.TE.2 L.P., Blackstone Real Estate Partners (AIV) V L.P., and Blackstone Real Estate Holdings V L.P. (together, the “Blackstone Funds”).

The managing members of BRE/LQJV-NQ L.L.C. are Blackstone Real Estate Partners IV L.P. and Blackstone Real Estate Partners V L.P.

The managing member of BRE/Prime Mezz 2 L.L.C. is BRE/Prime Mezz 3-A L.L.C. The managing member of BRE/Prime Mezz 3-A L.L.C. is BRE/Prime Holdings L.L.C. The managing member of BRE/Prime Holdings L.L.C. is WIH Hotels L.L.C. The managing member of WIH Hotels L.L.C. is Blackstone Real Estate Partners IV L.P.

 

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The general partner of each of Blackstone Real Estate Partners IV L.P., Blackstone Real Estate Partners IV.F L.P., Blackstone Real Estate Partners IV.TE.2 L.P., Blackstone Real Estate Partners (DC) IV.TE.1 L.P., Blackstone Real Estate Partners (DC) IV.TE.2 L.P. and Blackstone Real Estate Partners (DC) IV.TE.3-A L.P. is Blackstone Real Estate Associates IV L.P. The general partner of Blackstone Real Estate Associates IV L.P. is BREA IV L.L.C.

The general partner of each of Blackstone Real Estate Partners V L.P., Blackstone Real Estate Partners V.F L.P., Blackstone Real Estate Partners V.TE.1 L.P., Blackstone Real Estate Partners V.TE.2 L.P., and Blackstone Real Estate Partners (AIV) V L.P. is Blackstone Real Estate Associates V L.P. The general partner of each of Blackstone Real Estate Associates V L.P. is BREA V L.L.C.

The general partner of Blackstone Real Estate Holdings V L.P. is BREP V Side-by-Side GP L.L.C. The general partner of Blackstone Real Estate Holdings IV L.P. is BREP IV Side-by-Side GP L.L.C.

The sole member of each of BREP IV Side-by-Side GP L.L.C. and BREP V Side-by-Side GP L.L.C. and managing member of each of BREA IV L.L.C. and BREA V L.L.C is Blackstone Holdings II L.P. The general partner of Blackstone Holdings II L.P. is Blackstone Holdings I/II GP Inc. The sole stockholder of Blackstone Holdings I/II GP Inc. is The Blackstone Group L.P. The general partner of The Blackstone Group L.P. is Blackstone Group Management L.L.C. Blackstone Group Management L.L.C. is wholly-owned by Blackstone’s senior managing directors and controlled by its founder, Stephen A. Schwarzman. Each of the entities that may be deemed to directly or indirectly control shares held by the Blackstone Funds and Mr. Schwarzman may be deemed to beneficially own such shares directly or indirectly controlled by it or him, but each disclaims beneficial ownership of such shares (other than the Blackstone Funds to the extent of their direct holdings).

 

(2) Beneficial ownership information is based on information contained in the Amendment No. 3 to Schedule 13G filed on February 14, 2018 on behalf of Eminence Capital, LP (“Eminence Capital”), Eminence GP, LLC (“Eminence GP”) and Ricky C. Sandler (“Mr. Sandler”). According to the schedule, included in the shares of our common stock listed above as beneficially owned by Eminence Funds are 10,540 shares over with Mr. Sandler has both sole voting and sole dispositive power; 9,597,541 shares over which each of Eminence Capital and Mr. Sandler has both shared voting power and shared dispositive power; and 6,940,942 shares over which Eminence GP has both shared voting power and shared dispositive power.

According to the schedule, the shares of our common stock reflected above are held for the accounts of: (i) Eminence Partners, L.P. (“Eminence I”), Eminence Partners II, L.P. (“Eminence II”), Eminence Eaglewood Master, L.P. (“Eminence Eaglewood”), Eminence Partners Long, L.P. (together with Eminence I, Eminence II, Eminence Leveraged and Eminence Eaglewood, the “Partnerships”), as well as Eminence Fund Master, Ltd. (“Eminence Offshore Master Fund”), Eminence Fund Leveraged Master, Ltd. (together with Eminence Offshore Master Fund, the “Master Funds”) and Eminence Fund Long, Ltd. (“Eminence Offshore Long”). The Partnerships, Master Funds and Eminence Offshore Long are collectively referred to as the “Eminence Funds”; (ii) a separately managed account (the “SMA”); and (iii) family accounts and other related accounts over which Mr. Sandler has investment discretion (the “Family Accounts”).

