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EXHIBIT 10(a)
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STOCKHOLDERS AGREEMENT
among
THE STOCKHOLDERS NAMED HEREIN
and
INTERSTATE HOTELS COMPANY
Dated as of June 25, 1996
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STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT (this "Agreement"), dated as of June 25, 1996, among
BLACKSTONE REAL ESTATE PARTNERS II L.P. ("BREPII"), BLACKSTONE REAL ESTATE
PARTNERS IV L.P. ("BREPIV"), BLACKSTONE RE CAPITAL PARTNERS II L.P.
("BRECPII"), each a Delaware limited partnership, BRE/INTERSTONE L.L.C., a
Delaware limited liability company ("BRE"; BRE, BREPII, BREPIV and BRECPII,
collectively, the "Blackstone Entities"), INTERSTATE HOTELS COMPANY, a
Pennsylvania corporation (the "Company"), and the stockholders of the Company
(other than the Blackstone Entities) identified on the signature pages hereof
(the "Fine Family Stockholders").
Background
WHEREAS, Blackstone Real Estate Advisors L.P. ("BREA"), Interstate Hotels
Corporation ("IHC"), and certain other persons are parties to the Option
Agreement, dated as of October 12, 1995 (as amended by Amendment No. 1, dated
December 15, 1995, and Amendment No. 2, dated as of March 29, 1996, the "Option
Agreement");
WHEREAS, IHC is a party to a Contribution Agreement, dated as of March 29,
1996 (the "Contribution Agreement"), with the contributors referred to therein,
including certain affiliates of BREA;
WHEREAS, in accordance with the Contribution Agreement and/or the Option
Agreement, the Company has delivered to the Blackstone Entities, shares of the
Common Stock (as defined below); and
WHEREAS, the parties hereto wish to set forth certain rights and obligations
with respect to the Common Stock owned by such parties (other than the Company)
and the governance and operations of the Company.
NOW, THEREFORE, in consideration of the mutual promises and agreements set
forth herein, the adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms shall have
the following meanings, whether used in the singular or the plural:
"Affiliate" means, with respect to any person, any other person that
directly or indirectly through one or more intermediaries Controls, or is
Controlled by, or is under common Control with, such first person.
"Blackstone" means The Blackstone Group L.P., a Delaware limited
partnership.
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"Charter Documents" means the articles of incorporation and bylaws (or other
constituent documents) of the Company.
"Common Stock" means the common stock, par value $.01 per share, of the
Company and any other shares, units or other equity interests into which such
common stock may be converted or exchanged in any acquisition, merger,
consolidation, reorganization, reclassification or similar transaction.
"Control" means, with respect to any person, the possession, directly or
indirectly, of the power to direct or cause the direction of the management
and policies of such person, whether through the ownership of voting
securities, by contract or otherwise.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time.
"Fine Family Stockholders Representative" means Milton Fine or other
Individual Fine Family Member designated by the Fine Family Stockholders.
"Individual Fine Family Member" means: (i) each of Milton Fine, David J.
Fine, Sybil Fine King and Carolyn Fine Friedman and (ii) each spouse, child
(natural or adopted), grandchild or parent of the individuals referred to in
clause (i); provided, however, no individual who is less than 21 years of age
shall be an Individual Fine Family Member.
"Permitted Transferee" means: (i) with respect to any Fine Family
Stockholder, (1) any Individual Fine Family Member, (2) any trust, the
beneficiaries of which include only Individual Fine Family Members and/or any
individual who would, but for the proviso to clause (ii) of the definition of
Individual Fine Family Member, be an Individual Fine Family Member, (3) any
corporation or partnership controlled by any Fine Family Stockholder or any
Individual Fine Family Member, so long as a majority of the economic and
voting interests of such corporation or partnership are owned by Fine Family
Stockholders, Individual Fine Family Members and/or trusts referred to in
clause (2) above and (4) any director, officer or employee of the Company or
its subsidiaries; and (ii) with respect to any Blackstone Entity, (1) any
corporation, partnership or other entity which is an Affiliate of Blackstone
("Blackstone Affiliate"), (2) any managing director, general partner, or
limited partner, director, officer or employee of Blackstone or any
Blackstone Affiliate ("Blackstone Associate"), (3) the heirs, executors,
administrators, testamentary trustees, legatees or beneficiaries of any
Blackstone Associate, or (4) any trust, the beneficiaries of which, or
corporation or partnership, the stockholders or
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general or limited partners of which, include only Blackstone, Blackstone
Affiliates, Blackstone Associates, their spouses or their lineal descendants.
"person" means any individual, partnership, joint venture, limited liability
company, corporation or other entity, trust, unincorporated organization or
government or department or agency thereof.
"Public Sale" means any underwritten public distribution pursuant to a
registered public offering under the Securities Act or any sale pursuant to
Rule 144 (if available) or Rule 144A under the Securities Act (or any similar
rule then in force).
"Securities Act" means the Securities Act of 1933, as amended from time to
time.
"Securities and Exchange Commission" means the Securities and Exchange
Commission and includes any federal governmental body or agency succeeding to
the functions thereof.
