UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
FILED PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 31, 2002
INTERSTATE HOTELS & RESORTS, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 1-14331 52-2101815
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(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification Number)
1010 Wisconsin Avenue, N.W.
Washington, D.C. 20007
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(Address of principal executive offices)
Registrant's telephone number, including area code: (202) 965-4455
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FORMER NAME: MERISTAR HOTELS & RESORTS, INC.
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(Former name or former address, if changed since last report)
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FORM 8-K
ITEM 1. CHANGES IN CONTROL OF THE REGISTRANT
Interstate Hotels & Resorts, Inc., a Delaware corporation (formerly
known as "MeriStar Hotels & Resorts, Inc.") (the "Registrant"), and Interstate
Hotels Corporation, a Maryland corporation ("Interstate"), entered into an
Agreement and Plan of Merger, dated May 1, 2002 and as amended on June 3, 2002
(the "Merger Agreement") pursuant to which Interstate merged with and into
Interstate Hotels & Resorts (the "Merger"). On July 31, 2002, after receiving
the required stockholder approvals, pursuant to the Merger Agreement, Interstate
Hotels & Resorts and Interstate, completed the Merger. Upon consummation of the
Merger, pursuant to the Merger Agreement, each outstanding share of Interstate
common stock, par value $0.01 per share, was converted into 4.6 shares of
Interstate Hotels & Resorts' common stock, $0.01 par value per share (the
"Common Stock") and MeriStar Hotels & Resorts, Inc.'s name was changed to
"Interstate Hotels & Resorts, Inc." A copy of the Merger Agreement and the
agreements ancillary thereto are filed as Exhibits 2.1 through 2.3.1 to this
report. The Registrant also issued a press release on July 31, 2002 relating to
the completion of the merger. A copy of the press release is filed as Exhibit
99.1 to this report and is incorporated herein by reference.
Immediately after the effective time of the Merger, Interstate Hotels &
Resorts also effected a one-for-five reverse split of the Common Stock (the
"Reverse Stock Split").
Following the Merger and the Reverse Stock Split, two affiliated
investment funds, CGLH Partners I, LP and CGLH Partners II, LP (together, the
"Investor Group"), collectively beneficially owned 6,900,000 shares of Common
Stock, which represented approximately 34.2% of the outstanding Common Stock as
of July 31, 2002. In addition, five of the 13 directors of the Registrant
(Messrs. Karim J. Alibhai, Joseph J. Flannery, Mahmood J. Khimji, Raymond C.
Mikulich and Sherwood M. Weiser) were nominated by the Investor Group.
In connection with the Merger:
(i) the Registrant filed a Certificate of Merger, dated
July 31, 2002 (the "Certificate of Merger"), and thereby amended its
Certificate of Incorporation:
o changing the name of the Registrant to "Interstate
Hotels & Resorts, Inc.",
o fixing the size of the board of directors of the
Registrant at 13 for the next 18 months,
o insuring the nomination of the initial slate of the
Registrant's directors during the next 18 months, and
o increasing the authorized number of shares of capital
stock to 255 million, of which 250 million shares
will be Common Stock and 5 million shares will be
preferred stock;
(ii) the Registrant amended its by-laws (the "Bylaw
Amendments") which amendments provided for fixing the size of the board
of directors of the Registrant at 13 for the next 18 months and
insuring the nomination of the initial slate of the Registrant's
directors during the first 18 months after the Merger;
(iii) the Registrant and certain of its stockholders,
including the Investor Group, entered into a Stockholder and Board
Composition Agreement, dated as of July 31, 2002 (the "Board
Composition Agreement") pursuant to which procedures for the
replacement of directors of the Registrant who resign, retire or are no
longer able to serve as directors of the Registrant during the first 18
months after the Merger were established;
(iv) the Registrant and the Investor Group entered into a
Registration Rights Agreement, dated as of July 31, 2002 (the
"Registration Rights Agreement"), pursuant to which the Investor Group
was given demand and piggyback registration rights for their shares of
Common Stock;
(v) Interstate and Thomas F. Hewitt entered into a Second
Amended and Restated Employment Agreement, dated as of July, 30, 2002
(the "Hewitt Employment Agreement Amendment"), pursuant to which the
terms of Mr. Hewitt's financial arrangements with the Registrant were
established; and
(vi) the Registrant filed a Certificate of Amendment,
dated July 31, 2002 (the "Certificate of Amendment"), in order to
effect the Reverse Split.