According to the schedule, Eminence Capital serves as the management company to the Eminence Funds with respect to the shares of our common stock directly owned by the Eminence Funds and the investment adviser to the SMA with respect to the shares of our common stock directly owned by the SMA. Eminence Capital may be deemed to have voting and dispositive power over the shares held for the accounts of the Eminence Funds and the SMA.

 

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According to the schedule, Eminence GP serves as general partner or manager with respect to the shares of our common stock directly owned by the Partnerships and Master Funds and may be deemed to have voting and dispositive power over the shares held for the accounts of the Partnerships and Master Funds.

According to the schedule, Mr. Sandler is the Chief Executive Officer of Eminence Capital and the Managing Member of Eminence GP and may be deemed to have voting and dispositive power with respect to the shares of our common stock directly owned by the Eminence Funds, the SMA and the Family Accounts, as applicable.

The address of the principal business and principal office of Eminence GP, Eminence Capital and Mr. Sandler is 65 East 55th Street, 25th Floor, New York, New York 10022.

 

(3) Beneficial ownership information is based on information contained in the Schedule 13G filed on February 6, 2018 on behalf of Iridian Asset Management LLC (“Iridian”), David L. Cohen (“Cohen”) and Harold J. Levy (“Levy”). According to the schedule, included in the shares of our common stock listed above as beneficially owned by Iridian Asset Management are 8,937,686 shares over which each of Iridian, Cohen and Levy has shared voting and shared dispositive power.

According to the schedule, Iridian is majority owned by Arovid Associates LLC, a company owned and controlled by the following: 12.5% by Cohen, 12.5% by Levy, 37.5% by LLMD LLC and 37.5% by ALHERO LLC. LLMD LLC is owned 1% by Cohen, and 99% by a family trust controlled by Cohen. ALHERO LLC is owned 1% by Levy and 99% by a family trust controlled by Levy.

According to the schedule, Iridian has direct beneficial ownership of the shares of Common Stock in the accounts for which it serves as the investment adviser under its investment management agreements. Messrs. Cohen and Levy may be deemed to possess beneficial ownership of the shares of Common Stock beneficially owned by Iridian by virtue of their indirect controlling ownership of Iridian, and having the power to vote and direct the disposition of shares of Common Stock as joint Chief Investment Officers of Iridian. According to the schedule, Messrs. Cohen and Levy disclaim beneficial ownership of such shares.

The address of the principal business office of each of Iridian, Cohen and Levy is 276 Post Road West, Westport, CT 06880-4704.

 

(4) Beneficial ownership information is based on information contained in the Amendment No. 1 to Schedule 13 G filed on February 9, 2018 on behalf of The Vanguard Group and its wholly-owned subsidiaries, Vanguard Fiduciary Trust Company and Vanguard Investments Australia, Ltd. According to the schedule, included in the shares of our common stock listed above as beneficially owned by The Vanguard Group are 105,125 shares over which The Vanguard Group has sole voting power, 11,985 shares over which The Vanguard Group has shared voting power, 6,554,716 shares over which The Vanguard Group has sole dispositive power and 109,795 shares over which The Vanguard Group has shared dispositive power.
(5) Includes 267,652 shares of unvested restricted stock. Does not include shares issuable upon settlement of performance share units (“PSUs”) granted to Mr. Cline.
(6) Includes 79,390 shares of unvested restricted stock. Does not include shares issuable upon settlement of PSUs granted to Mr. Forson.
(7) Includes 77,948 shares of unvested restricted stock. Does not include shares issuable upon settlement of PSUs granted to Mr. Cantele.
(8) Includes 126,577 shares of unvested restricted stock. Does not include shares issuable upon settlement of PSUs granted to Mr. Trivedi.
(9) Includes 90,652 shares of unvested restricted stock. Does not include shares issuable upon settlement of PSUs granted to Mr. Chloupek.
(10) Messrs. Cutaia and Kim are each employees of Blackstone, but each disclaims beneficial ownership of the shares beneficially owned by Blackstone.
(11) Includes 676,176 shares of unvested restricted stock. Does not include shares issuable upon settlement of PSUs granted to our executive officers.

