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EXHIBIT 2.2
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FORMATION AGREEMENT
among
INTERSTATE HOTELS COMPANY,
INTERSTATE HOTELS CORPORATION
and
THE CONTRIBUTORS NAMED HEREIN
As of June __, 1996
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FORMATION AGREEMENT
FORMATION AGREEMENT (this "Agreement"), made as of the ______
day of June, 1996 by and among each of the Contributors (as defined below),
INTERSTATE HOTELS COMPANY, a Pennsylvania corporation ("Interstate"), and
INTERSTATE HOTELS CORPORATION, a Pennsylvania corporation ("IHC").
BACKGROUND
A. Interstate contemplates the consummation of an
initial public offering of its common stock.
B. The persons listed on SCHEDULE A attached hereto and
made a part hereof (collectively, "Contributors") own interests in the
corporations and partnerships listed opposite their respective names on
Schedule A attached hereto (collectively, the "Assets").
C. The Contributors desire to contribute the Assets to
Interstate in exchange for shares of Interstate's common stock, on the terms
and conditions hereinafter set forth.
D. The Contributors and Interstate intend that the
contribution of the Assets and the issuance of the common stock hereunder, will
be treated as a tax-free transfer within the meaning of Section 351(a) of the
Internal Revenue Code of 1986, as amended (the "Code").
E. Interstate desires to contribute certain of the
Assets to IHC.
NOW, THEREFORE, in consideration of the foregoing and
the mutual covenants and agreements set forth herein, and other good and
valuable consideration, the receipt of which is hereby acknowledged, the
parties, intending to be legally bound, agree as follows:
1. CONTRIBUTIONS OF ASSETS. On the Closing Date (as
hereinafter defined) and pursuant to the terms and subject to the conditions
set forth in this Agreement, the Contributors shall contribute to Interstate
and Interstate shall accept from the Contributors all of the Contributors'
right, title and interest in and to the Assets, free and clear of any and all
Encumbrances (as hereinafter defined) other than Permitted Exceptions (as
hereinafter defined). Immediately following the foregoing contribution,
Interstate shall contribute the Assets described on SCHEDULE B attached hereto
and made a part hereof to IHC. In addition, on the Closing Date IHC shall
assign its 1% general partner interest (the "GP Interest") in IHC/Pittsburgh
Partnership, L.P., a Delaware limited partnership ("IHC/Pittsburgh") to IHC
Member Corporation, a Delaware
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corporation ("IHC Member"), who shall be admitted as an additional general
partner of IHC/Pittsburgh.
2. CONSIDERATION. In consideration of the contribution
of the Assets by the Contributors, on the Closing Date, Interstate shall
deliver to the Contributors certificates representing shares of the common
stock, par value $.01 per share, of Interstate (the "Stock") with each
Contributor receiving the number of shares of Stock set forth opposite the name
of such Contributor on SCHEDULE A, attached hereto and made a part hereof. The
contribution by Interstate of the Assets described on Schedule B to IHC shall
be treated as a contribution of capital and no additional shares of capital
stock of IHC shall be issued to Interstate. The contribution by IHC of the GP
Interest in IHC/Pittsburgh to IHC Member shall be treated as a contribution of
capital and no additional shares of capital stock of IHC Member shall be issued
to IHC. Interstate, IHC and IHC Member intend that the contribution by
Interstate of the Assets described on Schedule B to IHC and the contribution by
IHC of the GP Interest in IHC/Pittsburgh to IHC Member will be treated as
tax-free transfers within the meaning of Section 351 of the Code.
3. THE CLOSING. (a) The closing of the contribution of
the Assets (the "Closing") shall take place on the date of closing of
Interstate's initial public offering (the "Closing Date"), or such other date
as the parties may mutually determine.
(b) The Closing shall be held on the Closing Date at 9:00
A.M. at the offices of Jones, Day, Reavis & Pogue, 500 Grant Street, One Mellon
Bank Center, Pittsburgh, Pennsylvania 15219, or at such other location agreed
upon by the parties hereto.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
CONTRIBUTORS. Each Contributor hereby represents, warrants and covenants to
Interstate as of the date hereof and as of the Closing Date, as to itself and
its own actions, severally but not jointly, as follows:
4.1 FORMATION; EXISTENCE. Each Contributor that
is a limited liability company, general or limited partnership
or corporation, as applicable, is duly formed, validly
existing and in good standing under the laws of the
jurisdiction of its organization.
4.2 POWER AND AUTHORITY. It has all requisite
power and authority to enter into this Agreement, to perform
its obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance
of this Agreement and the consummation of the transactions
provided for in this Agreement have been duly authorized by
all necessary action on its part. This Agreement has been
duly executed and delivered by it and constitutes its legal,
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valid and binding obligation, enforceable against it in
accordance with its terms, except as such enforceability may
be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights and by
general principles of equity (whether applied in a proceeding
at law or in equity).
4.3 NO CONSENTS. No consent, license, approval,
order, permit or authorization of, or registration, filing or
declaration with, any court, administrative agency or
commission or other governmental authority or instrumentality,
domestic or foreign, or any other persons is required to be
obtained or made in connection with the execution, delivery
and performance of this Agreement or any of the transactions
required or contemplated hereby other than such as have been
made or obtained prior to the date hereof or will be made or
obtained prior to the Closing Date.
4.4 NO CONFLICTS. The execution, delivery and
performance of this Agreement, and the contribution of the
Assets, will not (a) conflict with or result in any violation
of its organization documents, (b) conflict with or result in
any violation of any provision of any bond, note or other
instrument of indebtedness, indenture, mortgage, deed of
trust, loan agreement, lease or other material agreement or
instrument to which it is a party in its individual capacity
or by which its assets are bound, or (c) violate any existing
term or provision of any order, writ, judgment, injunction,
decree, statute, law, rule or regulation applicable to it or
its assets or properties.