"Subsidiary" means, with respect to any person, any corporation, limited
liability company, partnership, joint venture, trust or estate of which (or
in which) more than 50% of: (a) the outstanding capital stock having ordinary
voting power to elect a majority of the Board of Directors of such
corporation (irrespective of whether or not at the time capital stock of any
other class or classes of such corporation shall or might have voting power
upon the occurrence of any contingency); (b) the interest in the capital or
profits of such partnership, limited liability company or joint venture; or
(c) the beneficial interest of such trust or estate, is at the time directly
or indirectly (through one or more other Subsidiaries of such person) owned
by such person.
"Transfer" of any shares of Common Stock, means any sale, transfer,
assignment, or other disposition of such shares or any interest therein for
value (but excluding bona-fide pledges and any transfer upon foreclosure
thereof and any transfer by gift or devise), directly or indirectly
(including a transfer by any person of the capital stock or other interest in
a Subsidiary of such person which is the direct or indirect holder of shares
of Common Stock).
2. TAG ALONG RIGHT.
(a) No Fine Family Stockholder shall Transfer any shares of Common Stock
other than in compliance with this Section 2. Any such attempted Transfer not
in compliance herewith shall be null and void, ab initio, and the Company shall
not give
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effect to any such attempted Transfer in the stock transfer ledgers of the
Company.
(b) At least 20 days prior to any Transfer by any Fine Family Stockholder
of any shares of Common Stock, such Fine Family Stockholder proposing to make
such Transfer (the "Transferring Fine Family Stockholder") shall deliver a
notice (a "Tag Along Notice") to BREA specifying the identity of the
prospective Transferee(s) and disclosing in reasonable detail the price and
other terms and conditions of the proposed Transfer, and offering to permit
each of the Blackstone Entities to Transfer their shares of Common Stock as
part of such proposed Transfer as provided herein. BREA may on behalf of each
of such Blackstone Entities elect to participate in the proposed Transfer by
delivering written notice of such election to the Transferring Fine Family
Stockholder prior to the expiration of the 20-day period commencing on the date
of receipt by BREA of the Tag Along Notice.
(c) If BREA elects on behalf of the Blackstone Entities to participate in a
Transfer in accordance with this Section 2, each Blackstone Entity on whose
behalf such election has been made will be entitled to sell in such proposed
Transfer, at the same price and on the same terms as the Transferring Fine
Family Stockholder, that number of shares of Common Stock which is equal to the
product of (1) the quotient determined by dividing the number of the
outstanding shares of Common Stock then held by such Blackstone Entity by the
total number of shares of outstanding Common Stock then held by the
Transferring Fine Family Stockholder and such Blackstone Entity and (2) the
total number of shares of Common Stock to be sold in such proposed Transfer.
(d) The provisions of this Section 2 shall not apply to Transfers by any
Fine Family Stockholder: (i) of Common Stock pursuant to a Public Sale
involving a public offering registered under the Securities Act; (ii) to a
Permitted Transferee of such Fine Family Stockholder (provided that, in the
case of this clause (ii), such Permitted Transferee has agreed in writing to be
bound by the terms and conditions of this Agreement, in form and substance
reasonably satisfactory to BREA, to the same extent and in the same manner
applicable to the Fine Family Stockholder Transferring such shares; and (iii)
to any person (other than persons who or which fall within the definition of
"Permitted Transferee" with respect to such Fine Family Stockholder); provided
that the aggregate number of shares of Common Stock transferred by all Fine
Family Stockholders and their Permitted Transferees in reliance on the
foregoing clause (iii) shall not exceed 238,095 shares (as adjusted from time
to time following the date hereof to give effect to any stock splits,
combinations and other similar events following the date hereof).
3. BOARD REPRESENTATION. (a) The Fine Family Stockholders shall vote all
their shares of Common Stock, at any
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regular or special meeting of the stockholders of the Company called for the
purpose of filling positions on the Board of Directors of the Company, or, to
the extent permitted by the Charter Documents, in any written consent executed
in lieu of such a meeting of stockholders, and shall take all actions
necessary, to ensure that the Board of Directors of the Company (the "Board of
Directors") shall include at least one individual selected by BREA, for and on
behalf of the Blackstone Entities and their Permitted Transferees (the "BREA
Nominee"), such individual to be reasonably acceptable to the Company (it being
agreed that any individual employed by Blackstone at the level of senior
managing director or higher is acceptable to the Company.)
(b) If, prior to his or her election to the Board of Directors pursuant to
Section 3(a), the BREA Nominee shall be unable or unwilling to serve as a
director of the Company, BREA shall be entitled to nominate a replacement who
shall then be the BREA Nominee for purposes of this Section 3. If, following
election to the Board of Directors pursuant to Section 3(a), the BREA Nominee
shall resign, or be removed, or be unable to serve for any reason prior to the
expiration of his or her term as a director of the Company, BREA, for and on
behalf of the Blackstone Entities and their Permitted Transferees, shall within
30 days of such event, notify the Board of Directors in writing of a
replacement BREA Nominee, and the Fine Family Stockholders shall vote all their
shares of Common Stock, at any regular or special meeting called for the
purpose of filling positions on the Board of Directors, or, to the extent
permitted by the Charter Documents, in any written consent executed in lieu of
such a meeting of stockholders, and shall take all actions necessary, to ensure
the prompt election to the Board of Directors of such replacement BREA Nominee
to fill the unexpired term of the BREA Nominee whom such new BREA Nominee is
replacing.
(c) Each of the Company and each Fine Family Stockholder agrees that it
shall not take any direct or indirect action to remove any BREA Nominee without
cause.
