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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) August 31, 2000
INTERSTATE HOTELS CORPORATION
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(Exact Name of Registrant as Specified in its Charter)
Maryland 0-26805 75-2767215
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(State or other jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
Foster Plaza 10, 680 Andersen Drive, Pittsburgh, Pennsylvania 15220
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (412) 937-0600
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS.
On August 31, 2000, Interstate Hotels Corporation ("the Company")
entered into a definitive agreement with CGLH Partners I, LP and CGLH Partners
II, LP (together, the "Investor"), pursuant to which the Company agreed to sell
to the Investor an aggregate amount of $25,000,000 of its 8.75% Subordinated
Convertible Notes (the "Notes") and 500,000 shares of its Series B Convertible
Preferred Stock, par value $.01 per share (the "Preferred Stock") for an
aggregate amount of $5,000,000. The issuance of the Preferred Stock and the
Notes, together with the execution of a Registration Rights Agreement (which is
attached as an exhibit hereto), an Investor Agreement, and the formation of a
joint venture, all described more fully in the Company's Preliminary Proxy
Statement (the "Proxy Statement"), filed with the Securities and Exchange
Commission on September 1, 2000, is expected to occur promptly after receipt of
stockholder approval for the issuance of the Preferred Stock, the Notes and the
shares of Class A Common Stock issuable upon conversion of the Preferred Stock
and the Notes.
In connection with the transactions contemplated under the Securities
Purchase Agreement, the Company entered into amended and restated employment
agreements with each of Thomas F. Hewitt, J. William Richardson and Kevin P.
Kilkeary, members of senior management of the Company (the "Executives"). These
amended and restated employment agreements become effective upon the closing of
the transactions contemplated under the Securities Purchase Agreement and
provide, among other things, as described more fully in the Proxy Statement, for
the issuance of an aggregate of 225,000 shares of Preferred Stock to these
individuals in exchange for their waiver of severance payments owed to them by
the Company under their existing employment agreements. In addition, the
Executives entered into a Stockholders Agreement with the Investors pursuant to
which they agreed to appoint CGLH Partners III LP as proxy with the power to
vote their shares of Preferred Stock on all matters. The Stockholders Agreement
also provides for certain tag-along, drag-along and other buyout rights under
certain circumstances. A copy of the Stockholders Agreement is attached as an
exhibit hereto.
$25 million of the proceeds raised by the sale of the Notes and the
Preferred Stock will be invested by the Company in a newly formed joint venture
(the "Joint Venture") with affiliates of the Investor for acquisition of hotel
properties that will be managed by the Company. The Investor has committed to
invest $20 million of additional capital to the Joint Venture. The Joint Venture
is structured as a limited partnership with an affiliate of the Investor serving
as the managing general partner having decision-making authority and the Company
serving as a general partner having limited authority and responsibility. The
limited partnership interests will be owned by affiliates of the Investor,
affiliates of the Company and Mr. Hewitt and Mr. Richardson. The Company will
own a minority percentage interest of the Joint Venture. The terms of the Joint
Venture are described more fully in the Proxy Statement. A copy of the Limited
Partnership Agreement for the Joint Venture is attached as an exhibit hereto.
Also, in connection with the Investor's investment in the Preferred Stock and
the Notes, the Company has agreed to cause its principal operating subsidiary,
Interstate Hotels, LLC ("IH, LLC") to redeem from affiliates of Wyndham
International, Inc. their 55% non-voting economic interests in IH, LLC (the
"Wyndham Interest"). The terms of the redemption of the Wyndham Interest are
described more fully in the Proxy Statement and a copy of the Conversion and
Redemption Agreement is attached as an exhibit hereto.
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Also, the Company amended its Rights Agreement, dated as of July 8,
1999, between the Company and American Stock Transfer and Trust Company, as
transfer agent. The Amendment made certain provisions of the Rights Agreement
inapplicable to the transactions contemplated by the Securities Purchase
Agreement to ensure that the transactions contemplated thereunder, including the
conversion of the Notes or Preferred Stock into Class A Common Stock, will not
result in a distribution of separate rights certificates or the occurrence of a
distribution date under the Rights Agreement.