4.5 ASSETS. It is the owner and holder of good
and marketable title of a portion of the Assets and such
Assets are held by it free and clear of any lien, pledge,
option, charge, security interest, encumbrance, title
retention agreement, right of first refusal, adverse claim or
restriction (collectively, "Encumbrances") other than the
liens, encumbrances and exceptions set forth on EXHIBIT A
attached hereto and made a part hereof ("Permitted
Exceptions"). Upon contribution of such Assets by it to
Interstate and upon the issuance of the Stock to the
Contributors, Interstate will receive good and marketable
title to such Assets free and clear of any Encumbrances other
than Permitted Exceptions.
4.6 ACTION BY CONTRIBUTORS. (a) It has not
caused any of the entities whose ownership interests comprise
the Assets (i) to sell or otherwise dispose (or enter into a
contract to sell or dispose) of any of their material assets,
(ii) to place a voluntary lien
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on any of their material assets, or (iii) to enter into,
modify or terminate any of their material contracts, material
leases or other material commitments.
(b) From the date hereof through the Closing
Date, it shall not, without the prior approval of Interstate,
cause any such entities (i) to sell or otherwise dispose of
any of their material assets, (ii) to place a voluntary lien
on any of their material assets, or (iii) to enter into,
modify or terminate any material contracts, material leases or
other material commitments, except, in the case of clause
(iii), in the ordinary course of business.
4.7 GOOD FAITH EFFORTS. It shall use its good
faith efforts to consummate the Closing and fulfill each of
its obligations hereunder.
4.8 INVESTMENT REPRESENTATIONS. It (a) has
received no general solicitation or general advertisement
concerning the Stock, (b) is a sophisticated investor that has
prior experience with investments of a similar nature, and has
sufficient knowledge and experience in financial and business
matters so as to be capable of evaluating the merits and risks
of an investment in the Stock, (c) is accepting the Stock for
investment purposes only, for its own account and not with a
view to or in connection with any resale or distribution
thereof, (d) has no reason to anticipate any change in its
circumstances, financial or otherwise, which may cause or
require resale or distribution by it of all or any part of the
Stock, and (e) confirms that all requested information
pertaining to Interstate and the Stock and Interstate's
business operations has been made available to it, and it also
confirms that it has been given an opportunity to make any
further inquiries of Interstate that it desires to make. It
understands and agrees that (i) the Stock will be "restricted
securities" within the meaning of the Securities Act of 1933,
as amended ("Securities Act"), (ii) in the absence of a
registration statement filed in accordance with the Securities
Act and applicable state securities laws, or an exemption from
the registration requirements of such securities laws, such
Stock may not be offered or sold to any person and (iii) each
certificate representing the Stock will bear the following
legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
UNDER THE APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION, AND MAY NOT BE SOLD, ASSIGNED, TRANSFERRED,
PLEDGED OR OTHERWISE DISPOSED OF
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EXCEPT IN COMPLIANCE WITH THE REQUIREMENTS OF SUCH ACT AND THE
APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION."
5. REPRESENTATIONS WARRANTIES AND COVENANTS OF
INTERSTATE. Interstate hereby represents, warrants and covenants to the
Contributors as of the date hereof and as of the Closing Date as follows:
5.1 FORMATION; EXISTENCE. Interstate is a
corporation duly organized, validly existing and in good
standing under the laws of the Commonwealth of Pennsylvania.
5.2 POWER; AUTHORITY. Interstate has all
requisite power and authority to enter into this Agreement, to
perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution, delivery and
performance of this Agreement, the acquisition of the Assets
and the consummation of the transactions provided for herein
have been duly authorized by all necessary action on the part
of Interstate. This Agreement has been duly executed and
delivered by Interstate and constitutes the legal, valid and
binding obligation of Interstate enforceable against
Interstate in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors'
rights and by general principles of equity (whether applied in
a proceeding at law or in equity).
5.3 NO CONSENTS. No consent, license, approval,
order, permit or authorization of, or registration, filing or
declaration with, any court, administrative agency or
commission or other governmental authority or instrumentality,
domestic or foreign, or any other persons is required to be
obtained or made in connection with the execution, delivery
and performance of this Agreement or any of the transactions
required or contemplated hereby other than such as have been
made or obtained or will be made or obtained prior to the
Closing Date.
5.4 NO CONFLICTS. The execution, delivery and
performance of the terms and provisions of this Agreement, and
the acquisition of the Assets, will not (a) conflict with or
result in any violation of its organizational documents, (b)
conflict with or result in any violation of any provision of
any bond, note or other instrument of indebtedness, indenture,
mortgage, deed of trust, loan agreement, lease or other
material agreement or instrument to which it is a party in its
individual capacity, or (c) violate any existing term
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or provision of any order, writ, judgment, injunction, decree,
statute, law, rule or regulation applicable to it or its
assets or properties.
5.5 EXAMINATION. Before entering into this
Agreement, Interstate has made such examination of the Assets
and all other matters affecting or relating to the
transactions contemplated hereunder as Interstate has deemed
necessary. In entering into this Agreement, Interstate has
not been induced by and has not relied upon any written or
oral representations, warranties or statements, whether
express or implied, made by any Contributor, any partner or
affiliate of any Contributor, or any agent, employee, or other
representative of any of the foregoing or by any broker or any
other person representing or purporting to represent any
Contributor, with respect to the Assets or any other matter
affecting or relating to the transactions contemplated hereby,
other than those expressly set forth in this Agreement.
5.6 GOOD FAITH EFFORTS. Interstate shall use its
good faith efforts to consummate the Closing and fulfill each
of its obligations hereunder.
5.7 CONTRIBUTORS. Although the Contributors have
jointly executed this Agreement for administrative efficiency,
Interstate hereby acknowledges and agrees that each
Contributor shall be liable hereunder only for the
representations, warranties and covenants made by such
Contributor with respect to such Contributor and the Assets
owned by such Contributor, and no Contributor shall be liable
for any representations, warranties or covenants made by any
of the other Contributors hereunder.