 

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MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER

The following is a summary of the material U.S. federal income tax consequences of the merger to “U.S. holders” and “non-U.S. holders” (in each case, as defined below) of La Quinta common stock whose shares of common stock are converted into the right to receive cash in the merger. This summary is based on the current provisions of the U.S. Internal Revenue Code of 1986, as amended from time to time (the “Code”), applicable U.S. Treasury regulations, judicial authority, and administrative rulings, all of which are subject to change, possibly with retroactive effect. Any such change could alter the tax consequences to the holders as described herein. This summary is general in nature and does not purport to be a complete analysis of all potential tax effects of the merger. For example, it does not consider the effect of the Medicare tax on net investment income or any applicable state, local or foreign income tax laws, or of any non-income tax laws. Furthermore, this summary applies only to holders that hold their La Quinta common stock as “capital assets” within the meaning of Section 1221 of the Code (generally, property held for investment). In addition, this discussion does not address all aspects of U.S. federal income tax consequences that may be relevant to a holder in light of the holder’s particular circumstances or to holders subject to special rules, such as:

 

    a bank, insurance company, or other financial institution;

 

    a tax-exempt organization;

 

    a retirement plan or other tax-deferred account;

 

    an entity or arrangement treated for U.S. federal income tax purposes as a partnership, S corporation or other pass-through entity (or an investor in such an entity or arrangement);

 

    a mutual fund;

 

    a real estate investment trust or regulated investment company;

 

    a dealer or broker in stocks and securities or currencies;

 

    a trader in securities that elects mark-to-market treatment;

 

    a holder of shares subject to the alternative minimum tax provisions of the Code;

 

    a holder of shares that received the shares through the exercise of an employee stock option, through a tax qualified retirement plan or otherwise as compensation;

 

    a U.S. holder that has a functional currency other than the U.S. dollar;

 

    a “controlled foreign corporation,” “passive foreign investment company,” or corporation that accumulates earnings to avoid U.S. federal income tax;

 

    a holder subject to the income recognition rules of Section 451(b) of the Code;

 

    a holder that owns (directly or indirectly) 10% or more of La Quinta;

 

    a holder that also owns (directly or indirectly) stock of Wyndham Worldwide;

 

    a holder that holds shares as part of a hedge, straddle, constructive sale, conversion or other integrated transaction; or

 

    a United States expatriate or a person subject to the U.S. anti-inversion rules under Section 7874 of the Code.

If an entity that is classified as a partnership for U.S. federal income tax purposes holds La Quinta common stock, the U.S. federal income tax treatment of a partner will generally depend on the status of the partner and the activities of the partner and the partnership. Partnerships holding La Quinta common stock and partners in such partnerships should consult their tax advisors as to the particular U.S. federal income tax consequences of the merger to them.

 

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For purposes of this discussion, the term “U.S. holder” means a beneficial owner of La Quinta common stock that is:

 

    an individual citizen or resident of the United States;

 

    a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized under the laws of the United States, any state thereof or the District of Columbia;

 

    an estate the income of which is subject to U.S. federal income taxation regardless of its source; or

 

    a trust if it (1) is subject to the primary supervision of a court within the United States and one or more United States persons have the authority to control all substantial decisions of the trust or (2) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a United States person.

A “non-U.S. holder” means a beneficial owner of La Quinta common stock that is not a U.S. holder or a partnership (or any other entity classified as a partnership for U.S. federal income tax purposes).

U.S. Holders

General. As further described in CorePoint’s Form 10 filed with the SEC (File No. 001-38168), for U.S. federal income tax purposes, the spin-off and the merger are expected to be treated as in part a sale, to the extent of the cash received in the merger, and in part a redemption of La Quinta common stock in exchange for the CorePoint shares received in the spin-off, that together result in a complete termination of La Quinta stockholders’ interests in La Quinta in a fully taxable transaction. In general, a U.S. holder whose shares of La Quinta common stock are converted into the right to receive cash in the merger and CorePoint shares in the spin-off will recognize capital gain or loss for U.S. federal income tax purposes in an amount equal to the difference, if any, between (1) the sum of (A) the amount of cash received with respect to such shares plus (B) the fair market value, determined when the spin-off occurs, of the CorePoint shares received in the spin-off, and (2) the U.S. holder’s adjusted tax basis in such shares. A U.S. holder’s adjusted tax basis generally will equal the price the U.S. holder paid for such shares (taking into account the reverse stock split implemented as part of the spin-off). Gain or loss will be determined separately for each block of shares of La Quinta common stock (i.e., shares of La Quinta common stock acquired at the same cost in a single transaction). Such gain or loss will be capital gain or loss and generally will be treated as long-term capital gain or loss if the U.S. holder has held the shares of La Quinta common stock for more than one year at the time of the effective time of the merger. Long-term capital gains of non-corporate U.S. holders (including individuals) are generally eligible for reduced rates of taxation. The deductibility of capital losses is subject to limitations.