(d) If and for so long as an executive committee (or other comparable
committee) of the Board of Directors exists, the BREA Nominee shall, at BREA's
option, be a member of such committee.
(e) Each Blackstone Entity shall vote all its shares of Common Stock, at
any regular or special meeting of the stockholders of the Company called for
the purpose of filling positions on the Board of Directors, or, to the extent
permitted by the Charter Documents, in any written consent executed in lieu of
such a meeting of stockholders, for the election of the director-candidates
nominated by the Board of Directors.
(f) BREA, for and on behalf of the Blackstone Entities and their Permitted
Transferees, shall have the option, upon
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written notice to the Company, to terminate the provisions of this Section 3.
(g) The Charter Documents shall contain provisions: (i) specifying that
directors may not be removed without cause; and (ii) (1) limiting the liability
of the directors of the Company and (2) requiring indemnification by the
Company for such directors, all to the fullest extent permitted by law.
(h) In order to effectuate the provisions of this Agreement, each of the
Blackstone Entities and the Fine Family Stockholders hereby agrees that when
any action or vote is required to be taken by such person pursuant to this
Agreement, such person shall use such person's best efforts to call, or cause
the appropriate officers and directors of the Company to call, a special or
annual meeting of stockholders of the Company, as the case may be, or, to the
extent permitted by the Charter Documents, execute or cause to be executed a
consent in writing in lieu of any such meetings.
(i) The Company shall take appropriate action so that the policies of the
Board of Directors shall require that any transaction between the Company (or
its Subsidiaries) with any Affiliate of the Company (other than wholly owned
Subsidiaries of the Company) be approved in advance by affirmative action of a
majority of the disinterested directors of the Company.
4. CONFORMITY OF CHARTER DOCUMENTS TO AGREEMENT. Each Blackstone Entity
and each of the Fine Family Stockholders shall vote all shares of Common Stock
owned or Controlled by such person, at any regular or special meeting of
stockholders of the Company or, to the extent permitted by the Charter
Documents, in any written consent executed in lieu of such a meeting of
stockholders, and shall take all actions necessary, to ensure that the Charter
Documents do not, at any time, conflict with the provisions of this Agreement.
5. ROFO.
(a) Each Blackstone Entity agrees that it shall not Transfer any shares of
Common Stock other than in compliance with this Section 5. Any such attempted
Transfer not in compliance herewith shall be null and void, ab initio, and the
Company shall not give effect to any such attempted Transfer in the stock
transfer ledgers of the Company.
(b) If any Blackstone Entity proposes to Transfer any shares of Common
Stock, BREA shall given written notice (the "First Offer Notice") of such
proposal to the Fine Family Stockholders Representative at least 5 days in
advance thereof, setting forth the number of shares which such Blackstone
Entity desires to Transfer (the "First Offer Shares"). The Fine Family
Stockholders Representative, on behalf of the Fine Family Stockholders, may at
any time within 5 days after delivery by
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BREA of the First Offer Notice (the "First Offer Period") submit to BREA a
written offer to purchase (a "Purchase Offer") all (but not less than all) of
the First Offer Shares covered by such First Offer Notice at a per share cash
price specified by the Fine Family Stockholders Representative in the Purchase
Offer. The Purchase Offer shall specify which of the Fine Family Stockholders
shall, if such Purchase Offer is accepted by BREA, purchase the First Offer
Shares (including the number of First Offer Shares to be purchased by each of
such Fine Family Stockholders). The Fine Family Stockholders shall be under no
obligation to submit a Purchase Offer, and BREA shall not be obligated to
accept any Purchase Offer. Upon BREA's acceptance of any Purchase Offer in
writing, such Purchase Offer shall be irrevocable, and the parties shall
thereafter promptly (and in any event within 10 days of the date of such
written acceptance) close the purchase and sale of the First Offer Shares
covered by the Purchase Offer. At such closing, BREA shall (or shall cause the
transferring Blackstone Entity to) deliver the First Offer Shares to the Fine
Family Stockholders on whose behalf the Fine Family Stockholders Representative
delivered the Purchase Offer against a cash payment therefor in full by wire
transfer of immediately available funds to such account or accounts as may be
designated by BREA. Such closing shall take place at such place as the Fine
Family Stockholders Representative and BREA shall mutually agree.
(c) If no Purchase Offer is received by BREA within the First Offer
Period, or if BREA rejects or otherwise declines to accept a Purchase Offer
received by BREA within the First Offer Period, the Blackstone Entity shall be
entitled, for a period of 120 days following the date of delivery of the First
Offer Notice (the "Free Transfer Period"), to Transfer all (but not less than
all, excluding shares covered by a First Offer Notice which are Transferred
during the Free Transfer Period in reliance on the provisions of Section 5(d)
below) of the First Offer Shares on such terms as it may be willing to accept;
provided that, if a Purchase Offer has been submitted to BREA within the First
Offer Period, no Transfer may be made during the Free Transfer Period at a per
share cash price less than the per share price specified in the Purchase Offer.
(d) The provisions of this Section 5 shall not apply to Transfers by any of
the Blackstone Entities (including Transfers of First Offer Shares during the
Free Transfer Period) (i) of Common Stock pursuant to a Public Sale (1)
involving a public offering registered under the Securities Act or (2)
consistent with the "manner of sale" requirements specified in Rule 144(f)
under the Securities Act; or (ii) to a Permitted Transferee of such Blackstone
Entity; provided that, in the case of clause (ii), such Permitted Transferee
has agreed in writing to be bound by the terms and conditions of this
Agreement, in form and substance reasonably satisfactory to the Company, to the
same extent and in the same manner applicable to such Blackstone Entity.