5.8 INVESTMENT REPRESENTATIONS. Interstate (a)
has received no general solicitation or general advertisement
concerning the Assets, (b) is a sophisticated investor that
has prior experience with investments of a similar nature, and
has sufficient knowledge and experience in financial and
business matters so as to be capable of evaluating the merits
and risks of investment in the Assets, (c) is accepting the
Assets for investment purposes only, for its own account and
not with a view to or in connection with any resale or
distribution thereof, (d) has no reason to anticipate any
change in its circumstances, financial or otherwise, which may
cause or require resale or distribution by it of all or any
part of the Assets, and (e) confirms that all requested
information pertaining to the Assets and their business
operations has been made available to Interstate, and
Interstate also confirms that it has been given an opportunity
to
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make any further inquiries of the Assets and the Contributors
that it desires to make. Interstate understands and agrees
that (i) the Assets will be "restricted securities" within the
meaning of the Securities Act, (ii) in the absence of a
registration statement filed in accordance with the Securities
Act and applicable state securities laws, or an exemption from
the registration requirements of such securities laws, such
Assets may not be offered or sold to any person and (iii) each
certificate representing such Assets will bear the following
legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR UNDER THE APPLICABLE SECURITIES LAWS
OF ANY STATE OR OTHER JURISDICTION, AND MAY NOT BE
SOLD, ASSIGNED, TRANSFERRED, PLEDGED OR OTHERWISE
DISPOSED OF EXCEPT IN COMPLIANCE WITH THE
REQUIREMENTS OF SUCH ACT AND THE APPLICABLE
SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION."
6. CONDITIONS PRECEDENT TO CLOSING.
6.1 CONTRIBUTORS' OBLIGATION. The obligation of
the Contributors to consummate the transfer of the Assets to
Interstate on the Closing Date is subject to the satisfaction
(or waiver by the Contributors) as of the Closing of the
following conditions:
(a) Each of the representations and warranties
made by Interstate in this Agreement shall be true and correct
in all material respects when made and on and as of the
Closing Date as though such representations and warranties
were made on and as of the Closing Date, and Interstate shall
have performed or complied in all material respects with each
obligation and covenant required by this Agreement to be
performed or complied with by Interstate on or before the
Closing.
(b) The Contributors shall have received duly
executed counterparts of each of the following documents,
dated as of the Closing Date:
(i) Assignment and Assumption Agreement for
each of the Assets representing interests in
partnerships;
(ii) amendments to the partnership agreement
(and the execution thereof by Interstate) and any
certificate of limited partnership for each of the
Assets representing partnership interests which
amendments shall reflect the assignment of
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partnership interests and admission of Interstate as an
additional or substitute partner;
(iii) any forms or affidavits required to be
filed with respect to any applicable transfer, stamp,
transfer gains or other similar taxes applicable to
the transfers;
(iv) the Registration Rights Agreement
attached hereto as EXHIBIT B and made a part hereof;
and
(v) such other documents reasonably required
by the Contributors to transfer the Assets hereunder.
(c) No order or injunction of any court or
administrative agency of competent jurisdiction nor any
statute, rule, regulation or executive order promulgated by
any governmental authority of competent jurisdiction shall be
in effect as of the Closing which restrains or prohibits the
transfer of the applicable Assets or the consummation of any
other transaction contemplated hereby.
(d) No action, suit or other proceeding shall be
pending which shall have been brought by any person or entity
(other than the parties hereto and their affiliates) (i) to
restrain, prohibit or change in any material respect the
contribution and acceptance of the Assets or the consummation
of any other transaction contemplated hereby or (ii) seeking
material damages with respect to such contribution and
acceptance or any other transaction contemplated hereby.
(e) The Contributors shall have received the
Stock of Interstate, in accordance with Section 2 above.
(f) The Contributors shall have obtained all
necessary consents to the transfer of the Assets from any
ground lessors, lenders, franchisors, partners and all other
third parties with approval rights. The Contributors shall
cooperate with Interstate in obtaining any necessary consents
(including reasonably timely execution of any applications or
similar documents).
(g) Interstate shall have paid (or reimbursed the
Contributors, as the case may be) all of the reasonable costs
and expenses incurred by the Contributors and Interstate in
connection with the consummation of the transactions
contemplated hereby, including without limitation any sales,
real estate transfer, stamp,
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recordation, or other similar taxes applicable to or arising
out of the contribution of the Assets.
6.2 INTERSTATE'S OBLIGATION. The obligation of
Interstate to issue the Stock is subject to the satisfaction
(or waiver by Interstate) as of the Closing of the following
conditions:
(a) Each of the representations and warranties
made by the Contributors in this Agreement shall be true and
correct in all material respects when made and on and as of
the Closing Date as though such representations and warranties
were made on and as of Closing Date, and the Contributors
shall have performed or complied in all material respects with
each obligation and covenant required by this Agreement to be
performed or complied with by the Contributors on or before
the Closing.
(b) Interstate shall have received duly executed
counterparts of each of the following documents, dated the
Closing Date:
(i) Assignment and Assumption Agreement
for each of the Assets representing interests in
partnerships;
(ii) amendments to the partnership agreement
and certificate of limited partnership for each of
the Assets representing partnership interests which
amendments shall reflect the assignment of
partnership interests and admission of Interstate as
an additional or substitute partner;
(iii) stock powers reflecting the assignment
of the Assets representing interests in corporations;
(iv) The Stockholders Agreement attached
hereto as EXHIBIT C;
(v) The Registration Rights and
Shareholders Agreement attached hereto as EXHIBIT B
and made a part hereof;
(vi) any forms or affidavits required to
be filed with respect to any applicable transfer,
stamp, transfer gains or other similar taxes
applicable to the transfers; and
(vii) such other documents reasonably
required by Interstate to transfer the Assets
hereunder.