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Immediately after the Merger, the Registrant, its principal operating
subsidiary, Meristar H & R Operating Company, L.P. (the "OP"), Societe Generale,
SG Cowen Securities Corporation, Salomon Smith Barney Inc., Lehman Brothers,
Inc., Credit Lyonnais New York Branch and various other lenders entered into a
$113 million Senior Secured Credit Agreement, dated as of July 31, 2002 (the
"Senior Credit Agreement"), pursuant to which the existing senior credit
agreements of the Registrant and Interstate were refinanced. The Senior Credit
Agreement consists of a $65 million term loan due on July 31, 2005 and a $48
million revolving credit facility due on July 31, 2005 (with a one-year renewal
at the Registant's option). The interest rate on the Senior Credit Facility will
be LIBOR plus 3.00% to 4.50%, based on the fulfillment of various financial
tests by the Registrant. As of July 31, 2001, approximately $65 million was
outstanding under the Senior Credit Agreement and $5 million was outstanding
under the revolving credit facility, bearing interest at a rate of 5.8125% per
annum, and approximately $43 million was available under the revolving credit
facility. A copy of the Senior Credit Agreement is filed as Exhibit 10.3 to this
report.
The OP and MeriStar Hospitality Operating Partnership, L.P. ("MHOP")
were parties to a Revolving Credit Agreement, dated as of August 3, 1998 and
amended on February 29, 2000 and January 28, 2002 (as amended, the "MHOP Loan"),
pursuant to which MHOP provided a $50 million revolving credit facility to the
OP. Immediately after the merger, the OP and MHOP entered into the Third
Amendment to Revolving Credit Agreement, dated as of July 31, 2002 (the "MHOP
Loan Agreement Amendment"), pursuant to which:
o an existing $13.1 million term note issued by the OP and MHOP
was retired, with the balance added to the MHOP Loan;
o the MHOP Loan became a term loan due July 31, 2007; and
o $3.0 million of the outstanding principal amount under the
MHOP Loan was repaid.
As of July 31, 2002, after the amendment, approximately $56.1 million was
outstanding under the MHOP Loan, bearing interest at a rate of 8.31% per annum.
A copy of the MHOP Loan Agreement Amendment is filed as Exhibit 10.4 to this
report.
A copy of the Certificate of Merger is filed as Exhibit 3.1 to this
report.
A copy of the Certificate of Amendment is filed as Exhibit 3.2 to this
report.
A copy of the Bylaw Amendments is being filed as Exhibit 3.3 to this
report.
A copy of the Form of Interstate Hotels & Resorts Common Stock
Certificate is being filed as Exhibit 4.1 to this report.
A copy of the Board Composition Agreement is being filed as Exhibit 9.1
to this report.
A copy of the Registration Rights Agreement is being filed as Exhibit
10.1 to this report.
A copy of the Hewitt Employment Agreement Amendment is filed as Exhibit
10.2 to this report.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
In the Merger, which closed on July 31, 2002, the Registrant acquired
all of the business and assets of Interstate, then the second-largest hotel
management company in the United States. The Registrant intends to continue to
operate Interstate's business. A total of 63,803,104 shares of Common Stock were
issued pursuant to the Merger Agreement to the holders of Interstate securities.
Another 540,000 shares of Common Stock are reserved for issuance pursuant to an
Interstate stock option plan assumed by the Registrant. The amount of
consideration was determined by the Registrant's board of directors through
arms-length bargaining between Interstate and the Registrant, based, in part, on
valuations and a fairness opinion provided by the Registrant's financial
advisor. The financing for the Registrant following the Merger is as described
in Item 1, above.
ITEM 5. OTHER EVENTS
At the Registrant's 2002 Annual Meeting, the Registrant's stockholders
approved an amended and restated Incentive Plan, a copy of which is filed with
this report as Exhibit 10.5. The Registrant's stockholders also approved
amendments to the Registrant's Employee Stock Purchase Plan and the Registrant's
Non-Employee Directors' Stock Option Plan, copies of which are filed with this
report as Exhibits 10.6 and 10.7, respectively.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial statements of businesses acquired. The financial
statements required by this Item will be filed not later than
60 days after the date that this initial report was required
to be filed.
(c) Exhibits:
EXHIBIT DESCRIPTION
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2.1 Agreement and Plan of Merger, dated May 1,
2002, by and between Interstate Hotels
Corporation and Interstate Hotels & Resorts,
Inc., dated May 1, 2002 (incorporated by
reference to Exhibit 2.1 to the Registrant's
Registration Statement on Form S-4 filed on
June 4, 2002 (Registration No. 333-89740)).