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6. INITIAL LOCK-UP PERIOD. [Intentionally left blank]
7. REGISTRATION RIGHTS. (a) If at any time after the date hereof the
Company intends to file with the Securities and Exchange Commission a
registration statement on any registration form of the Securities and Exchange
Commission (other than Form S-8 or S-4) covering the sale of shares of Common
Stock for cash in a public offering by the Company or any of its stockholders,
the Company shall notify BREA of its intention to file that registration
statement at least 30 days prior to the filing thereof. The notice shall state
the total number of shares of Common Stock proposed to be registered thereby.
If BREA notifies the Company within 10 days after receipt of such notice from
the Company of the desire of any or all of the Blackstone Entities to have
included in that registration statement any of their shares of Common Stock,
then, subject to Section 7(e), the Company shall include those shares in that
registration statement ("Company Registration"). Neither the delivery of a
notice under this Section 7(a) nor a request by BREA under this Section 7(a)
shall in any way, obligate the Company to file any registration statement and
notwithstanding the filing of such a registration statement, the Company may,
at any time before the effective date thereof, elect to terminate the entire
registration process without any further obligation to BREA or the Blackstone
Entities with respect thereto. A registration request pursuant to this Section
7(a) shall not be deemed to have been effected (i) unless a registration
statement with respect thereto has become effective for such period as is
described in Section 7(c), (ii) if after it has become effective such
registration is interfered with by any stop order, injunction or other order or
requirement of the Securities and Exchange Commission or other governmental
authority and (iii) unless the amount of shares offered and sold by the Company
as part of such underwritten public offering shall have created an active
trading market for such shares immediately following such offering in the
reasonable judgment of the managing underwriter or underwriters in respect of
such offering. If the registration demanded pursuant to this Section 7(a)
shall not have been deemed to be so effected, BREA shall be entitled to
exercise registration rights as provided herein until the registration demanded
pursuant to this Section 7(a) shall be deemed to be so effected.
(b) BREA may on behalf of any or all of the Blackstone Entities, subject to
the terms and conditions contained in this Section 7, exercise the demand
registration rights contained in this Section 7(b) at any time and from time to
time, subject to the 180-day "lock-up" agreement entered into by the Blackstone
Entities in connection with this Agreement. BREA may exercise the demand
registration rights contained in this Section 7(b) for up to three Demand
Registrations (as defined below). BREA shall have the right to make a demand
on the Company to effect the registration (a "Demand Registration") for an
underwritten public offering involving a secondary offering of all or a portion
of
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the shares of Common Stock held by the Blackstone Entities on Form S-1 (or
other form available for registration of sales of securities for cash). BREA
shall notify the Company of its desire to exercise each Demand Registration by
delivering to the Company written notice (a "Demand Notice") specifying the
number of shares of Common Stock which BREA desires to be included in the
Demand Registration. Upon receipt of the Demand Notice, the Company shall
promptly give written notice of the Demand Registration to all holders of
shares of Common Stock, if any, that are entitled to have such shares included
in such registration (the "Other Holders") and otherwise comply with the
registration procedures contained herein. Each of the Other Holders may elect
to participate in the Demand Registration by giving the Company written notice
of such Other Holder's election to include its shares of Common Stock in the
Demand Registration within 15 days from the date on which the notice to Other
Holders is given by the Company, which notice shall specify the number of
shares of Common Stock which such Other Holder desires to be included in the
Demand Registration. A registration demanded pursuant to this Section 7(b)
shall not be deemed to have been effected (i) unless a registration statement
with respect thereto has become effective for such period as is described in
Section 7(c) and (ii) if after it has become effective, such registration is
interfered with by any stop order, injunction or other order or requirement of
the Securities and Exchange Commission or other governmental authority. If the
registration demanded pursuant to this Section 7(b) shall not have been deemed
to be so effected, such registration shall not be counted against the number of
Demand Registrations permitted by this Section 7(b).
(c) Upon the Company's receipt of a Demand Notice and the responses from
Other Holders (or the expiration of the 15-day period referred to above), the
Company shall prepare and file with the Securities and Exchange Commission, as
soon as practicable but no longer than 60 days from the date of the Company's
receipt of the Demand Notice, a registration statement covering the shares of
Common Stock requested to be included in the Demand Registration by BREA and
the Other Holders, and shall use its best efforts to cause such registration
statement to become effective as expeditiously as possible. The Company shall
in no event be required to maintain the effectiveness under the Securities Act
of any registration statement relating to a Demand Registration for more than
15 months following the date such registration statement became effective. In
connection with the Demand Notice and the filing of such registration
statement, the Company will:
(i) Prepare and file with the Securities and Exchange Commission such
amendments to such registration statement and supplements to the prospectus
contained therein as may be necessary to keep such registration statement
effective for such period as may be reasonably necessary to effect the sale
of such securities.
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(ii) Cause all securities covered by such registration statement to be
listed on each securities exchange, if any, on which securities of such
class, if any, are then listed if requested by BREA.
(iii) Cooperate and assist in any filings required to be made with the
National Association of Securities Dealers, Inc. (the "NASD") and the
performance of any due diligence investigation by the underwriters (including
any "qualified independent underwriter" that is required to be retained in
accordance with the rules and regulations of the NASD).