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(c) No order or injunction of any court or
administrative agency of competent jurisdiction nor any
statute, rule, regulation or executive order promulgated by
any governmental authority of competent jurisdiction shall be
in effect as of the Closing which restrains or prohibits the
transfer of the applicable Assets or the consummation of any
other transaction contemplated hereby.
(d) No action, suit or other proceeding shall be
pending which shall have been brought by any person or entity
(other than the parties hereto and their affiliates) (i) to
restrain, prohibit or change in any material respect the
contribution and acceptance of the applicable Assets or the
consummation of any other transaction contemplated hereby or
(ii) seeking material damages with respect to such
contribution and acceptance or any other transaction
contemplated hereby.
7. FURTHER ASSURANCES. From time to time, as
and when requested by any party hereto, the other party shall
execute and deliver, or cause to be executed and delivered,
all such documents and instruments and shall take, or cause to
be taken, all such further or other actions as such other
party may reasonably deem necessary or desirable to consummate
the transactions contemplated by this Agreement.
8. SURVIVAL OF REPRESENTATIONS. The
representations and warranties contained in Section 4.5 of
this Agreement shall survive the Closing without limitation as
to time subject to applicable statutes of limitation. The
remainder of the representations and warranties contained in
this Agreement shall survive the Closing and shall terminate
on the first anniversary of the Closing Date.
9. INDEMNIFICATION.
9.1 INDEMNIFICATION BY THE CONTRIBUTORS. Each
Contributor shall indemnify and hold Interstate, its
shareholders, officers, directors, employees, agents and
affiliates harmless from and against any and all costs, fees,
expenses, damages, deficiencies, interest and penalties
(including, without limitation, reasonable attorneys' fees and
disbursements) suffered or incurred by any such indemnified
party in connection with any and all losses, liabilities,
claims, damages and expenses ("Losses") arising out of, or in
any way relating to, (i) any breach of any representation or
warranty of such Contributor contained in this Agreement or in
any Schedule, certificate, instrument
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or other document delivered pursuant hereto, and (ii) any
breach of any covenant of such Contributor contained in this
Agreement and (iii) any act or omission by such Contributor
arising out of or related to the Assets occurring on or prior
to the Closing, such obligation to survive the Closing subject
to Section 9.3.
9.2 INDEMNIFICATION BY INTERSTATE. Interstate
shall indemnify and hold the Contributors, their partners,
members, shareholders, officers, directors, employees, agents
and affiliates harmless from any and all Losses arising out
of, or in any way relating to, (i) any breach of any
representation or warranty by Interstate contained in this
Agreement or in any Schedule, certificate, instrument or other
document delivered pursuant hereto or in connection herewith,
(ii) any breach of any covenant of Interstate contained in
this Agreement, and (iii) any act or omission arising out of
or related to the Assets occurring after the Closing, such
obligation to survive the Closing or termination of this
Agreement subject to Section 9.3.
9.3 TERMINATION OF INDEMNIFICATION. (a) The
obligations of the Contributors under Section 9.1 shall
terminate on the first anniversary of the Closing Date (or the
first anniversary of the termination of this Agreement) except
with respect to any claims expressly asserted prior to such
termination.
(b) The obligations of Interstate under Section
9.2 shall terminate on the first anniversary of the Closing
Date (or the first anniversary of the termination of this
Agreement) except with respect to any claims expressly
asserted prior to such termination.
10. TAXES; PRORATIONS. (a) All sales and use, stamp,
transfer, documentary or other ad valorem taxes imposed by any governmental
taxing authority or any other taxing authority (excluding, however, taxes on
capital gains or income) as a result of the contribution of the Assets
hereunder shall be paid by Interstate.
(b) Any and all distributions and allocations made with
respect to the Assets for the year in which the contribution contemplated
hereunder occurs shall be prorated between Interstate and the Contributor based
upon the number of days in such year during which the respective Assets were
held by each party.
11. INDEMNIFICATION OF FINE. In consideration of Fine
(as hereinafter defined) granting to IHC the rights described in Sections 12.1
and 12.2 and other good and valuable consideration,
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IHC shall indemnify and hold Milton Fine and his heirs, personal and legal
representatives and affiliates (collectively, "Fine Indemnities") harmless from
and against all Losses, including without limitation, any Losses as incurred to
the extent of the aggregate amount paid in investigation, preparation, defense
or settlement of any litigation or proceeding, suffered or incurred by any of
the Fine Indemnities, directly or indirectly, arising out of, or in any way
related to the action styled as STANLEY H. TREZEVANT, JR., V. INTERSTATE HOTELS
CORPORATION, ET AL., United States District Court for the Western District of
Tennessee, Docket Number 94-2709 GBRE, or any related action or the facts or
circumstances giving rise to any such action. The provisions of this section
shall survive Closing.
12. RIGHTS OF FIRST REFUSAL/RIGHTS OF FIRST OPPORTUNITY.
Milton Fine, individually and as trustee under that certain Second Amended and
Restated Trust Agreement for the Milton Fine Revocable Trust dated November 11,
1994 for the benefit of Milton Fine (collectively, "Fine") owns direct and
indirect interests (collectively, "Interests") in the entities set forth on
SCHEDULE C attached hereto (collectively, "Fine Partnerships"). In
consideration of the agreement by IHC to provide the services to Fine described
in Section 12.3 below, Fine shall grant to IHC the rights described in Sections
12.1 and 12.2 below.