2.1.1 Amendment No. 1 to Agreement and Plan of
Merger, dated June 3, 2002, by and between
Interstate Hotels Corporation and Interstate
Hotels & Resorts, Inc. (incorporated by
reference to Exhibit 2.1.1 to the
Registrant's Registration Statement on Form
S-4 filed on June 4, 2002 (Registration No.
333-89740)).
2.2 Interstate Hotels Corporation Stockholder
Voting and Conversion Agreement, dated as of
May 1, 2002, among Interstate Hotels &
Resorts, Inc., Interstate Hotels Corporation
and certain stockholders named therein
(incorporated by reference to Exhibit 2.2 to
the Registrant's Registration Statement on
Form S-4 filed on June 4, 2002 (Registration
No. 333-89740)).
2.2.1 Amendment No. 1 to the Interstate Hotels
Corporation Stockholder Voting and
Conversion Agreement, dated June 3, 2002,
among Interstate Hotels & Resorts, Inc.,
Interstate Hotels Corporation and certain
stockholders named therein (incorporated by
reference to Exhibit 2.2.1 to the
Registrant's Registration Statement on Form
S-4 filed on June 4, 2002 (Registration No.
333-89740)).
2.3 Conversion Incentive Agreement, dated as of
May 1, 2002, among Interstate Hotels
Corporation and holders of Interstate Hotels
Corporation's Series B Preferred Stock and
8.75% Convertible Subordinated Notes
(incorporated by reference to Exhibit 2.3 to
the Registrant's Registration Statement on
Form S-4 filed on June 4, 2002 (Registration
No. 333-89740)).
2.3.1 Letter Agreement among Interstate Hotels
Corporation, Interstate Hotels & Resorts,
Inc. and holders of Interstate Hotel
Corporation's convertible securities, dated
June 3, 2002, amending and clarifying the
Conversion Incentive Agreement (incorporated
by reference to Exhibit 2.3.1 to the
Registrant's Registration Statement on Form
S-4 filed on June 4, 2002 (Registration No.
333-89740)).
3.1 Certificate of Merger, dated July 31, 2002
(incorporated by reference to Exhibit 3.1.2
to the Registrant's Registration Statement
on Form 8-A/A filed with the Securities and
Exchange Commission on August 2, 2002).
3.2 Certificate of Amendment of Restated
Certificate of Incorporation of Interstate
Hotels & Resorts, Inc., dated July 31, 2002
(incorporated by reference to Exhibit 3.1.3
to the Registrant's Registration Statement
on Form 8-A/A filed with the Securities and
Exchange Commission on August 2, 2002).
3.3 Amendment to the By-laws of Interstate
Hotels & Resorts, Inc. (incorporated by
reference to Exhibit 3.3 to the Registrant's
Registration Statement on Form 8-A/A filed
with the Securities and Exchange Commission
on August 2, 2002).
4.1 Form of Interstate Hotels & Resorts Common
Stock Certificate (incorporated by reference
to Exhibit 4.1 to the Registrant's
Registration Statement on Form 8-A/A filed
with the Securities and Exchange Commission
on August 2, 2002).
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9.1 Board Composition Agreement, dated as of
July 31, 2002, among the Registrant and
certain stockholders of the Registrant
specified therein.
10.1 Registration Rights Agreement, dated as of
July 31, 2002, among the Registrant, CGLH
Partners I, LP and CGLH Partners II, LP.
10.2 Second Amended and Restated Employment
Agreement, dated as of July 30, 2002,
between the Registrant and Thomas F. Hewitt.
10.3 Senior Credit Agreement, dated as of July
31, 2002, among the Registrant, MeriStar H
& R Operating Company, L.P., Societe
Generale, SG Cowen Securities Corporation,
Salomon Smith Barney Inc., Lehman Brothers,
Inc., Credit Lyonnais New York Branch and
various other lenders.
10.4 Third Amendment to Revolving Credit
Agreement, dated as of July 31, 2002, by and
between MeriStar H&R Operating Company, L.P.
and MeriStar Hospitality Operating
Partnership, L.P.
10.5 Amended and Restated Incentive Plan.
10.6 Amendment to the Registrant's Employee Stock
Purchase Plan.
10.7 Amendment to the Registrant's Non-Employee
Directors' Incentive Plan.
99.1 Press Release, dated as of July 31, 2002.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: August 7, 2002
INTERSTATE HOTELS & RESORTS, INC
By: /s/ Christopher L. Bennett
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Christopher L. Bennett
Senior Vice President and General Counsel
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EXHIBIT INDEX
EXHIBIT DESCRIPTION
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2.1 Agreement and Plan of Merger, dated May 1,
2002, by and between Interstate Hotels
Corporation and Interstate Hotels & Resorts,
Inc., dated May 1, 2002 (incorporated by
reference to Exhibit 2.1 to the Registrant's
Registration Statement on Form S-4 filed on
June 4, 2002 (Registration No. 333-89740)).