Information Reporting and Backup Withholding. Information reporting and backup withholding may apply to payments made in connection with the merger. Backup withholding will not apply, however, to a holder of La Quinta common stock who (1) furnishes a correct taxpayer identification number (“TIN”), certifies that such holder is not subject to backup withholding on an Internal Revenue Service (“IRS”) Form W-9, and otherwise complies with all applicable requirements of the backup withholding rules; or (2) provides proof that such holder is otherwise exempt from backup withholding. Backup withholding is not an additional tax, and any amounts withheld under the backup withholding rules may be refunded or credited against a holder’s U.S. federal income tax liability, if any, so long as such holder furnishes the required information to the IRS in a timely manner.

Non-U.S. Holders

General. Subject to the discussion of backup withholding below, a non-U.S. holder’s receipt of cash in exchange for shares of La Quinta common stock pursuant to the merger generally will not be subject to U.S. federal income tax unless:

 

    the gain, if any, on such shares is effectively connected with a trade or business of the non-U.S. holder in the United States (and, if required by an applicable income tax treaty, is attributable to the non-U.S. holder’s permanent establishment in the United States);

 

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    the non-U.S. holder is an individual who is present in the United States for 183 days or more in the taxable year of the exchange of shares of La Quinta common stock for cash pursuant to the merger and certain other conditions are met; or

 

    La Quinta is or has been a “United States real property holding corporation” for U.S. federal income tax purposes and certain other conditions are met.

A non-U.S. holder described in the first bullet point immediately above will generally be subject to regular U.S. federal income tax on any gain realized as if the non-U.S. holder were a U.S. holder. If such non-U.S. holder is a foreign corporation, it may also be subject to a branch profits tax equal to 30% of its effectively connected earnings and profits (or a lower treaty rate). A non-U.S. holder described in the second bullet point immediately above will be subject to tax at a rate of 30% (or a lower treaty rate) on any gain realized, which may be offset by U.S.-source capital losses recognized in the same taxable year, even though the individual is not considered a resident of the United States.

Generally, a corporation is a “United States real property holding corporation” if the fair market value of its United States real property interests equals or exceeds 50% of the sum of the fair market value of its worldwide real property interests and its other assets used or held for use in a trade or business (all as determined for U.S. federal income tax purposes). La Quinta believes that it is currently a “United States real property holding corporation” for U.S. federal income tax purposes. However, so long as La Quinta common stock is regularly traded on an established securities market, La Quinta’s treatment as a “United States real property holding corporation” would cause only a non-U.S. holder who holds or held, directly or indirectly under certain ownership rules of the Code, more than 5% of La Quinta common stock (at any time during the shorter of the five-year period preceding the merger or the period that the non-U.S. holder held La Quinta common stock), and is not eligible for a treaty exemption, to be subject to U.S. federal income tax on the exchange of La Quinta common stock for cash in the merger.

Information Reporting and Backup Withholding. Information reporting and backup withholding will generally apply to payments made pursuant to the merger to a non-U.S. holder effected by or through the U.S. office of any broker, U.S. or foreign, unless the holder certifies its status as a non-U.S. holder and satisfies certain other requirements, or otherwise establishes an exemption. Copies of applicable information returns reporting such payments and any withholding may also be made available to the tax authorities in the country in which such holder resides under the provisions of an applicable treaty or agreement. Generally, information reporting and backup withholding will not apply to a payment of disposition proceeds to a non-U.S. holder where the transaction is effected outside the United States through a non-U.S. office of a broker. However, for information reporting purposes, dispositions effected through a non-U.S. office of a U.S. broker or a non-U.S. broker with substantial U.S. ownership or operations generally will be treated in a manner similar to dispositions effected through a U.S. office of a broker. A non-U.S. holder must generally submit an IRS Form W-8BEN or IRS Form W-8BEN-E (or other applicable IRS Form W-8) attesting to its exempt foreign status in order to qualify as an exempt recipient. Notwithstanding the foregoing, backup withholding and information reporting may apply if the applicable withholding agent has actual knowledge, or reason to know, that a non-U.S. holder is a United States person. Backup withholding is not an additional tax. Rather, any amounts withheld under the backup withholding rules from a payment to a non-U.S. holder can be refunded or credited against the non-U.S. holder’s U.S. federal income tax liability, if any, so long as such holder furnishes the required information to the IRS in a timely manner.