12.1 RIGHTS OF FIRST REFUSAL. If Fine shall
receive a bona fide cash offer from a third party to purchase
any one or more of the Interests ("Offered Interests") in the
Fine Partnerships and Fine desires to sell the Offered
Interests pursuant to such offer, Fine shall offer to sell all
of the Offered Interests to IHC, or its designee, for the
price set forth in, and in accordance with the other terms and
conditions of, the bona fide offer by the third party. Fine
shall give to IHC written notice ("Offer Notice") of such
offer stating the Offered Interests, the name and address of
the proposed purchaser (including the names and addresses of
the owners of the equity interests in such prospective
purchaser), the price offered for the Offered Interests and
the other terms and conditions of the offer and shall attach a
photocopy of the bona fide offer by such third party to the
Offer Notice. Fine shall also provide to IHC such other
information regarding the proposed sale as is reasonably
requested by IHC and reasonably available to Fine. Within
fifteen (15) days after receipt of the Offer Notice, IHC or
its designee may accept the offer of Fine to purchase all (but
not less than all) of the Offered Interests and shall provide
Fine with written notice stating whether IHC or its designee
accepts or rejects such offer. If the offer is accepted, IHC
shall deposit in escrow with a bank or other financial
institution selected by Fine as escrowee an earnest
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money deposit in cash in an amount equal to 10% of the
purchase price and the parties shall promptly enter into an
agreement of sale consistent with the terms and conditions in
the Offer Notice. A failure by IHC or its designee to notify
Fine of its acceptance of the offer within such fifteen (15)
day period shall constitute a waiver of its rights hereunder.
If IHC fails to close such purchase, then Fine may retain the
escrow deposit and, in addition, may exercise any other rights
or remedies available to him at law or in equity. All
closings of the purchase by IHC under this Section shall be
held at IHC's principal office and shall take place on the
date mutually agreed by IHC and Fine but not later than thirty
(30) days after the date of the notice to Fine exercising the
purchase option. All transfer, stamp and recording taxes
imposed on the transfer and all other closing costs shall be
paid by IHC. If IHC or its designee does not accept the offer
to purchase all of the Offered Interests subject to the Offer
Notice, then at any time within one hundred eighty (180) days
after IHC or its designee notifies Fine of its rejection of
the offer (or is deemed to have rejected the offer pursuant to
the terms of this Section), Fine may sell the Offered
Interests to the third party offeror at a price not less than
90% of the price set forth in the Offer Notice and on other
terms and conditions no less favorable to Fine than those
stated in the Offer Notice. In determining the application of
the 90% as stated herein, only the stated purchase price shall
be relevant and no adjustments thereto shall be made in
respect of the other terms or conditions of a proposed sale.
If such transfer to such third party is not made within such
one hundred eighty (180) day period, Fine shall not transfer
the Offered Interests except by again complying with this
Section.
12.2 RIGHT OF FIRST OFFER. In the event Fine
desires to market or actively solicit the sale of any of the
Interests ("Sale Interests") to a third party, prior to
offering such Sale Interests for sale, Fine shall give IHC
written notice ("Sale Notice") of his intent to sell or market
such Sale Interests, stating Fine's intended cash purchase
price and all other terms and conditions of such proposed sale
together with all other information with respect thereto which
is reasonably required by IHC and reasonably available to
Fine. Within fifteen (15) days of its receipt of such Sale
Notice, IHC, or its designee, may elect, by providing written
notice to Fine, to purchase all (but not less than all) of the
Sale Interests at the same price and upon the same terms and
conditions as those set forth in the Sale Notice. A failure
by IHC or its designee to notify Fine of its acceptance of the
offer
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within such fifteen (15) day period shall constitute a waiver
of its rights hereunder. In the event that IHC or its
designee shall have elected to purchase all of the Sale
Interests in accordance with the provisions of the preceding
sentence, IHC shall deposit in escrow with a bank or other
financial institution selected by Fine as escrowee an earnest
money deposit in cash in an amount equal to 10% of the
purchase price and Fine and IHC (or its designee as the case
may be) shall promptly thereafter enter into an agreement for
sale at the price and on the same terms and conditions as set
forth in the Sale Notice. If IHC fails to close such
purchase, then Fine may retain the escrow deposit and, in
addition, may exercise any other rights or remedies available
to him at law or in equity. All closings of the purchase by
IHC under this Section shall be held at IHC's principal office
and shall take place on the date mutually agreed by IHC and
Fine but not later than thirty (30) days after the date of the
notice to Fine exercising the purchase option. All transfer,
stamp and recording taxes imposed on the transfer and all
other closing costs shall be paid by IHC. If IHC elects not to
purchase all of the Sale Interests, then at any time within
one hundred eight (180) days from the date of Fine's Sale
Notice to IHC, Fine may sell the Sale Interests for a purchase
price which is at least 90% of the offer price contained in
the Sale Notice or a greater price and upon other terms and
conditions no less favorable to Fine than those set forth in
the Sale Notice. In determining the application of the 90% as
stated herein, only the stated purchase price shall be
relevant and no adjustments thereto shall be made in respect
of the other terms or conditions of a proposed sale. Should
Fine desire to sell such Sale Interests at a price which is
less than 90% of the original offer price or upon terms which
materially differ from those set forth in the Sale Notice to
IHC, or should the one hundred eight (180) day time period
expire, Fine shall again comply with the requirements set
forth in this Section 12.2 prior to marketing or soliciting
for sale of any such Interests.
12.3 SERVICES In consideration for Fine granting
to IHC the above described rights, IHC shall continue, at no
cost or expense to Fine, to provide to Fine various
administrative, legal, support and/or accounting services
related to his Interests in the Fine Partnerships so long as
he owns such Interests; provided, that IHC's provision of such
services is limited by the following: (a) these services
shall be consistent with past practices as to the type, scope
and extent of such services; (b) IHC shall not be obligated to
provide any services which it does not otherwise provide nor
will IHC be required to hire
- 14 -
16
personnel, acquire equipment or other assets or otherwise make
any capital expenditures solely for the purpose of providing
such services; and (c) the provision of such services shall
not unreasonably detract from the normal performance of duties
of the persons providing such services.
13. DEFAULT. In the event any of the parties hereto
shall default in the performance of its obligations hereunder, the
nondefaulting parties shall be entitled to terminate this Agreement with
respect to such party and/or pursue any and all remedies available to it at law
or in equity, including, without limitation, an action for specific
performance.