(iv) Use its best efforts to register or qualify the securities covered by
such registration statement for sale under such other securities or blue sky
laws of such jurisdictions as the holders of the securities covered thereby
(hereinafter in this Section referred to as "such holders") participating in
such registration may reasonably request and do any and all other acts and
things which may be reasonably necessary or desirable to enable such holders
to consummate the disposition in such jurisdictions of the securities covered
thereby owned by such holders.
(v) Furnish to such holders participating in such registration and to the
underwriters of the securities being registered a reasonable number of copies
of the registration statement, preliminary prospectus, final prospectus, and
such other documents as such holders or underwriters may reasonably request
in order to facilitate the public offering of such securities.
(vi) Notify such holders participating in such registration, promptly
after it shall receive notice thereof, of the time when such registration
statement has become effective or a supplement to any prospectus forming a
part of such registration statement has been filed.
(vii) Notify such holders promptly of any request by the Securities and
Exchange Commission for the amending or supplementing of such registration
statement or prospectus or for additional information.
(viii) Prepare and file with the Securities and Exchange Commission,
promptly upon the request of any such holders, any amendments or supplements
to such registration statement or prospectus which, in the opinion of special
counsel for such holders (and concurred in by counsel for the Company), is
required under the Securities Act or the rules and regulations thereunder in
connection with the distribution of the securities by such holder.
(ix) Prepare and promptly file with the Securities and Exchange Commission
and promptly notify such holders of the filing of such amendment or
supplement to such registration
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statement or prospectus as may be necessary to correct any statements or
omissions if, at the time when a prospectus relating to such securities is
required to be delivered under the Securities Act, any event shall have
occurred as the result of which any such prospectus or any other prospectus
as then in effect would include an untrue statement of a material fact or
omit to state any material fact necessary to make the statement therein, in
the light of the circumstances in which they were made, not misleading.
(x) Advise such holders, promptly after it shall receive notice or obtain
knowledge thereof, of the issuance of any stop order by the Securities and
Exchange Commission suspending the effectiveness of such registration
statement or the initiation or threatening of any proceeding for the purpose
and promptly use its best efforts to prevent the issuance of any stop order
or to obtain its withdrawal if such stop order should be issued.
(xi) As soon as practicable and in no event less than one day prior to the
filing of any amendment or supplement to such registration statement or
prospectus, furnish copies thereof to such holders and refrain from filing
any such amendment or supplement to which a majority in interest of such
holders shall have reasonably objected on the grounds that such amendment or
supplement does not comply in all material respects with the requirements of
the Securities Act or the rules and regulations thereunder, unless in the
opinion of counsel for the Company the filing of such amendment or supplement
is reasonably necessary to protect the Company from any liabilities under any
applicable federal or state law and such filing will not violate applicable
law.
(xii) Allow the managing underwriter (and its counsel) to conduct "due
diligence" investigations of the Company and participate in the preparation
of the registration statement, and at the request of any such holder, enter
into an underwriting agreement containing customary terms, conditions and
furnish on the date or dates provided for in the underwriting agreement: (i)
an opinion of counsel satisfactory to such holder, addressed to the
underwriters and to such holder or holders making such request, opining as to
such matters as such underwriters and holder or holders may reasonably
request; and (ii) a letter or letters from the independent certified public
accountants of the Company, addressed to the underwriter and to such holder
or holders making such request, covering such matters as such underwriters
and holder or holders may reasonably request, in which letters such
accountants shall state (without limiting the generality of the foregoing)
that they are independent certified public accountants within the meaning of
the Securities Act and that in the opinion of such
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accountants the financial statements and other financial data of the Company
included in the registration statement or any amendment or supplement thereto
comply in all material respects with the applicable accounting requirements
of the Securities Act.
(d) The obligations of the Company under Section 7(b) to comply with
requests for Demand Registrations are subject to the following limitations:
(i) The Company shall be entitled to postpone up to 60 days in any twelve
month period the filing of any registration statement otherwise required to
be prepared and filed by it pursuant to Section 7(b) if, at the time it
receives a Demand Notice, the Company determines, in its reasonable and good
faith judgment, that such registration and sale would materially interfere
with any financing, acquisition, corporate reorganization or other material
transaction involving the Company or any of its Subsidiaries and promptly
gives BREA written notice of such determination. If the Company shall so
postpone the filing of a registration statement, the Demand Notice received
by the Company shall not be counted for purposes of determining the number of
Demand Registrations to which BREA is entitled pursuant to this Section 7.
(ii) Any Demand Notice shall be for the registration of shares of Common
Stock representing at least 25% of the total number of shares of Common Stock
issued to the Blackstone Entities on the date of this Agreement or, if less,
all shares of Common Stock owned by the Blackstone Entities and their
Permitted Transferees.
(iii) In the event of a Demand Registration, sales shall be made through
a managing underwriter or underwriters mutually selected by BREA and the
Company.