THIS DISCUSSION IS FOR GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE. WE URGE YOU TO CONSULT WITH YOUR TAX ADVISOR WITH RESPECT TO THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO YOUR PARTICULAR SITUATION, AS WELL AS ANY TAX CONSEQUENCES OF THE MERGER ARISING UNDER THE FEDERAL ESTATE OR GIFT TAX RULES OR UNDER THE LAWS OF ANY STATE, LOCAL, FOREIGN OR OTHER TAXING JURISDICTION OR UNDER ANY APPLICABLE TAX TREATY.

 

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FUTURE LA QUINTA STOCKHOLDER PROPOSALS

La Quinta has not determined whether it will hold its 2018 annual meeting of stockholders due to the merger proposal. If the merger is not completed, La Quinta stockholders will continue to be entitled to attend and participate in La Quinta annual meeting of stockholders. If La Quinta holds its 2018 annual meeting of stockholders, any stockholder proposal intended for inclusion in the proxy materials for the 2018 annual meeting must have been received by our Secretary at our headquarters no later than December 8, 2017. Where a stockholder does not seek inclusion of the proposal in the proxy material and submits a proposal outside of the process described in Rule 14a-8 of the Exchange Act, the proposal must still comply with the procedural requirements in La Quinta’s bylaws. Accordingly, written notice must be sent to the Secretary of La Quinta not less than 90 nor more than 120 calendar days before the first anniversary of the prior year’s annual meeting. This means that for the 2018 annual meeting, written notice must have been delivered between the close of business on January 18, 2018 and the close of business on February 17, 2018. If the date of the annual meeting, however, is not within 20 days before or 70 days after the anniversary of the prior year’s meeting date, a stockholder proposal must be submitted within 120 calendar days before the actual meeting and no later than the later of  (i) the 90th calendar day before the actual meeting and (ii) the 10th calendar day following the calendar day on which La Quinta first announces the meeting date to the public. A copy of the full text of the bylaw provisions discussed above may be obtained by writing to: Secretary, La Quinta Holdings Inc., 909 Hidden Ridge, Suite 600, Irving, Texas 75038, or by telephone at (214) 492-6600.

Any stockholder suggestions for director nominations must be submitted by the dates by which other stockholder proposals are required to be submitted as set forth above.

The summaries set forth above are qualified in their entirety by our amended and restated bylaws and the process for submitting a stockholder proposal as described in Rule 14a-8 of the Exchange Act.

 

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MULTIPLE STOCKHOLDERS SHARING ONE ADDRESS

The SEC has adopted rules that permit companies and intermediaries, such as brokers and banks, to satisfy the delivery requirements for proxy statements with respect to two or more stockholders sharing an address by delivering a single proxy statement, as applicable, addressed to those stockholders, unless contrary instructions have been received. This procedure, which is commonly referred to as “householding,” reduces the amount of duplicate information that stockholders receive and lowers printing and mailing costs for companies.

Certain brokerage firms may have instituted householding for beneficial owners of our common stock held through brokerage firms. If your family has multiple accounts holding our common stock, you may have already received a householding notification from your broker. You may decide at any time to revoke your decision to household, and thereby receive multiple copies of proxy materials. If you wish to opt out of this procedure and receive a separate set of proxy materials in the future, or if you are receiving multiple copies and would like to receive only one, you should contact your broker, trustee or other nominee or La Quinta at the address and telephone number below. A separate copy of these proxy materials will be promptly delivered to any stockholder upon written request to: Secretary, La Quinta Holdings Inc., 909 Hidden Ridge, Suite 600, Irving, TX 75038, or by telephone at (214) 492-6600.

 

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WHERE YOU CAN FIND MORE INFORMATION

Investors will be able to obtain free of charge this proxy statement and other documents filed with the SEC at the SEC’s website at http://www.sec.gov. In addition, this proxy statement and our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to section 13(a) or 15(d) of the Securities Exchange Act of 1934 are available free of charge through our website at www.lq.com. as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. The information located on, or hyperlinked or otherwise connected to, La Quinta’s website referenced anywhere in this proxy statement is not, and shall not be deemed to be, a part of this proxy statement or incorporated into any other filings that we make with the SEC. For additional information regarding the spin-off, please see CorePoint’s Form 10 filed with the SEC (File No. 001-38168).