14. BROKERS. (a) Each Contributor represents and
warrants to Interstate that it has dealt with no broker, salesman, finder or
consultant with respect to this Agreement or the transactions contemplated
hereby. Each Contributor agrees to indemnify, protect, defend and hold
Interstate harmless from and against all claims, losses, damages, liabilities,
costs, expenses (including reasonable attorneys' fees and disbursements) and
charges resulting from such Contributor's breach of the foregoing
representation in this subsection (a). The provisions of this subsection (a)
shall survive the Closing and any termination of this Agreement.
(b) Interstate represents and warrants to the Contributors
that it has dealt with no broker, salesman, finder or consultant with respect
to this Agreement or the transactions contemplated hereby. Interstate agrees
to indemnify, protect, defend and hold the Contributors harmless from and
against all claims, losses, damages, liabilities, costs, expenses (including
reasonable attorneys' fees and disbursements) and charges resulting from
Interstate's breach of the foregoing representations in this subsection (b).
The provisions of this subsection (b) shall survive the Closing and any
termination of this Agreement.
15. SUCCESSORS AND ASSIGNS; NO THIRD-PARTY BENEFICIARIES.
The stipulations, terms, covenants and agreements contained in this Agreement
shall inure to the benefit of, and shall be binding upon, the parties hereto
and their respective permitted successors and assigns (including any successor
entity after a public offering of stock, merger, consolidation, purchase or
other similar transaction involving a party here to) and nothing herein
expressed or implied shall give or be construed to give to any person or
entity, other than the parties hereto and such assigns, any legal or equitable
rights hereunder.
16. ASSIGNMENT. This Agreement may not be assigned by
either party hereto without the consent of the other party hereto, except to an
entity under the control of, controlling or under common control with the
assigning party, provided that in
- 15 -
17
each case, the assigning party will continue to remain primarily liable under
this Agreement notwithstanding any such assignment. Interstate may designate
parties to which the Assets will be assigned at the Closing, provided that
Interstate will continue to remain primarily liable under this Agreement
notwithstanding any such designation.
17. NOTICES. All notices, demands or requests made
pursuant to, under or by virtue of this Agreement must be in writing and shall
be (i) personally delivered, (ii) delivered by express mail, Federal Express or
other comparable overnight courier service, (iii) telecopied or (iv) mailed to
the party to which the notice, demand or request is being made by certified or
registered mail, postage prepaid, return receipt requested, as follows:
(a) To any Contributor:
to the address set forth opposite such
Contributor's name on the signature pages
hereto.
(b) To Interstate:
c/o Interstate Hotels Corporation
Foster Plaza X
680 Andersen Drive
Pittsburgh, Pennsylvania 15220
Attention: Mr. W. Thomas Parrington, Jr.
Facsimile: 412-937-8053
with copies thereof to:
Interstate Hotels Corporation
Foster Plaza X
680 Andersen Drive
Pittsburgh, Pennsylvania 15220
Attention: Marvin I. Droz, Esq.
Facsimile: 412-937-3116
and
Jones, Day, Reavis & Pogue
2300 Trammel Crow Center
2001 Ross Avenue
Dallas, Texas 75201
Attention: David Lowery, Esq.
Facsimile: 214-969-5100
All notices (i) shall be deemed to have been given on the date that the same
shall have been delivered in accordance with the provisions of this Section and
(ii) may be given either by a party or by such party's attorneys. Any party
may, from time to
- 16 -
18
time, specify as its address for purposes of this Agreement any other address
upon the giving of 10 days' notice thereof to the other parties.
18. ENTIRE AGREEMENT. This Agreement, along with the
Schedules here to (but specifically excluding any other correspondence between
any of the parties hereto or any of their affiliates), contains all of the
terms agreed upon between the parties hereto with respect to the subject matter
hereof, and all understandings and agreements heretofore had or made among the
parties hereto are merged in this Agreement which alone fully and completely
expresses the agreement of the parties hereto.
19. AMENDMENTS. This Agreement may not be amended,
modified, supplemented or terminated, nor may any of the obligations of the
Contributors or Interstate hereunder be waived, except by written agreement
executed by the party or parties to be charged.
20. NO WAIVER. No waiver by either party of any failure
or refusal by another party to comply with its obligations hereunder shall be
deemed a waiver of any other or subsequent failure or refusal to so comply.
21. GOVERNING LAW. This Agreement shall be governed by,
interpreted under, and construed and enforced in accordance with, the internal
laws of the Commonwealth of Pennsylvania.
22. SUBMISSION TO JURISDICTION. Each of Interstate and
each Contributor irrevocably submits to the jurisdiction of the United States
District Court for the Western District of Pennsylvania for the purposes of any
suit, action or other proceeding arising out of this Agreement or any
transaction contemplated hereby. Each of Interstate and each Contributor
further agrees that service of any process, summons, notice or document by U.S.
registered mail to such party's respective address set forth above shall be
effective service of process for any action, suit or proceeding in Pennsylvania
with respect to any matters to which it had submitted to jurisdiction as set
forth above in the immediately preceding sentence. Each of Interstate and each
Contributor irrevocably and unconditionally waives trial by jury and
irrevocably and unconditionally waives any objection to the laying of venue of
any action, suit or proceeding arising out of this Agreement or the
transactions contemplated hereby in the United States District Court for the
Western District of Pennsylvania, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum.
- 17 -
19
23. SEVERABILITY. If any term or provision of this
Agreement or the application thereof to any person or circumstances shall, to
any extent, be invalid or unenforceable, the remainder of this Agreement or the
application of such term or provision to persons or circumstances other than
those as to which it is held invalid or unenforceable shall not be affected
thereby, and each term and provision of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.
24. SECTION HEADINGS. The headings of the various
Sections of this Agreement have been inserted only for purposes of convenience,
are not part of this Agreement and shall not be deemed in any manner to modify,
explain, expand or restrict any of the provisions of this Agreement.
25. COUNTERPARTS. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, and it shall
not be necessary in making proof of this Agreement to produce or account for
more than one such counterpart.