(e) Notwithstanding the provisions of Section 7(a) and 7(b): (i) in the
event of any Company Registration in which the managing underwriter(s) notify
the Company that the aggregate amount of securities of the Company proposed to
be offered by the Company, the Blackstone Entities and Other Holders would
adversely affect the ability to effect such offering, then the number of shares
of Common Stock proposed to be offered by the Blackstone Entities and any Other
Holders shall be reduced (if need be to zero) to the aggregate amount
determined by the managing-underwriter(s) that can be offered without adversely
affecting the ability to effect such offering, such reductions to be made pro
rata among BREA and such Other Holders in accordance with the number of shares
of Common Stock proposed to be offered by each such offeror; and (ii) in the
event of any Demand Registration in which the managing underwriter(s) notify
the Company that the aggregate amount of securities of the Company proposed to
be offered by the Company, the Blackstone Entities
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and any Other Holders would adversely affect the ability to effect such
offering, then the number of shares of Common Stock proposed to be offered by
the Blackstone Entities shall first be included in such registration; then the
shares of Common Stock, if any, proposed to be included in such registration by
the Company and any Other Holders shall be reduced (if need be to zero) to the
aggregate amount determined by the managing-underwriter(s) that can be offered
without adversely affecting the ability to effect such offering, such
reductions to be made pro rata in accordance with the number of shares of
Common Stock proposed to be offered by each such offeror.
8. REGISTRATION EXPENSES. To the extent permitted by applicable law, the
Company shall pay all expenses in connection with any Company Registration or
Demand Registration, including, without limitation, (a) all expenses incident
to filing with the NASD, (b) registration fees, (c) printing expenses, (d)
accounting and legal fees and expenses of one accounting firm and one law firm
to represent all selling stockholders (selected by BREA, in the case of any
Demand Registration, and reasonably acceptable to BREA, in the case of any
Company Registration), (e) expenses of any special audits incident to or
required by any such registration or qualification, (f) premiums for insurance
in such amount, if any, deemed appropriate by the managing underwriter, and (g)
expenses of complying with the securities or blue sky laws of any jurisdictions
in connection with such registration or qualification; provided, however, the
Company shall not be liable for (1) any discounts or commissions to any
underwriter attributable to shares of Common Stock being sold by any selling
stockholder, (2) any stock transfer taxes incurred in respect of the shares of
Common Stock being sold by any selling stockholder, or (3) the legal fees of
any selling stockholder (other than as set forth in clause 8(d) above).
9. BLUE SKY LAWS. In any registration under Sections 7(a) and 7(b), the
Company shall use its best efforts to register, qualify, or effect an exemption
with respect to the shares of Common Stock of the Blackstone Entities under the
"blue sky" laws of such states as may be reasonably requested by BREA or the
managing underwriter(s); provided, however, that the Company shall not be
required to qualify to do business or to file a general consent to service of
process in any such jurisdictions.
10. INDEMNIFICATION. In connection with any registration pursuant to
Section 7:
(a) The Company hereby agrees to indemnify and hold harmless, to the
fullest extent permitted by law, BREA, and each of its partners, officers,
employees and agents, and any Affiliates (as defined in the Securities Act)
of BREA and each person who controls BREA (within the meaning of the
Securities Act or the Exchange Act), against any losses, costs, expenses,
claims, damages, liabilities, actions or
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judgments, including reasonable attorneys' fees and disbursements
(collectively, "Damages"), joint or several, to which any of them may become
subject under the Securities Act or otherwise, insofar as such Damages arise
out of or are based upon any untrue or alleged untrue statement of a material
fact contained in a registration statement filed with the Securities and
Exchange Commission by the Company, or preliminary or final prospectus
contained therein, or any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary in order to make the
statements made therein not misleading; and will reimburse BREA, and its
respective partners, officers, employees and agents, and any Affiliates or
control persons, for any legal or other expenses incurred by it or any of
them in connection with investigating or defending against any such Damages;
except that the Company will not be liable in any such case to BREA or any
other person or entity to the extent that any Damages arise out of or are
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in a registration statement, or preliminary or final
prospectus contained therein, or any amendment or supplement thereto, in
reliance upon and in conformity with written information furnished by or on
behalf of BREA specifically for use therein.
(b) BREA agrees to indemnify and hold harmless, to the fullest extent
permitted by law, the Company, each of its directors, officers, employees,
agents, and any Affiliates (as defined in the Securities Act) of the Company
and each person who controls the Company (within the meaning of the
Securities Act or the Exchange Act), against any Damages, joint or several,
to which any of them may become subject under the Securities Act or
otherwise, insofar as such Damages arise out of or are based upon any untrue
or alleged untrue statement of a material fact contained in a registration
statement filed with the Securities and Exchange Commission by the Company,
or preliminary or final prospectus contained therein or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, if such untrue or
alleged untrue statement or omission or alleged omission is made in reliance
upon and in conformity with written information furnished to the Company by
or on behalf of BREA, specifically for use therein, and will reimburse the
Company, its directors, officers, agents, and Affiliates or control persons,
for any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such Damages.