The foregoing description of the Securities Purchase Agreement, Rights
Agreement, employment agreements and related agreements is qualified in its
entirety by reference to the full text of such agreements, a copy of which has
been filed as an exhibit hereto (or otherwise as an appendix to the Proxy
Statement) and is incorporated herein by reference. Copies of such agreements,
and the related Summary of Rights, which is attached as Exhibit C to the Rights
Agreement, are available free of charge from the Company.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired: N/A
(b) Pro Forma Financial Information: None
(c) Exhibits:
Number Exhibit
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4.1 Amendment No. 1, effective as of August 31, 2000, to the
Rights Agreement, dated as of July 8, 1999, between Interstate
Hotels Corporation and American Stock Transfer and Trust
Company.
10.1 Form of Agreement of Limited Partnership of CGLH-IHC Fund I,
L.P. by and between CGLH Partners III, L.P., as managing
general partner, Interstate Investment Corporation, as general
partner and CGLH Partners IV L.P. and Interstate Property
Partnership, L.P., as limited partners
10.2 Conversion and Redemption Agreement, dated as of August 31,
2000, by and among Interstate Hotels, LLC, PAH-Interstate
Holdings, Inc., Wyndham International, Inc., Patriot American
Hospitality, Inc., Northridge Holdings, Inc. and Interstate
Hotels Corporation
10.3 Amended and Restated Employment Agreement, dated as of August
31, 2000 by and between Interstate Hotels Corporation and
Thomas F. Hewitt
10.4 Amended and Restated Employment Agreement, dated as of August
31, 2000 by and between Interstate Hotels Corporation and J.
William Richardson
10.5 Amended and Restated Employment Agreement, dated as of August
31, 2000 by and between Interstate Hotels Corporation and
Kevin P. Kilkeary
10.6 Stockholders Agreement, dated as of August 31, 2000, by and
among Interstate Hotels Corporation and Thomas F. Hewitt, J.
William Richardson and Kevin P. Kilkeary, as stockholders
10.7 Form of Registration Rights Agreement, by and between
Interstate Hotels Corporation and CGLH Partners I LP and CGLH
Partners II LP
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
INTERSTATE HOTELS CORPORATION
By: /s/ J. William Richardson
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Name: J. William Richardson
Title: Vice Chairman and
Chief Financial Officer
Dated: September 6, 2000
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INDEX TO EXHIBITS
NUMBER EXHIBIT
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4.1 Amendment No. 1, effective as of August 31, 2000, to the Rights
Agreement, dated as of July 8, 1999, between Interstate Hotels
Corporation and American Stock Transfer and Trust Company
10.1 Form of Agreement of Limited Partnership of CGLH-IHC Fund I, L.P. by
and between CGLH Partners III, L.P., as managing general partner,
Interstate Investment Corporation, as general partner and CGLH
Partners IV L.P. and Interstate Property Partnership, L.P., as
limited partners
10.2 Conversion and Redemption Agreement, dated as of August 31, 2000, by
and among Interstate Hotels, LLC, PAH-Interstate Holdings, Inc.,
Wyndham International, Inc., Patriot American Hospitality, Inc.,
Northridge Holdings, Inc. and Interstate Hotels Corporation
10.3 Amended and Restated Employment Agreement, dated as of August 31,
2000 by and between Interstate Hotels Corporation and Thomas F.
Hewitt
10.4 Amended and Restated Employment Agreement, dated as of August 31,
2000 by and between Interstate Hotels Corporation and J. William
Richardson
10.5 Amended and Restated Employment Agreement, dated as of August 31,
2000 by and between Interstate Hotels Corporation and Kevin P.
Kilkeary
10.6 Stockholders Agreement, dated as of August 31, 2000, by and among
Interstate Hotels Corporation and Thomas F. Hewitt, J. William
Richardson and Kevin P. Kilkeary, as stockholders
10.7 Form of Registration Rights Agreement, by and between Interstate
Hotels Corporation and CGLH Partners I LP and CGLH Partners II LP
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