2.1.1 Amendment No. 1 to Agreement and Plan of
Merger, dated June 3, 2002, by and between
Interstate Hotels Corporation and Interstate
Hotels & Resorts, Inc. (incorporated by
reference to Exhibit 2.1.1 to the
Registrant's Registration Statement on Form
S-4 filed on June 4, 2002 (Registration No.
333-89740)).
2.2 Interstate Hotels Corporation Stockholder
Voting and Conversion Agreement, dated as of
May 1, 2002, among Interstate Hotels &
Resorts, Inc., Interstate Hotels Corporation
and certain stockholders named therein
(incorporated by reference to Exhibit 2.2 to
the Registrant's Registration Statement on
Form S-4 filed on June 4, 2002 (Registration
No. 333-89740)).
2.2.1 Amendment No. 1 to the Interstate Hotels
Corporation Stockholder Voting and
Conversion Agreement, dated June 3, 2002,
among Interstate Hotels & Resorts, Inc.,
Interstate Hotels Corporation and certain
stockholders named therein (incorporated by
reference to Exhibit 2.2.1 to the
Registrant's Registration Statement on Form
S-4 filed on June 4, 2002 (Registration No.
333-89740)).
2.3 Conversion Incentive Agreement, dated as of
May 1, 2002, among Interstate Hotels
Corporation and holders of Interstate Hotels
Corporation's Series B Preferred Stock and
8.75% Convertible Subordinated Notes
(incorporated by reference to Exhibit 2.3 to
the Registrant's Registration Statement on
Form S-4 filed on June 4, 2002 (Registration
No. 333-89740)).
2.3.1 Letter Agreement among Interstate Hotels
Corporation, Interstate Hotels & Resorts,
Inc. and holders of Interstate Hotel
Corporation's convertible securities, dated
June 3, 2002, amending and clarifying the
Conversion Incentive Agreement (incorporated
by reference to Exhibit 2.3.1 to the
Registrant's Registration Statement on Form
S-4 filed on June 4, 2002 (Registration No.
333-89740)).
3.1 Certificate of Merger, dated July 31, 2002
(incorporated by reference to Exhibit 3.1.2
to the Registrant's Registration Statement
on Form 8-A/A filed with the Securities and
Exchange Commission on August 2, 2002).
3.2 Certificate of Amendment of Restated
Certificate of Incorporation of Interstate
Hotels & Resorts, Inc., dated July 31, 2002
(incorporated by reference to Exhibit 3.1.3
to the Registrant's Registration Statement
on Form 8-A/A filed with the Securities and
Exchange Commission on August 2, 2002).
3.3 Amendment to the By-laws of Interstate
Hotels & Resorts, Inc. (incorporated by
reference to Exhibit 3.3 to the Registrant's
Registration Statement on Form 8-A/A filed
with the Securities and Exchange Commission
on August 2, 2002).
4.1 Form of Interstate Hotels & Resorts Common
Stock Certificate (incorporated by reference
to Exhibit 4.1 to the Registrant's
Registration Statement on Form 8-A/A filed
with the Securities and Exchange Commission
on August 2, 2002).
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9.1 Board Composition Agreement, dated as of
July 31, 2002, among the Registrant and
certain stockholders of the Registrant
specified therein.
10.1 Registration Rights Agreement, dated as of
July 31, 2002, among the Registrant, CGLH
Partners I, LP and CGLH Partners II, LP.
10.2 Second Amended and Restated Employment
Agreement, dated as of July 30, 2002,
between the Registrant and Thomas F. Hewitt.
10.3 Senior Credit Agreement, dated as of July
31, 2002, among the Registrant, MeriStar H
& R Operating Company, L.P., Societe
Generale, SG Cowen Securities Corporation,
Salomon Smith Barney Inc., Lehman Brothers,
Inc., Credit Lyonnais New York Branch and
various other lenders.
10.4 Third Amendment to Revolving Credit
Agreement, dated as of July 31, 2002, by and
between MeriStar H&R Operating Company, L.P.
and MeriStar Hospitality Operating
Partnership, L.P.
10.5 Amended and Restated Incentive Plan.
10.6 Amendment to the Registrant's Employee Stock
Purchase Plan.
10.7 Amendment to the Registrant's Non-Employee
Directors' Incentive Plan.
99.1 Press Release, dated as of July 31, 2002.