26. TERMINATION. Effective as of the Closing, that
certain Shareholder Agreement dated May, 1996 among IHC, the Family
Shareholders named therein and the Employee Shareholders named therein shall
terminate and be of no further force or effect.
[Remainder of page intentionally left blank.]
- 18 -
20
IN WITNESS WHEREOF, this Agreement has been duly executed by
the parties hereto as of the day and year first above written.
INTERSTATE HOTELS COMPANY
By:
--------------------------------
Its:
----------------------------
INTERSTATE HOTELS CORPORATION
By:
--------------------------------
Its:
----------------------------
CONTRIBUTORS:
--------------------------------------
Milton Fine, Trustee, U/A dated
11/17/89, as amended, FBO
Milton Fine
--------------------------------------
David J. Fine, Trustee for the
Milton Fine Grantor Annuity
Trust U/A dated March 31, 1996
--------------------------------------
David J. Fine, Trustee, U/A dated
12/15/89 FBO Sibyl A.
Fine King
--------------------------------------
David J. Fine, Trustee, U/A dated
12/15/89 FBO Carolyn
Fine Friedman
- 19 -
21
--------------------------------------
David J. Fine, Trustee, U/A dated
12/15/89 FBO David J. Fine
--------------------------------------
W. Thomas Parrington
--------------------------------------
J. William Richardson
--------------------------------------
Robert L. Froman
--------------------------------------
Marvin I. Droz
--------------------------------------
Henry L. Ciaffone
--------------------------------------
Kevin P. Kilkeary
--------------------------------------
Jay A. Litt
--------------------------------------
Gregory W. Ade
--------------------------------------
Robert D. Cowan
--------------------------------------
Robert C. Holland
- 20 -
22
--------------------------------------
Jay Wold
--------------------------------------
Milton Fine
IHC ASSOCIATES LIMITED PARTNERSHIP
By: IHC Associates Corporation,
General Partner
By:
-----------------------------------
Title:
--------------------------------
HILLTOP INVESTMENTS PARTNERSHIP, L.P.
By:
-----------------------------------
Milton Fine, Trustee, U/A dated
11/17/89, as amended, FBO
Milton Fine, General Partner
INTERPRO, LTD.
By: Interstate Hotels Corporation
#1018, General Partner
By:
-----------------------------------
Title:
--------------------------------
- 21 -
23
SCHEDULE A
ASSETS TO BE CONTRIBUTED TO INTERSTATE HOTELS COMPANY
AND NUMBER OF SHARES OF INTERSTATE HOTELS COMPANY STOCK
TO BE ISSUED TO CONTRIBUTORS IN RETURN THEREFORE
CONTRIBUTOR COMPANY/INTERESTS TO BE CLASS NO. OF SHARES CERT. SHARES OF INTERSTATE
CONTRIBUTED NO. TO BE ISSUED TO
CONTRIBUTORS FOR
CONTRIBUTION
1. Milton Fine, Trustee Interstate Hotels Corporation A 538.145 22 5,020,461.61331
FBO Milton Fine A 197.438 26
-------
735.583
B 66,323.795 31
2. David Fine, Trustee Interstate Hotels Corporation A 179-229/600 23 1,623,981.91939
FBO Sibyl F. King A 65-4876/6000 27
-------------
245-1,166/6000
B 9,824.292 23
B 11,622.015 27
----------
21,446.307
3. David Fine, Trustee Interstate Hotels Corporation A 179-229/600 24 1,623,981.91939
FBO Carolyn F. A 65-4876/6000 28
Friedman --------------
245-1,166/6000
B 9,824.292 24
B 11,622.015 28
----------
21,446.307
4. David Fine, Trustee Interstate Hotels Corporation A 179-229/600 25 1,623,981.91939
FBO David Fine A 65-4876/6000 29
--------------
245-1,166/6000
B 9,824.292 25
B 11,622.015 29
----------
21,446.307
5. David Fine, Trustee Interstate Hotels Corporation B 17,383.000 30 1,300,636.19192
Milton Fine Grantor
Annuity Trust
6. Milton, Fine, Trustee Colony Hotels and Resorts B 0.4 1 0
FBO Milton Fine Company ("Colony")
7. David Fine, Trustee Colony B 1.2 2 0
FBO Sibyl F. King
8. David Fine, Trustee Colony B 1.2 3 0
FBO Carolyn F.
Friedman
24
CONTRIBUTOR COMPANY/INTERESTS TO BE CLASS NO. OF SHARES CERT. SHARES OF INTERSTATE
CONTRIBUTED NO. TO BE ISSUED TO
CONTRIBUTORS FOR
CONTRIBUTION
9. David Fine, Trustee Colony B 1.2 4 0
FBO David Fine
10. Milton Fine, Trustee IHC Member Corporation A 50.00 1 5,549.10609
FBO Milton Fine ("IHC Member")
B 4,950.00 1
B 2,175.00 5
--------
7,125.00
11. David Fine, Trustee IHC Member A 16-2/3 2 1,289.11017
FBO Sibyl F. King
B 1,650.00 2
12. David Fine, Trustee IHC Member A 16-2/3 3 1,289.11017
FBO Carolyn F. B 1,650.00 3
Friedman
13. David Fine, Trustee IHC Member A 16-2/3 4 1,289.11017
FBO David Fine
B 1,650.00 4
14. Milton Fine, Trustee Northridge Insurance Company B 22.73 10B 3,272.5
FBO Milton Fine ("Northridge")
15. David Fine, Trustee Northridge B 59.09 11B 8,825.83333
FBO Sibyl F. King
16. David Fine, Trustee Northridge B 59.09 12B 8,825.83333
FBO Carolyn F.
Friedman
17. David Fine, Trustee Northridge B 59.09 13B 8,825.83333
FBO David Fine
18. Milton Fine IHC/Colorado Springs -- 600 1 2,786.0
Corporation
19. Milton Fine IHC/Lisle Corporation -- 600 1 3,517.0
20. Milton Fine IHC/Huntington Corporation -- 600 1 711.0
21. Milton Fine IHC/Houston Corporation -- 600 1 1,970.0
22. Milton Fine IHC/Denver Corporation -- 600 1 1,569.0
23. Milton Fine, Trustee IHC/Conshohocken Corporation -- 600 1 2,151.0
FBO Milton Fine
24. Milton Fine, Trustee IHC/Atlanta Corporation -- 600 1 2,192.0
FBO Milton Fine
25. Milton Fine, Trustee IHC/CG Portfolio Corporation -- 600 1 11,733.0
FBO Milton Fine
25
CONTRIBUTOR COMPANY/INTERESTS TO BE CLASS NO. OF SHARES CERT. SHARES OF INTERSTATE
CONTRIBUTED NO. TO BE ISSUED TO
CONTRIBUTORS FOR
CONTRIBUTION
26. Milton Fine IHC/Interstone Corporation -- 600 1 59,332.0
27. Milton Fine IHC/Williamsburg Corporation -- 600 1 764.0
28. IHC Associates 6.7673% limited partner -- -- -- 146,599.0
Limited Partnership interest in IHC/Pittsburgh
Partnership, L.P.
6.7673% limited partner
interest in IHC/Interstone
Partnership, L.P.
6.7673% limited partner
interest in IHC/Interstone
Partnership II, L.P.
29. Hilltop Investments 92.2327% limited partner -- -- -- 1,212,574.0
Partnership, L.P. interest in IHC/Interstone
Partnership, L.P.
30. Interpro, Ltd. Special Interest in -- -- -- 251,208.0
IHC/Interstone Partnership,
L.P.
31. W. Thomas Parrington, Interstate Hotels Corporation B 2,935.71714 32 219,761.0
Jr.
32. J. William Richardson Interstate Hotels Corporation B 1,547.58986 33 115,849.0
33. Robert L. Froman Interstate Hotels Corporation B 1,650.78567 34 123,574.0
34. Marvin I. Droz Interstate Hotels Corporation B 719.13788 35 53,833.0
35. Henry L. Ciaffone Interstate Hotels Corporation B 287.65248 36 21,533.0
36. Kevin P. Kilkeary Interstate Hotels Corporation B 287.65248 42 21,533.0
37. Jay A. Litt Interstate Hotels Corporation B 287.65248 37 21,533.0
38. Robert C. Holland Interstate Hotels Corporation B 143.83292 38 10,767.0
39. Robert D. Cowan Interstate Hotels Corporation B 143.83292 39 10,767.0
40. Jay Wold Interstate Hotels Corporation B 143.83292 40 10,767.0
41. Gregory W. Ade Interstate Hotels Corporation B 143.83292 41 10,767.0
42. Milton Fine HMG Beverage, Inc. Common 400 -- 0
43. Milton Fine, Trustee IHC Capital Corporation Common 100 1 0
FBO Milton Fine
26
Schedule B
Assets to be Contributed
to IHC by Interstate
1. Four (4) shares of Class B stock of Colony Hotels and Resorts Company
2. 100 shares of Class A stock and 12,075 shares of Class B stock of IHC
Member Corporation
3. 200 shares of Class B stock of Northridge Insurance Company
4. 600 shares of common stock of IHC/Colorado Springs Corporation
5. 600 shares of common stock of IHC/Lisle Corporation
6. 600 shares of common stock of IHC/Huntington Corporation
7. 600 shares of common stock of IHC/Houston Corporation
8. 600 shares of common stock in IHC/Interstone Williamsburg Corporation
9. 600 shares of common stock of IHC/Denver Corporation
10. 600 shares of common stock of IHC/Conshohocken Corporation
11. 600 shares of common stock of IHC/Atlanta Corporation
12. 600 shares of common stock of IHC/CG Portfolio Corporation
13. 6.7673% limited partner interest in IHC/Interstone Partnership II, L.P.
14. 6.7673% limited partner interest in IHC/Pittsburgh Partnership, L.P.
15. 600 shares of common stock in IHC/Interstone Corporation
16. 92.2327% limited partner interest in IHC/Interstone Partnership, L.P.
17. Special Interest in IHC/Interstone Partnership, L.P.
18. 400 shares of common stock in HMG Beverage, Inc.
19. 6.7673% limited partner interest in IHC/Interstone L.P.
27
Exhibit A
Permitted Exceptions
1. All liens, encumbrances and exceptions set forth in the
articles or certificate of incorporation, bylaws, certificate
of limited partnership, partnership agreement or similar
organizational document of the corporations and partnerships
comprising the Assets.
2. All encumbrances and exceptions set forth in the Stockholder
Agreements attached hereto as EXHIBIT C and D, respectively.
3. Liens for taxes not yet due and payable.
4. Any financing liens that the Assets will be subject to after
Closing including, without limitation, liens that will be
imposed at Closing by Credit Lyonnais.
28
Schedule C
Fine Partnerships
Owner Property
----- --------
(1) Interstate Hotels Partners, L.P. (1) Albany Marriott
(2) Cincinnati Hotel Limited Partnership (2) Cincinnati Marriott
(3) Interstate/Fort Lauderdale Associates Ltd. (3) Ft. Lauderdale Marriott North
(4) Swatara Associates (4) Harrisburg Marriott
(5) Interstate Hotels Partners, L.P. (5) Minneapolis Marriott Southwest
(6) Park West Hotels Associates (6) Pittsburgh Airport Marriott
(7) Green Tree Associates (7) Pittsburgh Greentree Marriott
(8) Host/Interstate Partnership, L.P. (8) Pittsburgh Marriott City Center
(9) Providence Realty Associates, L.P. (9) Providence Marriott
(10) The Key West Reach Limited Partnership (10) Marriott's Reach Resort
(11) Maryville Centre Hotel Joint Venture (11) St. Louis Marriott
(12) Interstate Hotels Partners, L.P. (12) San Diego Marriott
(13) Trumbull Hotel Associates Limited Partnership (13) Trumbull Marriott