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(c) Any person entitled to indemnification hereunder shall give prompt
notice to the indemnifying person of any claim with respect to which it shall
seek indemnification and shall permit such indemnifying person to assume the
defense of such claim with counsel reasonably satisfactory to the indemnified
person; provided, that any person entitled to indemnification hereunder shall
have the right to employ separate counsel and to participate in the defense
of such claim, but the fees and expenses of such counsel shall be at the
expense of such person unless (i) the indemnifying person shall have agreed
to pay such fees or expenses, or (ii) the indemnifying person shall have
failed to assume the defense of such claim and employ counsel reasonably
satisfactory to such person, or (iii) in the opinion of outside counsel to
such person there may be one or more legal defenses available to such person
which are different from or in addition to those available to the
indemnifying person with respect to such claims (in which case, if the person
notifies the indemnifying person in writing that such person elects to employ
separate counsel at the expense of the indemnifying person, the indemnifying
person shall not have the right to assume the defense of such claim on behalf
of such person). If such defense is not assumed by the indemnifying person,
the indemnifying person shall not be subject to any liability for any
settlement made without its consent (but such consent shall not be
unreasonably withheld). No indemnified person shall be required to consent
to entry of any judgment or enter into any settlement that does not include
as an unconditional term thereof the giving by the claimant or plaintiff to
such indemnified person of a written release in form and substance reasonably
satisfactory to such indemnified person from all liability in respect of such
claim or litigation. An indemnifying person who is not entitled to, or
elects not to, assume the defense of a claim shall not be obligated to pay
the fees and expenses of more than one firm of counsel (and, if necessary,
local counsel) for all persons indemnified by such indemnifying person with
respect to such claim, unless in the written opinion of outside counsel to an
indemnified person a conflict of interest as to the subject matter exists
between such indemnified person and another indemnified person with respect
to such claim, in which event the indemnifying person shall be obligated to
pay the fees and expenses of additional counsel for such indemnified person.
(d) If for any reason the indemnification provided for herein is
unavailable to an indemnified person or is insufficient to hold it harmless
as contemplated hereby, then the indemnifying person shall contribute to the
amount paid or payable by the indemnified person as a result of such loss,
cost, expense, claim damage, liability, action or judgment in such proportion
as is appropriate to reflect not only the relative benefits received by the
indemnified
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person and the indemnifying person, but also the relative fault of the
indemnified person and the indemnifying person, as well as any other relevant
equitable considerations.
11. LOCK-UP PROVISION. Each Blackstone Entity agrees in connection with
any public offering of the Company's securities following the date hereof that,
upon the request of the managing underwriter(s) in the case of any underwritten
public offering, or the Company in the case of a non-underwritten public
offering, it shall not sell or offer to sell any shares of Common Stock or any
other securities of the Company, other than shares of Common Stock included in
the public offering, during the period commencing on the distribution of a "red
herring" prospectus for such offering and ending 90 days following the date of
the final prospectus used in such offering, provided that all Fine Family
Stockholders and all officers and managers of the Company have agreed to the
same lockup terms.
12. PARTICIPATION IN REGISTRATIONS. Each Blackstone Entity may not
participate in any registration of securities of the Company unless such
Blackstone Entity.
(a) agrees to sell its securities on the basis provided in any underwriting
arrangements approved by the Company and reasonably acceptable to BREA (in
the case of any Demand Registration) which are customary and which are not in
direct contradiction of any rights granted to BREA or the Blackstone Entities
under this Agreement; and
(b) completes and executes all questionnaires, powers of attorney,
custodial agreements, indemnities, underwriting agreements and other
documents required under the terms of such underwriting arrangements which
are customary and which are not in direct contradiction of any rights granted
to BREA or the Blackstone Entities under this Agreement.
13. REQUEST TO DEREGISTER. The Company will promptly deregister any of the
shares of the Blackstone Entities initially included in a registration
statement pursuant to Section 7 if BREA should thereafter desire to withdraw
such shares from the proposed offering, provided that (a) the registration
statement has not been declared effective, or (b) if the registration statement
has been declared effective, it is not current under the requirement of the
Securities Act due to the lapse of time or material changes in the affairs of
the Company. Such deregistration by the Company shall in no way indicate that
the Company or its counsel deem that any such shares meet the requirements for
sale under such rule.
14. LEGEND ON STOCK CERTIFICATES. Each certificate evidencing shares of
Common Stock will be stamped or otherwise imprinted with a legend in
substantially the following form:
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THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
STOCKHOLDERS AGREEMENT, DATED AS OF JUNE 25, 1996, AMONG INTERSTATE HOTELS
COMPANY (THE "COMPANY") AND CERTAIN STOCKHOLDERS OF THE COMPANY. A COPY OF
SUCH AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER
HEREOF UPON WRITTEN REQUEST.
The Company will imprint such legends on certificates evidencing shares of
Common Stock outstanding prior to the date hereof. The legend set forth in the
paragraph above shall be removed at such time as BREA and its Permitted
Transferees no longer own any Common Stock.
15. BREA AS REPRESENTATIVE. For the sake of convenience, notices and
other communications required hereunder to be made to the Blackstone Entities
and their Permitted Transferees, and all notices and other communications
required hereunder to be made by the Blackstone Entities and their Permitted
Transferees to the Company and the Fine Family Stockholders, shall be made
through BREA or such other Blackstone Affiliate as may be designated by BREA.
16. 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 successors and Permitted Transferees 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 successors and Permitted
Transferees, any legal or equitable rights hereunder.
17. ASSIGNMENT. This Agreement may not be assigned by any party hereto
(other than to Permitted Transferees of such party) without the consent of the
other party hereto. Notwithstanding any such assignment, the assigning party
will continue to remain primarily liable under this Agreement.
18. 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:
To BREA or any Blackstone Entity:
c/o Blackstone Real Estate Advisors L.P.
345 Park Avenue
New York, New York 10154
Attention: Mr. Thomas J. Saylak
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Facsimile: 212-754-8726
with copies thereof to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Glenn D. Kesselhaut, Esq.