The SEC allows us to “incorporate by reference” documents we file with the SEC into this proxy statement, which means that we can disclose important information to you by referring you to other documents filed separately with the SEC. The information incorporated by reference is deemed to be part of this proxy statement, except that information that we file later with the SEC will automatically update and supersede this information. This proxy statement incorporates by reference the documents listed below that have been previously filed with the SEC (other than, in each case, documents or information deemed to have been furnished and not filed in accordance with SEC rules):

 

    La Quinta’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016, which was filed with the SEC on March 1, 2017;

 

    La Quinta’s proxy statement for its 2017 annual meeting of stockholders, which was filed with the SEC on April 7, 2017;

 

    La Quinta’s Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2017, June 30, 2017 and September 30, 2017 which were filed with the SEC on May 5, 2017, August 7, 2017 and November 2, 2017, respectively; and

 

    La Quinta’s Current Reports on Form 8-K filed with the SEC on January 18, 2017, February 28, 2017, May 3, 2017, May 23, 2017, July 26, 2017, August 7, 2017, September 7, 2017, November 1, 2017, January 18, 2018 and February 2, 2018.

We also incorporate by reference into this proxy statement additional documents that La Quinta may file with the SEC under Section 13(a), 13(c), 14, or 15(d) of the Exchange Act, from the date of this proxy statement until the date of the special meeting; provided, however, that we are not incorporating by reference any additional documents or information furnished and not filed with the SEC. A copy of the materials that are incorporated by reference will be promptly delivered to any stockholder upon written request to: Secretary, La Quinta Holdings Inc., 909 Hidden Ridge, Suite 600, Irving, TX 75038.

Participants in Solicitation

La Quinta, its directors and certain of its executive officers may be considered participants in the solicitation of proxies in connection with the proposed transaction. Information regarding the persons who may, under the rules of the SEC, be deemed participants in such solicitation in connection with the proposed merger is set forth in the proxy statement filed with the SEC. Information about the directors and executive officers of La Quinta is set forth in its Annual Report on Form 10-K for the fiscal year ended December 31, 2016, which was filed with the SEC on March 1, 2017, its proxy statement for its 2017 annual meeting of stockholders, which was filed with the SEC on April 7, 2017, its Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2017, June 30, 2017 and September 30, 2017 which were filed with the SEC on May 5, 2017, August 7, 2017 and November 2, 2017, respectively, and its Current Reports on Form 8-K, which were filed with the SEC on January 18, 2017, February 28, 2017, May 3, 2017, May 23, 2017, July 26, 2017, August 7, 2017, September 7, 2017, November 1, 2017, January 18, 2018 and February 2, 2018.

 

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These documents can be obtained free of charge from the sources indicated above. Additional information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, is contained in the proxy statement and other relevant materials filed with the SEC.

La Quinta Holdings Inc.

909 Hidden Ridge, Suite 600

Irving, Texas 75038

Tel. 214-492-6600

www.lq.com

THIS PROXY STATEMENT DOES NOT CONSTITUTE THE SOLICITATION OF A PROXY IN ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM OR FROM WHOM IT IS UNLAWFUL TO MAKE SUCH PROXY SOLICITATION IN THAT JURISDICTION. YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE INTO THIS PROXY STATEMENT TO VOTE YOUR SHARES AT THE SPECIAL MEETING. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT FROM WHAT IS CONTAINED IN THIS PROXY STATEMENT.

THIS PROXY STATEMENT IS DATED [●], 2018. YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS PROXY STATEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THAT DATE, AND THE MAILING OF THIS PROXY STATEMENT TO STOCKHOLDERS DOES NOT CREATE ANY IMPLICATION TO THE CONTRARY.

 

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Annex A

EXECUTION VERSION

 

 

 

 

AGREEMENT AND PLAN OF MERGER

by and among

Wyndham Worldwide Corporation,

WHG BB Sub, Inc.

and

La Quinta Holdings Inc.

Dated as of January 17, 2018

 

 

 

 

 

 

 


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TABLE OF CONTENTS

 

          Page  

ARTICLE I THE MERGER

     A-2  

Section 1.1.

   The Distribution      A-2  

Section 1.2.

   The Merger      A-2  

Section 1.3.

   Closing; Effective Time      A-2  

Section 1.4.

   Effective Time      A-2  

Section 1.5.

   Effects of the Merger      A-2  

Section 1.6.

   Certificate of Incorporation; Bylaws      A-3  

Section 1.7.

   Directors and Officers      A-3  

ARTICLE II EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS

     A-3  

Section 2.1.

   Conversion of Securities      A-3  

Section 2.2.

   Treatment of Company Equity Awards      A-4  

Section 2.3.

   Dissenting Shares      A-5  

Section 2.4.

   Surrender of Shares      A-5  

Section 2.5.

   Withholding      A-7  

Section 2.6.

   Transfer Taxes      A-7  

ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     A-7  

Section 3.1.

   Organization and Qualification      A-7  

Section 3.2.

   Certificate of Incorporation      A-8  

Section 3.3.

   Capitalization      A-8  

Section 3.4.

   Authority      A-9  

Section 3.5.

   No Conflict; Required Filings and Consents      A-9  

Section 3.6.

   SEC Reports; Financial Statements; Undisclosed Liabilities      A-10  

Section 3.7.

   Contracts      A-12  

Section 3.8.

   Real Property      A-13  

Section 3.9.

   Intellectual Property      A-13  

Section 3.10.

   Compliance      A-14  

Section 3.11.

   Absence of Certain Changes or Events      A-14  

Section 3.12.

   Absence of Litigation      A-14  

Section 3.13.

   Employee Benefit Plans      A-15  

Section 3.14.

   Labor and Employment Matters      A-15  

Section 3.15.

   Insurance      A-16  

Section 3.16.

   Tax Matters      A-16  

Section 3.17.

   Environmental Matters      A-17  

Section 3.18.

   Affiliate Transactions      A-17  

Section 3.19.

   Proxy Statement      A-17  

Section 3.20.

   Opinion of Financial Advisor      A-18  

Section 3.21.

   Brokers; Certain Fees      A-18  

Section 3.22.

   Vote Required      A-18  

Section 3.23.

   Anti-Takeover Provisions      A-18  

Section 3.24.

   CPLG Financing      A-18  

Section 3.25.

   No Other Representations and Warranties      A-19  

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

     A-20  

Section 4.1.

   Organization      A-20  

Section 4.2.

   Authority      A-20  

 

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          Page  

Section 4.3.

   No Conflict; Required Filings and Consents      A-20  

Section 4.4.

   Absence of Litigation      A-21  

Section 4.5.

   Proxy Statement      A-21  

Section 4.6.

   Brokers      A-21  

Section 4.7.

   Operations of Merger Sub      A-21  

Section 4.8.

   Share Ownership      A-21  

Section 4.9.

   Vote/Approval Required      A-22  

Section 4.10.

   Other Agreements      A-22  

Section 4.11.

   Parent Financing      A-22  

Section 4.12.

   Eligible Independent Contractor Status      A-23  

Section 4.13.

   No Other Representations or Warranties      A-23  

ARTICLE V COVENANTS

     A-24  

Section 5.1.

   Conduct of Business of the Company Pending the Merger      A-24  

Section 5.2.

   Restrictions on the Conduct of Business of the Company Pending the Merger      A-25  

Section 5.3.

   Access to Information; Confidentiality      A-26  

Section 5.4.

   Acquisition Proposals      A-27  

Section 5.5.

   Employment and Employee Benefits Matters      A-30  

Section 5.6.

   Directors’ and Officers’ Indemnification and Insurance      A-31  

Section 5.7.

   Further Action; Efforts      A-33  

Section 5.8.

   Proxy Statement; Stockholders’ Meeting      A-34  

Section 5.9.

   Distribution      A-36  

Section 5.10.

   Public Announcements      A-36  

Section 5.11.

   Rule 16b-3      A-37  

Section 5.12.

   Further Assurances      A-37  

Section 5.13.

   No Control of the Company’s Business      A-37  

Section 5.14.

   Operations of the Merger Sub      A-37  

Section 5.15.

   Certain Tax Matters      A-37  

Section 5.16.

   Notification of Certain Matters      A-37  

Section 5.17.

   Litigation      A-37  

Section 5.18.

   Director Resignations      A-37  

Section 5.19.

   CPLG Financing      A-38  

Section 5.20.

   [Reserved]      A-39  

Section 5.21.

   Debt Financing      A-39  

Section 5.22.

   Debt Financing and Parent Spin Cooperation      A-41  

Section 5.23.

   Parent Spin      A-43  

Section 5.24.

   Spin-Off Transaction Agreements      A-43  

ARTICLE VI CONDITIONS OF MERGER

     A-44  

Section 6.1.

   Conditions to Obligation of Each Party to Effect the Merger      A-44  

Section 6.2.

   Additional Conditions to Obligation of the Company to Effect the Merger      A-44  

Section 6.3.

   Additional Conditions to Obligation of Merger Sub and Parent to Effect the Merger      A-45  

ARTICLE VII TERMINATION

     A-46  

Section 7.1.

   Termination by Mutual Agreement      A-46  

Section 7.2.

   Termination by Either Parent or the Company      A-46  

Section 7.3.

   Termination by the Company      A-46  

Section 7.4.

   Termination by Parent      A-47  

Section 7.5.

   Effect of Termination      A-47  

 

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          Page  

ARTICLE VIII GENERAL PROVISIONS

     A-49  

Section 8.1.

   Non-Survival of Representations, Warranties, Covenants and Agreements      A-49  

Section 8.2.

   Amendment      A-49  

Section 8.3.

   Waiver      A-49  

Section 8.4.

   Notices      A-49  

Section 8.5.

   Expenses      A-50  

Section 8.6.

   Severability      A-50  

Section 8.7.

   Assignment      A-50  

Section 8.8.

   Entire Agreement; Third-Party Beneficiaries      A-51  

Section 8.9.

   Governing Law      A-51  

Section 8.10.

   Counterparts      A-51  

Section 8.11.

   Performance Guaranty      A-51  

Section 8.12.

   Jurisdiction      A-51  

Section 8.13.

   Service of Process      A-52  

Section 8.14.

   Waiver of Jury Trial      A-52  

Section 8.15.

   Specific Performance; No Recourse      A-53  

Section 8.16.

   Interpretation      A-54  

 

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AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER, is entered into as of January 17, 2018 (as it may be amended from time to time, this “Agreement”), by and among Wyndham Worldwide Corporation, a Delaware corporation (“Parent”), WHG BB Sub, Inc., a Delaware corporation and wholly-owned Subsidiary of Parent (“Merger Sub”), and La Quinta Holdings Inc., a Delaware corporation (the “Company”). Capitalized terms which are otherwise not defined herein shall have the meaning set forth in Exhibit A hereto.

WHEREAS, concurrently with the execution of this Agreement, the Company and CorePoint Lodging Inc., a Maryland corporation and a wholly-owned Subsidiary of the Company (“CPLG”), entered into the Separation and Distribution Agreement in the form attached hereto as Annex A (the “Distribution Agreement”), pursuant to which, among other things, prior to the Effective Time: (i) the Company will effect a separation of the Management and Franchise Business (which will remain with the Company and the Retained Subsidiaries) and the Separated Real Estate Business (which will be conveyed to and vest in CPLG and its Subsidiaries); (ii) the Company will effect the Reverse Stock Split; and (iii) the Company will distribute to the holders of Shares all of the outstanding shares of CPLG Common Stock (the “Distribution”);

WHEREAS, concurrently with the execution of this Agreement, the Company and CPLG entered into the Employee Matters Agreement in the form attached hereto as Annex B;

WHEREAS, at the Effective Time, the parties will effect the merger of Merger Sub with and into the Company, with the Company continuing as the Surviving Corporation, upon the terms and subject to the conditions set forth herein;

WHEREAS, the Company Board (a) has determined that the Merger and this Agreement are advisable, fair to, and in the best interests of the Company and its stockholders and has approved and declared advisable this Agreement and the transactions contemplated hereby, including the Merger, and (b) has recommended the adoption by the stockholders of the Company of this Agreement, in each case on the terms and subject to the conditions set forth herein;

WHEREAS, the Company Board (a) has determined that the amendment to the certificate of incorporation of the Company in order to effect the Reverse Stock Split (the “Reverse Stock Split Charter Amendment”) and the amendment to the certificate of incorporation of the Company in order to change the par value of the Shares in connection with the Reverse Stock Split (the “Par Value Charter Amendment” and, together with the Reverse Stock Split Charter Amendment, the “Company Charter Amendments”) are advisable and in the best interests of the Company and its stockholders and has approved the Company Charter Amendments and (b) has recommended that the stockholders approve the Company Charter Amendments;

WHEREAS, the respective boards of directors or equivalent governing body of each of Parent and Merger Sub have approved and declared advisable to enter into this Agreement and consummate the transactions contemplated hereby, including the Merger; and

WHEREAS, concurrently with the execution and delivery of this Agreement, and as a condition and inducement to the willingness of Parent to enter into this Agreement, certain stockholders of the Company are entering into a support agreement with Parent (the “Voting Agreement”), pursuant to which such stockholders have agreed, on the terms and subject to the conditions set forth therein, to, among other things, vote all of their Shares in favor of the adoption of this Agreement.

 

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NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, Parent, Merger Sub and the Company hereby agree as follows:

ARTICLE I

THE MERGER

Section 1.1. The Distribution. Upon the terms and subject to the conditions of the Spin-Off Transaction Agreements, on the Closing Date but prior to the Effective Time and subject to the satisfaction or (to the extent permitted by applicable Law) waiver of the conditions set forth in Article VI (other than those c