Facsimile: 212-455-2502
To the Company:
Interstate Hotels Corporation
Foster Plaza X
680 Andersen Drive
Pittsburgh, Pennsylvania 15220
Attention: Mr. Milton Fine
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: 412-937-3265
and
Jones, Day, Reavis & Pogue
2300 Trammel Crow Center
2001 Ross Avenue
Dallas, Texas 75201
Attention: David Lowery, Esq.
Facsimile: 214-969-5100
To the Fine Family Stockholders:
c/o Interstate Hotels Corporation
Foster Plaza X
680 Andersen Drive
Pittsburgh, Pennsylvania 15220
Attention: Marvin I. Droz, Esq.
Facsimile: 412-937-3265
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 time, specify as its address for purposes of this Agreement
any
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other address upon the giving of 10 days' notice thereof to the other parties.
19. ENTIRE AGREEMENT. This Agreement 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.
20. TERM OF AGREEMENT; TERMINATION OF CERTAIN SECTIONS. This Agreement
shall become effective upon the execution hereof, and Sections 3 and 4 shall
terminate at such time as the Blackstone Entities and their Permitted
Transferees own in the aggregate less than 25% of the shares of Common Stock
issued to the Blackstone Entities on the date of this Agreement. Sections 2, 5
and 7 shall terminate at such time as the Blackstone Entities and their
Permitted Transferees own in the aggregate less than 10% of the shares of
Common Stock issued to the Blackstone Entities on the date of this Agreement.
21. AMENDMENTS. This Agreement may not be amended, modified, supplemented
or terminated, nor may any of the obligations of the Parties hereto be waived,
except by written agreement executed by the party or parties to be charged.
22. NO WAIVER. No waiver by any party of any failure or refusal by the
other party to comply with its obligations hereunder shall be deemed a waiver
of any other or subsequent failure or refusal to so comply.
23. REMEDIES. The Parties hereto will be entitled to enforce their rights
under this Agreement specifically (without posting a bond or other security),
to recover damages by reason of any breach of any provision of this Agreement
and to exercise all other rights existing in their favor. The parties hereto
agree and acknowledge that money damages will not be an adequate remedy for any
breach of the provisions of this Agreement and that any party may in its sole
discretion apply to any court of law or equity or competent jurisdiction for
specific performance and/or injunctive relief in order to enforce or prevent
any violation of the provisions of this Agreement.
24. GOVERNING LAW. This Agreement shall be governed by, interpreted
under, and construed and enforced in accordance with, the laws of the State of
Pennsylvania.
25. SUBMISSION TO JURISDICTION. Each Fine Family Stockholder, the
Company, BREA and each Blackstone Entity irrevocably submits to the
jurisdiction of (a) the Supreme Court of the State of New York, New York
County, (b) the United States District Court for the Southern District of New
York, and (c) the United States District Court for the Western District of
Pennsylvania for the purposes of any suit, action or other
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proceeding arising out of this Agreement or any transaction contemplated
hereby. Each Fine Family Stockholder, the Company, BREA and each Blackstone
Entity 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
Delaware or Pennsylvania with respect to any matters to which it has submitted
to jurisdiction as set forth above in the immediately preceding sentence. Each
Fine Family Stockholder, the Company, BREA and each Blackstone Entity
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 (a) the Supreme Court of the State of New York, New York County, (b)
the United States District Court for the Southern District of New York, and (c)
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.
26. 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.
27. 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.
28. 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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed, all as of the day and year first above written.
INTERSTATE HOTELS COMPANY
By: /s/ Milton Fine
----------------------------
Milton Fine
Chairman
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FINE FAMILY STOCKHOLDERS:
/s/ Milton Fine
-------------------------------
Milton Fine
/s/ Milton Fine
- --------------------------------
Milton Fine, Trustee Under the
Second Amended and Restated
Revocable Trust
dated November 11, 1994
for the benefit of Milton Fine
/s/ David J. Fine
- --------------------------------
David J. Fine, Trustee Under
the Irrevocable Trust dated
December 15, 1989 for the
benefit of Sibyl Fine King
/s/ David J. Fine
- --------------------------------
David J. Fine, Trustee Under
the Irrevocable Trust dated
December 15, 1989 for the benefit
of Carolyn Fine Friedman
/s/ David J. Fine
- --------------------------------
David J. Fine, Trustee Under the
Irrevocable Trust dated
December 15, 1989 for the
benefit of David J. Fine.
/s/ David J. Fine
- --------------------------------
David J. Fine, Trustee for the
Milton Fine Grantor Annuity Trust
dated March 31, 1996.
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BLACKSTONE ENTITIES:
BLACKSTONE REAL ESTATE PARTNERS II L.P.
By: Blackstone Real Estate
Associates L.P., general partner
By: BREA L.L.C., general partner
By: /s/ Gary M. Sumers
-----------------------------
Name:
Title:
BLACKSTONE REAL ESTATE PARTNERS IV L.P.
By: Blackstone Real Estate
Associates L.P., general partner
By: BREA L.L.C., general partner
By: /s/ Gary M. Sumers
-----------------------------
Name:
Title:
BLACKSTONE RE CAPITAL PARTNERS II L.P.
By: Blackstone Real Estate
Associates L.P., general partner
By: BREA L.L.C., general partner
By: /s/ Gary M. Sumers
-----------------------------
Name:
Title:
BRE/INTERSTONE L.L.C.
By: /s/ Gary M. Sumers
---------------------------------
Name:
Title: