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Exhibit 10.9
SETTLEMENT AGREEMENT
THIS SETTLEMENT AGREEMENT (this "Agreement") is executed this
27th day of May, 1998 by and among MARRIOTT INTERNATIONAL, INC., a Delaware
corporation, INTERSTATE HOTELS CORPORATION, a Pennsylvania corporation,
INTERSTATE HOTELS COMPANY, a Pennsylvania corporation, PATRIOT AMERICAN
HOSPITALITY, INC., a Delaware corporation, and WYNDHAM INTERNATIONAL, INC., a
Delaware corporation.
PRELIMINARY STATEMENT
A. Pursuant to certain franchise agreements or license
agreements, Interstate Hotels Corporation (together with
Interstate Hotels Company and its other Affiliates,
collectively, "Interstate") is the franchisee, licensee or
operator with respect to the 62 full service hotels and
limited service hotels listed on Exhibits A, B, C and D
attached to this Agreement, except for the Troy, Michigan
Marriott hotel, for which an entity with which Patriot intends
to merge serves as the franchisee of such hotel. Marriott is
the franchisor or licensor with respect to each of such 62
hotels.
B. Patriot and Interstate have entered into an Agreement
and Plan of Merger dated as of December 2, 1997 pursuant to
which Interstate agreed to merge with and into Patriot (the
"Merger") effective upon satisfaction of certain closing
conditions.
C. Marriott filed suit in the United States District Court
for the District of Maryland (the "Maryland Court") (Marriott
International, Inc. v. Interstate Hotels Company, et al. CA
#MJG-98-925) (the "Maryland Case") seeking to enjoin
Interstate from transferring control, directly or indirectly,
of the franchisee under certain of the franchise and license
agreements noted above without Marriott's consent and to
obtain certain other relief, alleging that the proposed Merger
would violate the terms of such franchise agreements and
license agreements and would cause irreparable harm to
Marriott. Patriot filed suit in Dallas County, Texas state
court (the "Texas Court") (Patriot American Hospitality, Inc.
et al. v. Marriott International, Inc., Cause #98-02551-H)
(the "Texas Case") alleging that Marriott tortiously
interfered with the Merger.
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D. The parties hereto desire to enter into this Agreement
(i) to settle and resolve the disputes among themselves that
resulted in the filing of the Maryland Case and the Texas
Case, and (ii) to consummate the transactions contemplated
hereby.
NOW, THEREFORE, in consideration of the mutual premises,
obligations, covenants and agreements contained herein and other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound, agree as follows:
1. RECITALS. The foregoing recitals and statements are made a
part of this Agreement.
2. DEFINITIONS. Unless otherwise provided, capitalized terms
used herein shall have the definitions specified below:
"Affiliate" means any Person that is directly or
indirectly (through one or more intermediaries) Controlled by, under common
Control with, or Controlling another Person; provided, however, that the term
Affiliate shall not include any individual.
"Agreement" means this Settlement Agreement.
"Amendment to Tyson's Corner Management Agreement" shall
have the meaning given such term in Section 3.3.1.
"Approved Operator" means, with respect to a particular
point in time, a Person in good standing as an operator of Marriott-brand
hotels, then approved to enter into franchise or license agreements with
Marriott, as determined in accordance with Marriott's then existing standards.
Unless otherwise expressly stated by Marriott, a Person shall be an Approved
Operator only with respect to the specific Marriott brand for which that Person
is approved.
"Approved Owner" means an owner who is neither (i) engaged
in the business of operating, franchising or managing (as distinguished from
merely owning or financing) its own brand or the functional equivalent of its
own brand in competition with Marriott, nor (ii) known in the community as being
of bad moral character, or has been convicted of a felony in any state or
federal court, or is in Control of, or Controlled by Persons who have been
convicted of felonies in any state or federal court.
"Certain Newco Shareholders" means, collectively, Messrs.
Xxxxxxxx, D. Fine, M. Fine and Xxxxxxxx; provided, however, that each such
individual shall be included in such term for only so long as the Voting
Agreement continues in effect with respect to such individual.
"Control" means (and any form thereof, such as
"Controlled" or "Controlling" means) the possession by one Person, directly or
indirectly (through one or more intermediaries) of the power (i) to direct or
cause the direction of the management or policies of another Person,
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whether through the ownership of voting stock, by contract or otherwise; or (ii)
to vote more than fifty percent (50%) of the voting stock of such Person in the
case of a privately owned company, or to vote more than twenty percent (20%) of
the voting stock of such Person in the case of a company whose stock is publicly
traded.
"Covered Liability" shall have the meaning given such term
in Section 8.1.
"Divestiture" means the transactions required by the terms
of this Agreement involving Newco and its subsidiaries, IHC II, LLC and
Interstate Hotels, LLC, pursuant to which Newco is recapitalized through a
"spin-off" of all of Newco's common stock, other than the common stock owned by
Patriot or Marriott, on a pro-rata basis to existing holders of outstanding
paired shares of common stock of Patriot.
"Dollars" or "$" means United States Dollars.
"Effective Date of the Merger" shall have the meaning
given such term in Section 3.2.4.1.
"Exhibit A Hotels" means the Marriott-brand hotels listed
on Exhibit A, with respect to which the existing franchise agreements or license
agreements with Interstate (collectively, the "Exhibit A Hotel Franchise
Agreements"), together with any existing owner's agreements, will be terminated
in accordance with the terms of this Agreement.
"Exhibit B Hotels" means the Marriott-brand hotels listed
on Exhibit B, with respect to which (i) new submanagement agreements will be
executed by the Submanager and IHC II, LLC as more particularly described in
Section 3.2.1 hereof (collectively, the "Submanagement Agreements"), and (ii)
the obligations of the parties under all existing franchise agreements or
license agreements with Interstate (collectively, the "Exhibit B Hotel Franchise
Agreements"), except for the obligations of the franchisees thereunder to
continue to make "franchise fee" payments, will be suspended, as more
particularly set forth in Section 3.2.2.
"Exhibit B Liquidated Damages" means, with respect to any
Exhibit B Hotel Franchise Agreement, liquidated damages equal to the sum of the
projected franchise fees that would have been payable under such Franchise
Agreement during its remaining term (as if such Franchise Agreement had not been
terminated) as set forth on Schedule 12.4-B, discounted to present value using a
7.3% per annum discount rate. For any partial year, that year's franchise fees
shall be determined by dividing the projected franchise fees set forth on
Schedule 12.4-B for such year by 365 and then multiplying the product by the
remaining days in such year.
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"Exhibit C Hotels" means the Marriott-brand hotels listed
on Exhibit C, with respect to which the existing management agreements,
franchise agreements or license agreements with Interstate (or, in the case of
the Troy, Michigan Marriott hotel, with an Affiliate of Patriot) (collectively,
the "Exhibit C Hotel Franchise Agreements") will be modified, as more
particularly set forth in Section 3.3.2 and as otherwise set forth in Section
3.3.3.
"Exhibit C Liquidated Damages" means, with respect to any
Exhibit C Hotel Franchise Agreement, liquidated damages equal to the sum of the
projected franchise fees that would have been payable under such Franchise
Agreement during its remaining term (as if such Franchise Agreement had not been
terminated) as set forth on Schedule 12.4-C, discounted to present value using a
7.3% per annum discount rate. For any partial year, that year's franchise fees
shall be determined by dividing the projected franchise fees set forth on
Schedule 12.4-C for such year by 365 and then multiplying the product by the
remaining days in such year.
"Exhibit D Hotels" means the Marriott-brand hotels owned
by the third parties listed on Exhibit D, with respect to which the existing
franchise agreements or license agreements with Interstate or the Third-Party
Owner (collectively, the "Exhibit D Hotel Franchise Agreements") will remain in
place, as more particularly set forth in Section 4.1.
"Exhibit D Liquidated Damages" means, with respect to any
Exhibit D Hotel Franchise Agreement, liquidated damages equal to the sum of the
projected franchise fees that would have been payable under such Franchise
Agreement during its remaining term (as if such Franchise Agreement had not been
terminated) as set forth on Schedule 12.4-D, discounted to present value using a
7.3% per annum discount rate. For any partial year, that year's franchise fees
shall be determined by dividing the projected franchise fees set forth on
Schedule 12.4-D for such year by 365 and then multiplying the product by the
remaining days in such year.
"Existing Franchise Agreement Liquidated Damages" means,
following consummation of the Divestiture, the liquidated damages or termination
fees set forth in a Franchise Agreement and payable in connection with the
termination of a Franchise Agreement but shall not include (i) any fees or
changes due at the time of termination under or in connection with the Franchise
Agreement other than as a result of such termination and (ii) and claims related
to the failure to de-identify the hotel.
"Filing Date" means the earlier to occur of (i) ninety
(90) days following the Effective Date of the Merger, or (ii) one hundred twenty
(120) days following the date of this Agreement.
"Forbearance Termination Event" means that Patriot shall
not have caused (i) all filings to be made pursuant to Section 5.11 by the
Filing Date or (ii) the Divestiture to occur prior to the Final Divestiture
Date.
"Final Divestiture Date" means January 29, 1999.
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"Franchise Agreements" mean, collectively, the Exhibit A
Hotel Franchise Agreements, the Exhibit B Hotel Franchise Agreements, the
Exhibit C Hotel Franchise Agreements and the Exhibit D Hotel Franchise
Agreements and, individually, any of such Franchise Agreements.
"Indemnified Party" shall have the meaning given such term
in Section 8.1.
"IHC II, LLC" means IHC II, LLC, a Delaware limited
liability company to be owned 99.99% by Newco and 0.01% by Marriott.
"Interstate" has the meaning given in Preliminary
Statement (A).
"Interstate Hotels, LLC" means Interstate Hotels, LLC, a
Delaware limited liability company and successor-by-merger to Interstate Hotels
Corporation, the ownership of which, subject to consummation of the Divestiture,
is currently contemplated to be approximately 65% by Patriot and 35% by Newco.
"Interstate Releasors" shall have the meaning given such
term in Section 10.4.
"Marks" shall have the meaning given such term in Section
12.1.
"Marriott" means and includes Marriott International, Inc.
and its Affiliates.
"Marriott Released Parties" shall have the meaning given
such term in Section 10.3.
"Marriott Releasors" shall have the meaning given such
term in Section 10.2.
"Merger" means the merger of Interstate with and into
Patriot pursuant to the terms and conditions of the Agreement and Plan of Merger
dated as of December 2, 1997, as amended.
"Newco" means a Maryland corporation to be formed in
accordance with Section 5.1 hereof.
"Patriot" means and includes Patriot American Hospitality,
Inc., Patriot Partnership, Wyndham International, Inc. and their Affiliates and,
upon the Merger, shall include Interstate.
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"Patriot and Interstate Released Parties" shall have the
meaning given such term in Section 10.2.
"Patriot Interest" means, effective upon consummation of
the Merger (except for the Troy, Michigan Marriott hotel, which is currently
owned by Patriot) with respect to Patriot's ownership of an Exhibit B Hotel or
an Exhibit C Hotel (as the case may be): (i) the hotel, or the Person owning the
hotel, in all cases where Patriot, directly or indirectly, owns 100% of the
hotel; and (ii) in all cases where Patriot (directly or indirectly) owns less
than 100% of the hotel, Patriot's actual ownership interest in the hotel or the
Person that owns the hotel.
"Patriot Partnership" means Patriot American Hospitality
Partnership, L.P., a Virginia limited partnership.
"Patriot Releasors" shall have the meaning given such term
in Section 10.3.
"Person" means an individual, a partnership, a
corporation, a limited liability company, a government agency or department, a
trust, or any unincorporated organization.
"Primary Manager" means IHC II, LLC.
"Primary Management Agreement" means the management
agreement between IHC II, LLC and Wyndham as described in Section 5.15.
"REIT" shall have the meaning given such term in Section
3.2.4.5.
"Restricted Purchasers" means Patriot, any Affiliate of
Patriot, directors who are then employed by Patriot or were so employed within
one (1) year prior to the proposed sale or transfer to such Person, senior
executive officers, or principal shareholders of Patriot or its Affiliates who
are then employed by Patriot or were so employed within one (1) year prior to
such sale or transfer, the Certain Newco Shareholders and any joint venture or
partnership in which any of the foregoing have a Controlling interest.
"Right of First Refusal" shall have the meaning given such
term in Section 3.2.4.3.
"Securities Filings" shall have the meaning given such
term in Section 12.1.
"Sensitive Information" shall have the meaning given such
term in Section 12.2.
"Special Fee" means the fee, payable to the Submanager in
connection with the termination of a Submanagement Agreement as provided herein,
equal to 2.35%, which already reflects a reduction for a 0.5% cost factor and
which is subject to adjustment pursuant to Section 5.11, multiplied by the
projected gross revenues that would have been generated by the hotel under such
terminated Submanagement Agreement during its remaining term as set forth on
Schedule 2
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(had such Submanagement Agreement not been terminated) (the "Remaining Projected
Fees"). Schedule 2 reflects whole calendar years, and any partial year shall be
determined by dividing the relevant year's projected revenue in Schedule 2 by
365 and then multiplying the product by the remaining days in such partial year.
Marriott has the option to receive the Remaining Projected Fees as either (i) a
lump sum determined by discounting the Remaining Projected Fees to present value
using a 7.3% per annum discount rate, or (ii) increased "Base Management Fees"
under the not terminated Submanagement Agreements equal to 2.35% (subject to
Section 5.11) of the Remaining Projected Fees of the terminated Submanagement
Agreement spread pro rata among the hotels in which Patriot holds 100% of the
ownership interests. Marriott shall elect option (i) or (ii) within sixty (60)
days after such fee becomes payable pursuant to the terms of this Agreement.
"Submanagement Agreement" shall have the meaning given
such term in Section 3.2.1.
"Submanager" means Marriott International, Inc. or a
wholly-owned subsidiary (direct or indirect) of Marriott International, Inc., as
the case may be, as the submanager under the various Submanagement Agreements.
"Territory" means an Exhibit B Territory as defined in
Section 3.2.2.2 or an Exhibit C Territory as defined in Section 3.3.2.
"Third-Party Owner" means with respect to any hotel listed
on Exhibit D, any person who owns such hotel.
"Wyndham" means, collectively, Wyndham International,
Inc., a Delaware corporation, and Patriot American Hospitality Operating
Partnership, L.P., a Delaware limited partnership.
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3. INTERSTATE-OWNED HOTELS.
3.1 Exhibit A Hotels.
3.1.1 Termination of Franchise Agreements.
Patriot shall use its reasonable best efforts to obtain all necessary consents
and approvals required in order to permit the termination of the Exhibit A Hotel
Franchise Agreements (and the existing related owner's agreements). All such
Exhibit A Hotel Franchise Agreements (and the existing related owner's
agreements) with respect to which the necessary consents and approvals have been
obtained by Patriot shall be terminated on the dates set forth on Exhibit A;
provided, however, that prior to such termination such Franchise Agreements
shall be held by Patriot as franchisee thereunder, and the corresponding hotel
shall be managed by an Affiliate of Patriot. In connection with any such
termination, Patriot and its Affiliates shall fully and timely "de-identify"
each of the relevant Exhibit A Hotels as Marriott hotels, and all amounts
payable by Interstate, Patriot, Wyndham or any Affiliate thereof under any
existing Exhibit A Hotel Franchise Agreement (subject to Section 3.1.3) shall be
paid to Marriott on or prior to the termination date of the relevant Exhibit A
Hotel Franchise Agreement or within fifteen (15) days after the date of any
subsequent invoice. Until such termination, each such Exhibit A Hotel Franchise
Agreement (and the existing related owner's agreement) shall continue in full
force and effect, and the franchisee thereunder shall be obligated to continue
to make all payments to Marriott or its Affiliates and otherwise to continue to
perform all of its obligations under such Franchise Agreement, and the
franchisor thereunder shall continue to perform all of its obligations under
such Franchise Agreement. Until any such Exhibit A Hotel Franchise Agreement is
terminated or expires, such agreement shall be subject to Section 12 hereof. The
parties agree that effective upon the Merger, each Exhibit A Hotel Franchise
Agreement for which the relevant consents referred to on Schedule 6.2.6 have
been obtained is hereby amended so that there are no restrictions on Patriot or
the Primary Manager from developing, owning, franchising or operating other
hotels within a designated area around the relevant Exhibit A Hotel.
3.1.2 Failure to Terminate. If, despite
Patriot's reasonable best efforts, any such Exhibit A Hotel Franchise Agreement
is not terminated on the date set forth on Exhibit A solely because the relevant
consents and approvals listed on Schedule 6.2.6 have not been obtained, the
management fees payable to Marriott pursuant to the Submanagement Agreements
shall be adjusted downward (pro-rata, with respect to all Submanagement
Agreements) to reflect the continuation of such Exhibit A Hotel Franchise
Agreements beyond such agreed upon termination date. If Patriot ultimately
obtains such missing consent within one (1) year after the scheduled termination
of the relevant Exhibit A Hotel Franchise Agreement, then such Franchise
Agreement (and the related owner's agreement) shall be terminated as of the date
of such consent and the management fees under the related Submanagement
Agreements shall be re-adjusted upward (pro-rata, with respect to all
Submanagement Agreements) to reflect such termination as of such date.
Adjustments under this Section 3.1.2 shall be effected in a manner that is
designed to achieve fee neutrality on a net present value basis, assuming a 7.3%
per annum discount rate, between the termination fees otherwise payable in
connection with the termination of the Exhibit A Hotel Franchise Agreement and
the fees to be earned under the Submanagement Agreements relating to
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the Exhibit B Hotels in which Patriot holds a 100% ownership interest. If
Patriot does not obtain such consent within one (1) year after the scheduled
termination of the relevant Exhibit A Hotel Franchise Agreement, then the
initial adjustment to the management fees to reflect the continuation of such
Franchise Agreement shall become permanent, and the management of such hotel
shall then be transferred to the Primary Manager.
3.1.3 Waiver of Termination Fees. Effective
upon the respective termination date of each of the Exhibit A Hotel Franchise
Agreements terminated pursuant to Section 3.1.1 or 3.1.2 hereof, Marriott hereby
waives any right to receive any liquidated damages or termination fees payable
to it pursuant to the terms of such Exhibit A Hotel Franchise Agreements (or the
related owner's agreements) as a result of such termination. Additionally, the
parties agree as follows:
a. The following definitions will apply to this Section 3.1.3:
"Termination Fee Payment Agreement" shall mean that
certain agreement dated December 15, 1995, by and
between Interstone/CGL Partners L.P.
("Interstone/CGL") and Marriott Hotel Services, Inc.
("MHSI").
"Franchise Agreements" shall have the meaning given
in the fourth "Whereas" clause of the Termination Fee
Payment Agreement.
"Payment Event" shall have the meaning given in
Section 1(a) of the Termination Fee Payment
Agreement.
b. Marriott agrees that the termination of any of the
Franchise Agreements pursuant to the terms of this Agreement shall not
constitute a Payment Event under the Termination Fee Payment Agreement.
c. The parties acknowledge and agree that the remaining terms
of the Termination Fee Payment Agreement shall remain in effect.
3.1.4 Termination and Payments If No
Divestiture. If a Forbearance Termination Event occurs, in addition to its other
rights pursuant to this Section 3.1, Marriott shall have the right to terminate
all Exhibit A Franchise Agreements (and the related owner's agreement), and
Patriot agrees to pay Marriott the amounts described on Schedule 3.1.4 hereof
for each Exhibit A Hotel.
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3.2 Exhibit B Hotels.
3.2.1 Execution of Submanagement Agreements.
On or before the Divestiture, the Submanager and IHC II, LLC will execute
Submanagement Agreements for each of the Exhibit B Hotels in the form attached
as Exhibit B, which Submanagement Agreements shall become effective immediately
upon execution for a term commencing on the "Take-Over Dates" (as defined in the
Submanagement Agreements), and pursuant to which the Submanager shall submanage
(as more particularly set forth therein) the relevant Exhibit B Hotel (each a
"Submanagement Agreement" and collectively, the "Submanagement Agreements") as
of the "TakeOver Dates" (as defined in such Submanagement Agreements), which
dates correspond to the dates set forth on Exhibit B. For any hotel listed on
Schedule 6.2.6, the terms of this Section 3.2.1 shall not apply to such hotel
until the consent set forth in Schedule 6.2.6 for such hotel is obtained. The
management fees of 2.85% payable to the Submanager for its submanagement
services under the Submanagement Agreements (on a collective basis), subject to
adjustment under Sections 3.1.2 and 5.11, reflect the value of Marriott
management (including costs), and the loss in economic value resulting from the
termination of the Exhibit A Hotel Franchise Agreements.
If, despite Patriot's reasonable best efforts and Marriott's
efforts to obtain the relevant consents referred to on Schedule 6.2.6, the
execution and effectiveness of any of the Submanagement Agreements must be
delayed beyond such Take-Over Dates because the relevant consents and approvals
listed on Schedule 6.2.6 have not been obtained (the "Delayed Submanagement
Agreements"), the management fees payable to Marriott pursuant to those
Submanagement Agreements which do become effective as of such Take-Over Dates
and with respect to which Patriot owns 100% of the related Exhibit B Hotel (the
"Timely Submanagement Agreements") shall be adjusted upward (pro-rata, with
respect to all such Timely Submanagement Agreements) to reflect the delayed
effectiveness of the Delayed Submanagement Agreements beyond their Take-Over
Dates. If Patriot ultimately obtains such missing consent within one (1) year
after such Take-Over Date, then such Delayed Submanagement Agreement shall be
executed and become effective within sixty (60) days after the date of such
consent and the management fees under the Timely Submanagement Agreements shall
be re-adjusted downward (pro-rata, with respect to all such Timely Submanagement
Agreements) to reflect such execution and effectiveness as of such date. If
Patriot does not obtain such consent within one (1) year after the scheduled
Take-Over Date of a particular Delayed Submanagement Agreement, then the initial
adjustment to the Timely Submanagement Agreements to reflect such failure to
obtain a required consent shall become permanent.
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3.2.2 Suspension of Obligations,
Modification of Franchise Agreements.
3.2.2.1 Suspension. Beginning on
the "Take-Over Date" (as defined therein) of each Submanagement Agreement and
continuing during the period when the Submanager has possession of the relevant
Exhibit B Hotel under the relevant Submanagement Agreement, the rights and
obligations of the franchisee and franchisor under the related Exhibit B
Franchise Agreement shall be suspended for all purposes, except as modified by
this Agreement and except for the obligation of the franchisee thereunder to
make "franchise fee" payments (i.e., payments to Marriott of a percentage of
gross room sales and, in certain agreements, gross food and beverage sales,
which are not designated for marketing, purchasing or other ancillary services),
which obligation shall continue in full force and effect. In connection with any
such suspension, all amounts not then in dispute that are then currently past
due under the relevant Exhibit B Hotel Franchise Agreements shall be paid to
Marriott on or prior to the date of suspension or within fifteen (15) days after
the date of any subsequent invoice.
3.2.2.2 Modifications. Each of
the Exhibit B Hotel Franchise Agreements is amended, effective upon the
consummation of the Merger, to provide that upon the termination (but not the
expiration) of any such Franchise Agreement by the franchisee or, upon the
default by such franchisee, by Marriott, Marriott shall have the right to
acquire from Patriot or its Affiliate the Patriot Interest in the relevant
Exhibit B Hotel at a price determined pursuant to Section 3.2.2.3, less the
amount of the Special Fee otherwise payable as a result of the termination of
the underlying Submanagement Agreement (to the extent not paid); provided,
however, that Marriott shall have no such right to acquire such Patriot Interest
in the event of the termination of a Submanagement Agreement (and related
Franchise Agreement) pursuant to Section 11.22 of such Submanagement Agreement.
For any hotel listed on Schedule 6.2.6, the terms of this Section 3.2.2.2 shall
not apply to such hotel until the consent set forth in Schedule 6.2.6 for such
hotel is obtained. Marriott shall elect to exercise such right to purchase (if
at all) within thirty (30) days after the termination of such Franchise
Agreement, and the parties shall use their reasonable best efforts to close the
related purchase transaction within ninety (90) days after the determination,
pursuant to Section 3.2.2.3, of the purchase price for such Patriot Interest. In
addition, each Exhibit B Hotel Franchise Agreement is hereby amended, effective
upon consummation of the Merger, (i) to delete any provision that limits,
restricts or in any way modifies Marriott's ability to develop, operate, manage
or franchise any hotel (including any provisions requiring Marriott to provide
franchisee with notice and/or an opportunity to develop other hotels) within a
restricted geographic area or territory as set forth in such agreement (an
"Exhibit B Territory"), and (ii) to amend each such Franchise Agreement to
incorporate by reference Sections 11.13 and 11.22 of the Submanagement Agreement
for the relevant Exhibit B Hotel regardless of whether the relevant
Submanagement Agreement has been executed or terminated, and to interpret the
defined terms of Sections 11.13 and 11.22 of the Submanagement Agreement to give
effect to and make binding on themselves the
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provisions of Sections 11.13 and 11.22 solely for the purpose of defining
Marriott's rights to operate or manage (or franchise another party to operate or
manage) any hotel in/or around a "Restricted Area" as defined in a Submanagement
Agreement. Upon any termination of any such Submanagement Agreement pursuant to
Section 11.22 thereof (and the termination of the corresponding Franchise
Agreement), neither the Special Fee nor the liquidated damages set forth on
Schedule 3.2.7 shall be payable. The parties agree that effective upon the
Merger, each Exhibit B Hotel Franchise Agreement is hereby amended so that there
are no restrictions on Patriot or the Primary Manager from developing, owning,
franchising or operating other hotels within a designated area around the
relevant Exhibit B Hotel.
3.2.2.3 Determination of Purchase
Price. The parties shall attempt by good faith negotiation to arrive at a fair
market value purchase price for Patriot Interest to be acquired by Marriott
pursuant to Section 3.2.2.2. In the event that pursuant to such negotiations,
Marriott and Patriot do not agree upon a price for such Patriot Interest,
Marriott and Patriot each shall, at its own expense and within thirty (30) days
thereafter, obtain an appraisal of the fair market value of such Patriot
Interest from a nationally recognized appraiser of hotel properties comparable
to such hotel. In determining the fair market value of such hotel, the
appraisers shall be instructed to assume that the hotel is not subject to a
management agreement but is subject to the existing Franchise Agreement. If such
appraisals differ, then the determination of the purchase price for such Patriot
Interest shall be submitted to arbitration in Washington, D.C. in accordance
with the arbitration rules of the American Arbitration Association then in
effect. The parties shall jointly select a single arbitrator. If the parties are
unable to agree upon an arbitrator within ten (10) days following the 30-day
period during which the appraisals were obtained, the arbitrator shall be
selected by the respective appraisers selected by each party within ten (10)
days of such initial 10-day period. Such arbitrator whether selected by the
parties or by their appraisers, shall be knowledgeable with respect to the
appraisal of hotel properties and shall be instructed and obligated to decide,
within thirty (30) days after such submission, whether the appraisal submitted
by Marriott or the appraisal submitted by Patriot most accurately reflects the
fair market value of such Patriot Interest, and the written decision of the
arbitrator shall be conclusive and binding on the parties and enforceable by a
court of competent jurisdiction. The expenses of the arbitration shall be borne
equally by the parties to the arbitration.
3.2.3 INTENTIONALLY OMITTED
3.2.4 Limitations on Sale of Exhibit B
Hotels. Sales or other transfers by Patriot of a Patriot Interest in an Exhibit
B Hotel may be made to Restricted Purchasers only with Marriott's prior written
consent (which consent shall not be unreasonably withheld or delayed) and only
upon the Restricted Purchaser providing a replacement guaranty, owner agreement,
and corporate structure, all of which give Marriott protections and rights that
Marriott reasonably believes are substantially identical to or better than
Marriott had prior to such transfer. Any transfers of all Patriot Interests in
connection with any merger, sale by Patriot of all or substantially all of its
assets, or other similar business combination of Patriot, Wyndham and their
respective Affiliates, shall not constitute a "sale" or "transfer" of a Patriot
Interest for purposes of this Section 3.2.4. Any
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sale or other transfer of a Patriot Interest in an Exhibit B Hotel to any Person
who is not a Restricted Purchaser may only be made as follows:
3.2.4.1 Prior to the fifth
anniversary of the date on which the effective time of the Merger
occurs (the "Effective Date of the Merger"), no sale or other transfer
of any Patriot Interest shall be permitted without Marriott's prior
written consent, which consent may be withheld by Marriott in its sole
and absolute discretion, and such consent, if granted, will be granted
only if (i) Marriott has received written notice of such transaction at
least thirty (30) days prior thereto and such notice gives Marriott
reasonably sufficient detail about the proposed transaction to
understand how the transaction will affect the Marriott hotel, and (ii)
the transferee assumes the Submanagement Agreement and the suspended
Exhibit B Hotel Franchise Agreement pursuant to documentation
reasonably acceptable in form and substance to Marriott relating to
such hotel. For any hotel listed on Schedule 6.2.6, the terms of this
Section 3.2.4.1 shall not apply to such hotel until the consent set
forth in Schedule 6.2.6 for such hotel is obtained.
3.2.4.2 Beginning with the fifth
anniversary of the Effective Date of the Merger and ending with the
seventh anniversary thereof, any Patriot Interest may be sold or
otherwise transferred to an Approved Owner without the prior written
consent of Marriott, if immediately prior to such transfer, Patriot
cures all outstanding breaches (if any) by IHC II, LLC under the
Submanagement Agreement and if the transferee assumes the Submanagement
Agreement and the suspended Exhibit B Hotel Franchise Agreement
pursuant to documentation reasonably acceptable in form and substance
to Marriott relating to such hotel and provided that Marriott has
received written notice of such transaction at least thirty (30) days
prior thereto and that Marriott has not stated within such 30-day
period that such transferee is not an Approved Owner. For any hotel
listed on Schedule 6.2.6, the terms of this Section 3.2.4.2 shall not
apply to such hotel until the consent set forth in Schedule 6.2.6 for
such hotel is obtained.
3.2.4.3 The provisions of this
Section 3.2.4.3 and Sections 3.2.4.1 and 3.2.4.2 shall not prohibit or
limit a sale by Patriot to its joint venture partner pursuant to the
exercise by such partner of a buy-sell or similar right currently held
by such partner with respect to Patriot's Interest in Warner Center.
Following the seventh anniversary of the Effective Date of the Merger,
any Patriot Interest may be sold or otherwise transferred to an
Approved Owner without the prior written consent of Marriott, provided
that Marriott shall have a right of first refusal, pursuant to Section
3.2.4.3.1 (the "Right of First Refusal"), with respect to such sale
(for as long as the Exhibit B Hotel Franchise Agreement remains in
place) and provided further, that Marriott has received written notice
of such transaction at least thirty (30) days prior thereto and that
Marriott has not stated within such 30-day period that such transferee
is not an Approved Owner. For any hotel listed on Schedule 6.2.6, the
terms of this Section 3.2.4.3 shall not apply to such hotel until
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the consent set forth in Schedule 6.2.6 for such hotel is obtained. If
Marriott elects not to exercise such Right of First Refusal, IHC II,
LLC (at the direction of Wyndham) may terminate the Submanagement
Agreement relating to such hotel in connection with the sale or
transfer if an Approved Operator replaces Marriott as the operator of
such hotel, provided that (i) Patriot shall pay to Marriott in
connection with any such sale, the Special Fee and (ii) such new owner
assumes, pursuant to documentation reasonably acceptable in form and
substance to Marriott, the relevant Exhibit B Hotel Franchise
Agreement, with the suspended obligations of the franchisee thereunder
being reinstated at such time with the same terms and provisions,
except as amended by this Agreement, as existed immediately prior to
such suspension, provided however, that if such owner is not an
Approved Operator, such new owner shall enter into a management
contract with an Approved Operator to operate the hotel.
3.2.4.3.1 Following the
seventh anniversary of the Effective Date of the Merger, prior to
accepting an offer to buy a Patriot Interest, Patriot shall send
Marriott two copies of a contract for the sale of the Patriot Interest
embodying the terms of an offer which Patriot has received from a third
party regarding Patriot's sale of such Patriot Interest, both copies of
which have been duly executed by Patriot, together with a written
notification from Patriot of its intention to sell the Patriot Interest
to such third party. Marriott shall have the right, within thirty (30)
days after its receipt of the contract and the written notice, to elect
to purchase the Patriot Interest on the terms and conditions set forth
in the contract. In the event Marriott elects to accept the offer
embodied in the contract, Marriott must do so by executing one copy of
the contract and returning it to Patriot within such thirty (30) day
period, and in such case, the closing of such purchase transaction
shall occur within ninety (90) days after such election by Marriott,
subject to the terms of such contract. If Marriott defaults under its
obligations under such contract to purchase such Patriot Interest,
Marriott shall no longer have a Right of First Refusal with respect to
such Patriot Interest. If Marriott elects not to exercise its Right of
First Refusal within such thirty (30) day period, then the offer
embodied in the contract shall be deemed withdrawn and Patriot may
accept the offer which it received from such third party and close as
set forth in its contract. If for any reason such purchase does not
close as set forth in the contract, then any subsequent offer must
first be submitted to Marriott in accordance with the provisions of
this Section 3.2.4.3.1. If Marriott purchases under this Section
3.2.4.3.1, the price will be reduced by the amount of the Special Fee,
and if it does not, and if the respective Submanagement Agreement
terminates, Marriott will be paid such amount by Patriot pursuant to
Section 3.2.6. If an Exhibit B Hotel (or Tyson's Corner) is sold and
the Submanagement Agreement is not terminated, then Patriot shall cause
the purchaser to assume the rights and obligations of the "Primary
Manager" thereunder, unless a different structure is agreed to by
Marriott.
3.2.4.4 Notwithstanding the
provisions of Sections 3.2.4.1 and 3.2.4.2, Patriot shall have the right to sell
or transfer a Patriot Interest relating to the Exhibit B Hotels located in
Houston, Harrisburg or Atlanta, provided that any such sale or transfer shall be
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governed by the procedures set forth in Section 3.2.4.3 (including without
limitation Section 3.2.4.3.1), regardless of when such Patriot Interest is sold
or transferred. Wyndham shall have the right to terminate the Primary Management
Agreement and to cause IHC II, LLC to terminate the relevant Exhibit B Hotel
Franchise Agreement, and the relevant Submanagement Agreement, upon any sale of
the Patriot Interest in the Exhibit B Hotel located in Houston and in connection
with such termination, and Patriot shall pay to Marriott the Exhibit B
Liquidated Damages for such hotel.
3.2.4.5 Any other provision of this
Section 3.2.4 notwithstanding, Patriot shall be permitted to sell or transfer a
Patriot Interest in an Exhibit B Hotel if, in the opinion of counsel for
Patriot, such sale or transfer is reasonably necessary in order to satisfy the
Real Estate Investment Trust ("REIT") qualification provisions of Internal
Revenue Code Section Section 856 and 857 relating to Patriot's income tests and
quarterly asset tests (including under proposed legislation not currently
enacted), provided that the transferee is acceptable to Marriott in the exercise
of its reasonable discretion (considering the effect on Patriot of not
transferring such Interest) and further provided that (A) if all of the Patriot
Interest is transferred, (i) the transferee shall execute a replacement
guarantee, owner agreement and corporate structure, all of which give Marriott
protection and rights that Marriott reasonably believes are substantially
identical to or better than Marriott had prior to such transfer, and (ii) the
transferee shall execute a written agreement, in form and substance reasonably
acceptable by Marriott, to be bound by the restrictions on transfer set forth in
this Section 3.2.4, and (B) if less than all of the Patriot Interest is
transferred, Marriott shall be reasonably satisfied that its rights and remedies
immediately following the transfer are substantially identical to or better than
such rights and remedies immediately prior to such transfer.
3.2.4.6 The provisions of this
Section 3.2.4 (including Sections 3.2.4.1 through 3.2.4.5) shall be effective
only upon consummation of the Divestiture and shall expire with respect to each
Exhibit B Hotel upon the termination or expiration of the respective Exhibit B
Hotel Franchise Agreement; provided, however, that prior to such time and before
the earlier of the consummation of the Divestiture or a Forbearance Termination
Event, Patriot shall take no action with respect to the sale or transfer of any
Patriot Interest in an Exhibit B Hotel that would in any way deprive or
prejudice Marriott's rights to purchase any such Patriot Interest under Sections
3.2.2.2., 3.2.4.3, and 3.2.7.
3.2.5 Substitution.
3.2.5.1 Failure to Obtain Warner
Center Consents. Patriot shall use its reasonable best efforts to obtain all
necessary consents and approvals required in order to permit the extension
through December 31, 2015 of the Franchise Agreement on Warner Center, the Right
of First Refusal of Marriott pursuant to Section 3.2.4.3, and to the other
arrangements set forth in this Agreement relating to Warner Center. If Patriot
fails to obtain such consents within one year after the consummation of the
Divestiture, Marriott and Patriot agree that IHC II, LLC shall
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instead (i) enter into an extension through December 31, 2015 with Marriott of
the Franchise Agreement on Casa Marina and (ii) enter into a Submanagement
Agreement with the Submanager providing for the submanagement of Casa Marina
through December 31, 2015. In connection with any such extension of the
Franchise Agreement on Casa Marina and the entering into of a Submanagement
Agreement regarding Casa Marina, Exhibits A, B and C hereto shall be deemed to
be amended so that Casa Marina shall be included on Exhibit B and Warner Center
shall be included on Exhibit C. If Patriot fails to obtain any necessary consent
to the submanagement of Warner Center by the Submanager, then Marriott shall
have the option, subject to Marriott's obtaining any necessary consents of Host
Marriott, of entering into a Submanagement Agreement relating to any one of the
following Marriott hotels, subject to Section 0.0.0.0: San Francisco --
Fisherman's Wharf, Charlotte Executive Park, Manhattan Beach, Pittsburgh City
Center, Ontario Airport, or Waterford Oklahoma City.
3.2.5.2 [INTENTIONALLY OMITTED].
3.2.5.3 Fee Neutrality. The terms of
any Submanagement Agreement entered into pursuant to this Section 3.2.5 shall be
designed to achieve fee neutrality on a net present value basis, assuming a 7.3%
per annum discount rate, with respect to the Submanagement Agreement it is
designed to replace.
3.2.6 Marriott Rights Upon Termination of the
Submanagement Agreements. If a Submanagement Agreement is terminated (but not
upon expiration or termination pursuant to Section 11.22 of the Submanagement
Agreement ("Restricted Area Right of Termination")) by IHC II, LLC or, upon a
default by IHC II, LLC thereunder, by the Submanager, and either Newco or one of
its Affiliates is then an Approved Operator under Marriott's continuing system
standards after the Divestiture, then such Approved Operator shall assume,
pursuant to documentation reasonably acceptable in form and substance to
Marriott, the relevant Exhibit B Hotel Franchise Agreement, with the suspended
obligations of such Approved Operator as the new franchisee thereunder being
reinstated at such time with the same terms and provisions, except as amended by
this Agreement, as existed immediately prior to such suspension. If upon such
termination, neither Newco nor any of its Affiliates is then an Approved
Operator under Marriott's continuing system standards, then Patriot shall secure
such an Approved Operator, and such Approved Operator shall assume the relevant
Exhibit B Hotel Franchise Agreement as set forth immediately above.
If a Submanagement Agreement is terminated (but not upon
expiration or termination pursuant to Section 11.22 of the Submanagement
Agreement ("Restricted Area Right of Termination")) by IHC II, LLC or, upon a
default by IHC II, LLC thereunder, by the Submanager, Patriot shall be obligated
to pay the Special Fee to Marriott.
3.2.7 Further Rights to Acquire Exhibit B
Hotels and Termination Rights. If a Forbearance Termination Event occurs, in
addition to its other rights pursuant to this Section 3.2, Marriott also shall
have the right with respect to each Exhibit B Hotel, (i) to acquire the
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Patriot Interest in such Exhibit B Hotel at a purchase price arrived at pursuant
to a process consistent with that provided in Section 3.2.2.3 hereof, and paid
in accordance with the provisions of Section 3.2.2.2 (in which case, the amounts
set forth on Schedule 3.2.7 shall not be payable for such hotel), or (ii) to
terminate the respective Exhibit B Hotel Franchise Agreement and in connection
therewith Patriot agrees to pay to Marriott the amounts set forth on Schedule
3.2.7 hereof for such hotel. For any hotel listed on Schedule 6.2.6, the terms
of this Section 3.2.7 shall not apply to such hotel until the consent set forth
in Schedule 6.2.6 for such hotel is obtained. Marriott shall elect to exercise
such right to purchase (if at all) within thirty (30) days after the Final
Divestiture Date, and the parties shall use their reasonable best efforts to
close each such related purchase transaction within 120 days after the
respective determination, pursuant to Section 3.2.2.3, of the purchase price(s)
for such Patriot Interest(s). With respect to each Patriot Interest that
Marriott elects not to purchase under this Section 3.2.7 (or otherwise breaches
any contract entered into with Patriot pursuant to an affirmative election to
purchase), Marriott's right to purchase such Patriot Interest shall then be
terminated.
3.2.8 Funding of Capital Plan Shortfalls.
Contemporaneously with the Merger, Patriot shall cause the escrow funds set
forth in Exhibit B-2 to the Submanagement Agreements (including, to the extent
not previously funded, all loans/advances referenced in the last parenthetical
thereof) for Exhibit B Hotels to be funded into a separate account.
Upon execution of Submanagement Agreements, Patriot shall cause
such accounts to be transferred to Wyndham pursuant to its lease agreement with
IHC II, LLC and from Wyndham to IHC II, LLC pursuant to the Primary Management
Agreement.
3.2.9 Obligation to Obtain Consents. Except
with respect to any consent or approval required from Host Marriott relating to
an Exhibit B Hotel, where Patriot shall not be obligated to use reasonable best
efforts to obtain such consent, Patriot shall be obligated to use its reasonable
best efforts to obtain all consents and approvals referred to on Schedule 6.2.6.
Patriot agrees that with respect to Marriott's efforts to obtain Host Marriott's
consent relating to Exhibit B Hotels partially owned by Host Marriott, Patriot
shall provide adequate assurances to Host Marriott that it shall not be
economically disadvantaged as a result of the fee differentials (including chain
services differentials) between the Submanagement Agreement and the existing
Franchise Agreement and the existing management agreement.
3.2.10 Current Defaults. Marriott hereby
acknowledges that, to its knowledge, no current or past defaults by the
franchisees exist under the Exhibit B Hotel Franchise Agreements (excluding life
safety and ADA issues), nor has Marriott issued any formal "red zone"
notifications with respect to the Exhibit B Hotels. The parties agree that any
default thereunder declared or occurring subsequent to the date hereof shall be
addressed pursuant to the terms of such Franchise Agreements.
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3.3 Exhibit C Hotels.
3.3.1 Modification of Tyson's Corner
Management Agreement. The provisions of this Section 3.3.1 shall not prohibit or
limit a sale by Patriot to its joint venture partner pursuant to the exercise by
such partner of a buy-sell or similar right currently held by such partner with
respect to Patriot's Interest in Tyson's Corner. On or before the Divestiture,
Patriot shall use its reasonable best efforts to cause Interstone/CGL Partners,
L.P. to enter into the First Amendment to Hotel Management Agreement -- Tyson's
Corner Marriott Hotel with Marriott in the form attached hereto as Exhibit C-1
(the "Amendment to Tyson's Corner Management Agreement"), pursuant to which, as
more particularly set forth therein, the Submanager shall continue to manage the
Tyson's Corner Marriott. Patriot acknowledges that Cigna must consent to the
execution of such Amendment to Tyson's Corner Management Agreement and commits
to use its reasonable best efforts to obtain such consent. If Patriot fails to
secure such consent, then during the term of such underlying Tyson's Corner
Hotel Management Agreement, Patriot shall be prohibited from selling or
otherwise transferring its ownership interest in the Tyson's Corner Marriott
without the prior written consent of Marriott, unless and until it obtains the
consent of Cigna.
3.3.2 Modification of Exhibit C Hotel
Franchise Agreements. Each of the Exhibit C Hotel Franchise Agreements (except
for Xxxx and Xxxxx'x Corner, as to which the provisions of this Section 3.3.2
shall not apply) is amended, effective as of the date hereof to provide that
upon the termination of such Franchise Agreement by either party thereto (but
not the expiration), Marriott shall have the right to acquire from Patriot or
its Affiliate the Patriot Interest in the relevant Exhibit C Hotel at a price
determined pursuant to Section 3.2.2.3, and paid in accordance with the
provisions of Section 3.2.2.2. Marriott shall elect to exercise such right to
purchase (if at all) within thirty (30) days after the termination of such
Franchise Agreement, and the parties shall use their reasonable best efforts to
close the related purchase transaction within ninety (90) days after such
determination, pursuant to Section 3.2.2.3, of the purchase price for such
Patriot Interest. In addition, each Exhibit C Hotel Franchise Agreement is
hereby amended effective upon consummation of the Merger, (i) to delete any
provision that limits, restricts or in any way modifies Marriott's ability to
develop, operate, manage or franchise any hotel (including any provisions
requiring Marriott to provide franchisee with notice and/or an opportunity to
develop other hotels) within a restricted geographic area or territory as set
forth in such Franchise Agreement (an "Exhibit C Territory") (regardless of
whether the applicable provision has or shall lapse or terminate pursuant to its
terms) and (ii) to amend such Franchise Agreement as provided in Section 3.3.3.
For any hotel listed on Schedule 6.2.6, the terms of this Section 3.3.2 shall
not apply to such hotel until the consent set forth in Schedule 6.2.6 for such
hotel is obtained.
Patriot has agreed that it will amend the Xxxx Marriott Franchise Agreement
to reduce the Territory as set forth on Exhibit P, but has represented that it
cannot at this time execute such Amendment because Patriot's acquisition of the
Xxxx Marriott by merger has not been completed. Concurrent with the merger of
Patriot and an affiliate of CHC Lease Partners, Patriot shall cause
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CHC Lease Partners to execute and deliver to Marriott that certain Amendment to
Marriott Inn Franchise Agreement attached hereto as Exhibit P.
3.3.3 Modification of Territory Rights;
Termination Rights if New Marriott Competitor. Each of the Exhibit B Franchise
Agreement is hereby amended to provide that Marriott shall be entitled to engage
in any or all of the following activities, which are acknowledged to be
reasonable, within any geographic area described in an Exhibit C Territory
(notwithstanding the deletion of a territorial provision pursuant to Section
3.3.2): (i) to develop, own, operate, manage, license, franchise, and solicit
others to operate or develop hotels under any Marriott-owned or controlled trade
name; service marks, trademarks, or system; (ii) to publicize and promote such
hotels prior to opening and solicit and accept reservations for such hotels. The
parties agree that such Territory provision is hereby amended, subject to
obtaining the relevant consents referred to on Schedule 6.2.6, to permit
Marriott to engage in the activities described above in this Section 3.3.3 and
if such hotel is of the same Marriott brand (e.g., "Marriott Hotel" or
"Courtyard by Marriott") as the relevant Exhibit C Hotel, then either Marriott
or Interstate Hotels LLC shall have the right to terminate, or cause to be
terminated, the relevant Exhibit C Hotel Franchise Agreement (and the related
owner's agreement) as set forth below, and Wyndham shall have the right to
terminate the relevant management agreement between it and Interstate Hotels LLC
(in which case the related Franchise Agreement shall be terminated); provided,
however, that there is no such right to terminate if the hotel of the same
Marriott brand is acquired in connection with a chain acquisition that is
allowed by the "Territory" provision in the pre-Merger Franchise Agreement for
the New Haven Orange Courtyard, St. Louis Courtyard, Westborough Courtyard,
Tyson's Corner Marriott, and the Pittsburgh Airport Residence Inn. Such
termination right shall be the sole remedy (with respect to such activity) of
both Patriot or Marriott in such event, and Patriot and Marriott agree not to
institute suit against the other with respect to a violation of any implied
covenant of good faith or fair dealing or any other statutory or common law
theory claiming harm for such actions. Marriott shall notify Patriot upon the
earlier to occur of (x) thirty (30) days following execution of a purchase
agreement, management agreement, or license agreement or franchise agreement, as
the case may be, or (y) the opening of such hotel (including any so-called "soft
opening" of the hotel). Upon receipt by Patriot from Marriott of this written
notice, Patriot and Marriott shall each have the right to notify the other of
the termination of the relevant Franchise Agreement within sixty (60) days,
which termination shall not be effective until the opening date of such hotel.
Subject to Section 12.2, Patriot agrees to pay all amounts due to Marriott with
respect to the operation of the hotel under the Exhibit C Hotel Franchise
Agreement up to and including the termination date (excluding the fees set forth
on Schedule 3.3.5, which shall not be payable in such instance), and to fully
complete all aspects of the termination other than the payment of any damages in
accordance with the terms of the Exhibit C Hotel Franchise Agreement within
thirty (30) days of the effective date of termination or within fifteen (15)
days after the date of any subsequent invoice. Any termination by Patriot or
Marriott pursuant to this Section 3.3.3 shall not give Marriott the right to
acquire the Patriot Interest in such
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Exhibit C Hotel pursuant to Section 3.3.2. The parties agree that effective upon
the Merger, each Exhibit C Hotel Franchise Agreement for which the relevant
consents referred to on Schedule 6.2.6 have been obtained is hereby amended so
that there are no restrictions on Patriot or the Primary Manager from
developing, owning, franchising or operating other hotels within a designated
area around the relevant Exhibit C Hotel.
3.3.4 Limitations on Sale of Exhibit C
Hotels. Sales or other transfers by Patriot of a Patriot Interest in an Exhibit
C Hotel (except for Tyson's Corner and Xxxx) may be made to Restricted
Purchasers only with Marriott's prior written consent (which consent shall not
be unreasonably withheld or delayed) and only upon (i) the assumption by the
transferee of the Franchise Agreement (if Patriot is the franchisee immediately
prior to such transfer), such assumption to be in writing and in form and
substance reasonably acceptable to Marriott and (ii) a replacement guaranty,
owner agreement, and corporate structure, both of which give Marriott
protections and rights that Marriott reasonably believes are substantially
identical to or better than those that Marriott had prior to such transfer. Any
transfers of all Patriot Interests in connection with any merger, sale by
Patriot of all or substantially all of its assets, or other similar business
combination of Patriot, Wyndham and their respective Affiliates, shall not
constitute a "sale" or "transfer" of a Patriot Interest for purposes of this
Section 3.2.4. Any sale or other transfer of a Patriot Interest in an Exhibit C
Hotel (except for Tyson's Corner and Xxxx) to any Person who is not a Restricted
Purchaser may only be made as follows:
3.3.4.1 Following consummation of the
Divestiture, prior to accepting an offer to buy a Patriot Interest, Patriot
shall send Marriott two copies of a contract for the sale of the Patriot
Interest embodying the terms of an offer which Patriot has received from a third
party regarding Patriot's sale of such Patriot Interest, both copies of which
have been duly executed by Patriot, together with a written notification from
Patriot of its intention to sell the Patriot Interest to such third party.
Marriott shall have the right, within thirty (30) days after its receipt of the
contract and the written notice, to elect to purchase the Patriot Interest on
the terms and conditions set forth in the contract. In the event Marriott elects
to accept the offer embodied in the contract, Marriott must do so by executing
one copy of the contract and returning it to Patriot within such thirty (30) day
period, and in such case, the closing of such purchase transaction shall occur
within ninety (90) days after such election by Marriott, subject to the terms of
such contract. If Marriott defaults under its obligation under such contract to
purchase such Patriot Interest, Marriott shall no longer have a Right of First
Refusal with respect to such Patriot Interest. If Marriott elects not to
exercise its Right of First Refusal within such thirty (30) day period, then the
offer embodied in the contract shall be deemed withdrawn and Patriot may accept
the offer which it received from such third party and close as set forth in its
contract. If for any reason such purchase does not close as set forth in the
contract, then any subsequent offer must first be submitted to Marriott in
accordance with the provisions of this Section 3.3.4.1. If Marriott does not
purchase under this Section 3.3.4.1, and the Franchise Agreement terminates,
Marriott will be paid the Exhibit C Liquidated Damages. For any hotel listed on
Schedule 6.2.6, the terms of this Section 3.3.4.1 shall not apply to such hotel
until the consent set forth in Schedule 6.2.6 for such hotel is obtained.
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3.3.4.2 Any other provision of
this Section 3.3.4 notwithstanding, Patriot shall be permitted to sell or
transfer a Patriot Interest in an Exhibit C Hotel if, in the opinion of counsel
for Patriot, such sale or transfer is reasonably necessary in order to satisfy
the REIT qualification provisions of Internal Revenue Code Section Section 856
and 857 relating to Patriot's income tests and quarterly asset tests (including
under proposed legislation not currently enacted), provided that the transferee
is acceptable to Marriott in the exercise of its reasonable discretion
(considering the effect on Patriot of not transferring such Interest) and
further provided that (A) if all of the Patriot Interest is transferred, (i) the
transferee shall execute a replacement guarantee, owner agreement and corporate
structure, all of which give Marriott protection and rights that Marriott
reasonably believes are substantially identical to or better than Marriott had
prior to such transfer; (ii) the transferee shall execute a written agreement,
in form and substance reasonably acceptable by Marriott, to be bound by the
restrictions on transfer set forth in this Section 3.3.4, and (B) if less than
all of the Patriot Interest is transferred, Marriott shall be reasonably
satisfied that its rights and remedies immediately following the transfer are
substantially identical to or better than such rights and remedies immediately
prior to such transfer.
3.3.4.3. The provisions of
this Section 3.3.4 (including Sections 3.3.4.1 and 3.3.4.2) shall be effective
only upon consummation of the Divestiture and shall expire with respect to each
Exhibit C Hotel upon the termination or expiration of the respective Exhibit C
Hotel Franchise Agreement; provided, however, that prior to such time and before
the earlier of the consummation of the Divestiture or a Forbearance Termination
Event, Patriot shall take no action with respect to the sale or transfer of any
Patriot Interest in an Exhibit C Hotel that would in any way deprive or
prejudice Marriott's rights to purchase any such Patriot Interest under Sections
3.3.2, 3.3.4.1, and 3.3.5.
3.3.5 Further Right to Acquire Exhibit C
Hotels and Termination Rights. If a Forbearance Termination Event occurs, in
addition to its other rights pursuant to this Section 3.3, Marriott shall also
have the right, (i) to acquire any or all Patriot Interests in the Exhibit C
Hotels, except for Tyson's Corner or Xxxx, at a purchase price arrived at
pursuant to a process consistent with that provided in Section 3.2.2.3 hereof,
and paid in accordance with the provisions of Section 3.2.2.2, and (ii) to
terminate all Exhibit C Hotel Franchise Agreements (and related owner's
agreements) and Patriot agrees to pay Marriott the amounts set forth on Schedule
3.3.5 hereof. Marriott shall elect to exercise such right to purchase (if at
all) within thirty (30) days after the Final Divestiture Date, and the parties
shall use their reasonable best efforts to close each such related purchase
transaction within 120 days after their respective determination, pursuant to
Sections 3.3.2 and 3.2.2.3 of the purchase price(s) for such Patriot
Interest(s). With respect to each Patriot Interest that Marriott elects not to
purchase under this Section 3.3.5 (or otherwise breaches any contract entered
into with Patriot pursuant to an affirmative election to purchase), Marriott's
right to purchase such Patriot Interest shall then be terminated. For any hotel
listed on Schedule 6.2.6,
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the terms of this Section 3.3.5 shall not apply to such hotel until the consent
set forth in Schedule 6.2.6 for such hotel is obtained.
3.3.6 Current Defaults. Marriott hereby
acknowledges that, to its knowledge, no current or past defaults by the
franchisees exist under the Exhibit C Hotel Franchise Agreements (excluding life
safety and ADA issues), nor has Marriott issued any formal "red zone"
notifications with respect to the Exhibit C Hotels. The parties agree that any
default thereunder declared or occurring subsequent to the date hereof shall be
addressed pursuant to the terms of such Franchise Agreements.
3.3.7 [INTENTIONALLY OMITTED]
4. THIRD PARTY-OWNED HOTELS.
4.1 Continuation of Exhibit D Hotel Franchise
Agreements. Each Exhibit D Hotel Franchise Agreement shall continue in full
force and effect pursuant to the provisions thereof. In addition, each such
Franchise Agreement where Patriot or Interstate is the franchisee shall be
amended by this Agreement, as provided in Section 12 hereof.
4.2 Communication with Third-Party Owners. The
parties hereby agree that simultaneously with the execution of this Agreement, a
letter in the form attached as Exhibit D-1, shall be sent to the Third-Party
Owners (and/or any party Controlling or managing such Third-Party Owner).
4.3 Marriott Forbearance. Marriott and Patriot shall
each retain their respective rights against the other upon a Forbearance
Termination Event. However, subject to Sections 3.1.4, 3.2.7 and 3.3.5, until
consummation of the Divestiture, Marriott hereby agrees to forbear from
exercising any of its rights or remedies, if any, that arise from or with
respect to the Merger under any of the Franchise Agreements. This Agreement
shall constitute a "settlement of this action" permitting Interstate and Patriot
to transfer control in the twenty-nine (29) Marriott- franchised hotels covered
by the Order dated April 8, 1998, of the United States Court of Appeals for the
Fourth Circuit in the Maryland Case. Although Marriott is not consenting to the
Merger and asserts that its consent to the Merger is otherwise required,
Marriott agrees that (a) upon execution of this Agreement, it will seek a stay
of the Maryland Case as set forth in Section 9.1 hereof and (b) subsequent to
seeking the stay, it will not seek the enjoin the Merger until a Forbearance
Termination Event. Patriot does not agree that Marriott's consent is necessary
to consummate the Merger. If the Divestiture occurs on or prior to the Final
Divestiture Date, Marriott shall be deemed to have consented to the Divestiture
and the Merger, and shall be deemed to have waived any right to claim that the
Divestiture or Merger constitutes a breach, default, wrongful, unlawful or
improper act of any kind, including without limitation any default under the
terms of the Franchise Agreements, including without limitation, the trademark
license granted therein. Marriott may cease its forbearance if a Forbearance
Termination
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Event occurs, and upon any such occurrence, Marriott shall have its rights under
Sections 3.1.4, 3.2.7, and 3.3.5. In addition, if a Forbearance Termination
Event occurs, Marriott shall have all rights, if any, that it presently has to
issue a notice of default under each of the Franchise Agreements (without this
statement constituting an acknowledgment or admission by Patriot, Wyndham or
Interstate that such rights exist). Subject to Sections 9.1, 9.2 and 10.4, if
the Merger is not consummated, nothing in this Agreement or otherwise shall
modify any now existing rights, claims or agreements among Marriott, Patriot,
Wyndham or Interstate. Immediately following the execution hereof, Marriott will
send to the Third-Party Owners (and/or any Person Controlling or managing such
Third-Party Owner) the letter attached as Exhibit D-1, which describes the
Forbearance.
4.3.1 Third Party Owner Forbearance Damages.
Upon the occurrence of a Forbearance Termination Event, if a Third-Party Owner
elects to terminate its management agreement with Interstate but executes a
franchise or license agreement with Marriott containing substantially similar
terms and conditions, or agrees to continue to have the hotel operated pursuant
to the terms of the existing Exhibit D Hotel Franchise Agreement, with a new
Approved Operator, Patriot shall have no obligation to pay any damages,
termination fees or other amounts to Marriott with respect to its alleged
default under the Exhibit D Hotel Franchise Agreement if Patriot has paid to
Marriott any other amounts owed under the relevant Franchise Agreement.
If (i) Marriott and a Third-Party Owner, with respect to which
Patriot or Interstate is the franchisee, are unable to agree upon a new
operator, or (ii) a Third-Party Owner, with respect to which Patriot or
Interstate is the franchisee, elects not to continue to operate its hotel as a
Marriott- brand hotel as a result of the alleged default by Patriot under the
Exhibit D Hotel Franchise Agreement, then in either such case, Patriot shall pay
to Marriott the amounts for the applicable hotel set forth on Schedule 4.3.1.
The alleged default giving rise to such liquidated damage amount shall be
subject to Patriot's right to claim that Marriott or the Third-Party Owner is
not entitled to terminate the subject Exhibit D Hotel Franchise Agreement.
4.4 Third-Party Owner Communications. Marriott
shall be entitled to provide Third-Party Owners (and/or any Person Controlling
or managing such Third-Party Owner) with copies of any of the reports or hotel
performance information regarding the relevant hotel. Marriott also shall be
permitted to discuss such information and/or issues concerning such hotel's
continued participation in the Marriott system with Third-Party Owners at any
time. Marriott shall provide a copy of any information provided to Third-Party
Owners (and/or any Person Controlling or managing such Third-Party Owners) to
Patriot, prior to the Divestiture, and to Newco thereafter, concurrently with
its provision to Third-Party Owners (and/or any Person Controlling or managing
such Third-Party Owners). Similarly, Patriot agrees to provide a copy of any
information provided to Third-Party Owners (and/or any Person Controlling or
managing such Third-Party Owners) to Marriott concurrently with its provision to
Third-Party Owners. Each of the parties agrees not to interfere, either directly
or indirectly, with any other party's contractual relationships with Third-
Party Owners, it being acknowledged and agreed that the mere provision of such
information as set
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forth above (but not necessarily the content of such information), as well as
the act of discussing such information (but not necessarily the content of such
discussions), shall not in and of itself constitute such prohibited
interference.
4.5. Current Defaults. Marriott hereby acknowledges
that, to its knowledge, except for the Exhibit D Hotels in Cincinnati, Ohio and
Orlando I Drive, Florida, and the Omaha and Princeton Residence Inns, no current
or past defaults by the franchisees exist under the Exhibit D Hotel Franchise
Agreements (excluding life safety or ADA issues), nor has Marriott issued any
formal "red zone" notifications with respect to the Exhibit D Hotels. The
parties agree that any default thereunder declared or occurring subsequent to
the date hereof shall be addressed pursuant to the terms of such Franchise
Agreements; provided, however, that notwithstanding anything in this Agreement
or the relevant Exhibit D Hotel Franchise Agreement to the contrary, Patriot
shall not be obligated to Marriott for liquidated damages relating to any
current or past defaults by the franchisee on the Exhibit D Hotels in
Cincinnati, Ohio or Orlando I Drive, Florida.
5. NEWCO STRUCTURE AND INTERIM OPERATIONS.
5.1 Formation of Newco. All Exhibit B Hotels
submanaged by Marriott shall be subject to the structure described on Exhibit I.
Patriot shall form Newco, and shall merge into Interstate Hotels, LLC all of the
third party management business currently operated by Interstate and its
Affiliates which it conducts with Marriott and substantially all of Interstate's
non-Marriott third party-owned hotel management business which does not require
consent for its transfer to Interstate Hotels, LLC. Patriot estimates that
consent for transfer to Interstate Hotels, LLC is only required with respect to
the non-Marriott third party hotel management business representing 25% or less
of the revenues and profits of such non-Marriott third party hotel management
business.
The restated articles of incorporation and bylaws of Newco at the
time of the Divestiture shall in all material respects be in the forms attached
hereto as Exhibits E-1 and E-2, respectively. In addition, prior to consummation
of the Divestiture, the articles of incorporation of Newco shall be amended upon
the mutual agreement of Patriot and Marriott, to provide that either Patriot or
Marriott may forfeit its seat on the Board of Directors of Newco, if certain
agreed upon performance criteria related to Newco's subsidiaries are not
satisfied.
The restated articles of incorporation of Newco will also provide
for a class of preferred stock to be issuable to holders of Newco common stock
pursuant to a Rights Plan upon the occurrence of certain events to be agreed
upon between Patriot and Marriott and containing, among other things, a ten
percent (10%) trigger.
Patriot and Marriott shall have no obligation to offer to Newco
the opportunity to manage hotels or any other business opportunity, other than
as expressly provided in this Agreement; provided, however, that Patriot and
Marriott shall have the right to enter into management agreements with Newco for
the management by Newco of hotels other than as expressly provided
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herein, pursuant to terms and conditions mutually agreed to by Patriot or
Marriott, as the case may be, and Newco.
5.2 Formation of IHC II, LLC. Newco shall form IHC
II, LLC as a bankruptcy remote special purpose entity, which entity shall enter
into the Primary Management Agreements in the form attached hereto as Exhibit K
and the Submanagement Agreements. Patriot, Patriot Partnership and Wyndham are
not parties to and will not have recourse against Marriott (or any of its
Affiliates) with respect to breaches of the Submanagement Agreements or
Franchise Agreements (other than with respect to breaches of Section 11.22 of
the Submanagement Agreement); only IHC II, LLC will have recourse against
Marriott with respect to breaches of such Agreements. Effective upon the
consummation of Divestiture, IHC II, LLC shall assume each Exhibit B Hotel
Franchise Agreement and Interstate Hotels, LLC shall, as successor by merger to
Interstate Hotels Corporation, continue to be obligated under each Exhibit C
Hotel Franchise Agreement and Exhibit D Hotel Franchise Agreement, to the extent
in each case that Interstate is currently the franchisee thereunder.
The operating agreement of IHC II, LLC shall in all material
respects be in the form attached hereto as Exhibit F-1 upon consummation of the
Divestiture.
5.3 Formation of Interstate Hotels, LLC. Patriot,
prior to consummation of the Merger, will form Interstate Hotels, LLC.
The operating agreement of Interstate Hotels, LLC shall in
all material respects be in the form attached hereto as Exhibit F-2 upon
consummation of the Divestiture.
5.4 Newco Requirements. The parties desire for Newco
to be a strong, viable independent entity, and in order to accomplish such goal,
Patriot covenants and agrees that upon consummation of the Divestiture Newco
shall have a minimum initial capitalization of at least $50,000,000, and
"current assets" in an amount at least equal to "current liabilities" at the
time of the Divestiture, and total indebtedness which does not generate annual
debt service in excess of one-third EBITDA (i.e., earnings before interest,
taxes, depreciation and amortization) on a pro-forma basis.
5.5 Voting Agreement. Simultaneously with the
Divestiture, the Certain Newco Shareholders shall enter into the Voting
Agreement in the form attached as Exhibit G, which Voting Agreement shall become
effective immediately upon consummation of the Divestiture.
5.6 Owners Agreement. Simultaneously with the
Divestiture, the respective owners of the Exhibit B Hotels, Wyndham, IHC II, LLC
and Marriott shall enter into Owner Agreements in the form attached as Exhibit H
hereto, and shall use reasonable best efforts to provide
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written consents from all entities (other than Patriot) which own or have any
mortgage interest in the Exhibit B Hotels to provide non-disturbance assurances
as set forth in the Submanagement Agreement with respect to such hotels.
5.7 Compliance with Real Estate Investment Trust
("REIT") Requirements. In order to satisfy the REIT qualification provisions of
Internal Revenue Code Sections 856 and 857 relating to Patriot's income tests
and quarterly asset tests (including under proposed legislation not currently
enacted), at any time prior to the Final Divestiture Date, either Patriot or its
operating partnership may transfer all or any portion of its respective
ownership interest in Newco to an Affiliate of Patriot or Wyndham, including
individual members of Patriot's or Wyndham's senior management team or Persons
Controlled by one or more of such individuals. Any such transfer shall be
subject to any restrictions set forth in the charter and bylaws of Newco as of
the time of the Divestiture, as well as the terms and conditions of the Voting
Agreement, and the transferee being subject to all of the obligations of the
transferor hereunder. After consummation of the Divestiture, there shall be no
restrictions on Patriot's or Marriott's rights to transfer their interests in
Newco, IHC II, LLC or Interstate Hotels, LLC other than as set forth in the
organizational documents for such entities as they exist upon such consummation.
5.8 [INTENTIONALLY OMITTED].
5.9 Cost of Formation. All costs related to filing
fees, legal, accounting and other fees of advisors and consultants (such as
Newco's accountants, attorneys and financial advisors, if any), and financial
printing fees incurred in connection with the formation and implementation of
the Newco structure shall be borne solely by Patriot or its Affiliate.
5.10 Investment in Newco. Immediately prior to the
consummation of the Divestiture, Marriott shall acquire for cash four percent
(4%) of the Newco common stock at the economic equivalent value which Patriot
acquired its voting common stock in Newco (on a per share basis) and Patriot
shall retain, as of the consummation of the Divestiture, four percent (4%) of
such Newco common stock; provided however, that the maximum amount of Marriott's
capital contribution to acquire from Newco for cash such four percent (4%)
ownership interest shall be $3,000,000.
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5.11 Divestiture of Newco. The parties acknowledge
and agree that a fundamental condition of the execution of this Agreement by
Marriott is the agreement by Patriot to cause the Divestiture within the time
periods set forth below. Patriot shall cause all necessary filings (excluding
amendments or supplements to such filings) to be made by Patriot or its
Affiliates with federal and state governmental authorities and agencies to occur
on or prior to the Filing Date, other than routine filings not customarily made
prior to consummation of a "spin-off," such as, by way of example only, the
filing of amendments to charter documents.
If the Divestiture is consummated after November
30, 1998, but on or prior to the Final Divestiture Date, Patriot shall pay to
Marriott fees which are ten (10) basis points greater than the fees otherwise
due under the Submanagement Agreements (as modified hereby) for the entire term
of each such Submanagement Agreement and upon their termination the 2.35%
referenced in the definition of Special Fee shall be increased by ten (10) basis
points. In no event shall the Divestiture be consummated after the Final
Divestiture Date. Failure to consummate the Divestiture on or prior to the Final
Divestiture Date shall constitute a Forbearance Termination Event hereunder.
On or prior to the consummation of the Divestiture, the Board of Directors
of Newco shall be elected in accordance with the terms of the Charter and Bylaws
of Newco, and the Voting Agreement.
5.12 Marriott Approval Rights. All material aspects
of the formation of Newco (and subsidiary entities) as they exist at the time of
the Divestiture, and the Divestiture, shall be subject to Marriott's prior
approval, which approval shall not be unreasonably withheld or delayed.
5.13 Interim Operations. Prior to the Final
Divestiture Date, each of Newco and Patriot shall, subject to compliance with
this Agreement, and subject to ongoing compliance with Marriott's continuing
system standards, be an Approved Operator with respect to all Marriott- brand
hotels. In the event that the Divestiture is not consummated on or prior to
Final Divestiture Date, the status of Newco and Patriot as Approved Operators
shall be at Marriott's sole discretion. Any agreement entered into prior to the
Final Divestiture Date will clearly reflect the temporary status of Patriot and
Newco as Approved Operators.
5.14 Lease(s) between Patriot and Wyndham. Subject to
the consents set forth on Schedule 6.2.6, Patriot (or in the case of hotels
owned by joint ventures with third parties, the joint venture) and Wyndham
shall, upon the consummation of the Merger, execute one or more lease agreements
covering the Exhibit A Hotels, the Exhibit B Hotels, and the Exhibit C Hotels;
the leases for the Exhibit B Hotels and shall, upon the consummation of
Divestiture, be in the form attached as Exhibit J. The Tyson's Corner Marriott,
subject to obtaining the relevant consents listed on
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Schedule 6.2.6, shall be leased to Wyndham, managed by IHC II, LLC, and
submanaged by the Submanager pursuant to documentation similar to the
corresponding Exhibit B Hotel documentation, with appropriate changes to
correspond to the terms and conditions of the existing Tyson's Corner management
agreement.
5.15 Management Agreements between Wyndham and IHC
II, LLC. Simultaneously with the consummation of the Divestiture, in connection
with the Exhibit B Hotels, Wyndham and IHC II, LLC shall enter into the Primary
Management Agreements attached as Exhibit K, pursuant to which the Primary
Manager shall manage the Exhibit B Hotels as of the respective "Take-Over Dates"
specified therein.
5.16 Divestiture Payments. At the Divestiture,
Patriot will pay or cause to be paid all amounts not in dispute that are then
currently past due to Marriott or any other franchisor under any franchise or
license agreement for all Patriot-owned hotels to be operated by Newco.
5.17 Guarantees; Funding Obligations.
5.17.1 Guarantees. All of the obligations
of IHC II, LLC, and Interstate Hotels, LLC to Marriott hereunder or under any of
the Franchise Agreements, are, jointly and severally, irrevocably and
unconditionally guaranteed by Newco, pursuant to a separate Guaranty in the form
attached hereto as Exhibit L.
5.17.2 Funding Obligations. The following
obligations apply to all hotels submanaged by Marriott as listed on Exhibit B
from and after the respective "Take-Over Dates" (as defined in the relevant
Submangement Agreement (other than with respect to preliminary installation of
equipment pursuant to Section 1.02.B)). Patriot and Wyndham hereby acknowledge,
unless otherwise noted below, that each of the funding obligations (the
"Owner/Lessee Funding Obligations") listed below are required to be funded by
the owner of each of the properties ("Owner") to Wyndham under the leases for
the properties and, in turn, Wyndham is obligated to fund such obligation to the
Primary Manager under the terms of the Primary Management Agreement. Patriot
agrees that, to the extent of its interest in the properties (as shown on
Exhibit M), each of Primary Manager and Marriott are third party beneficiaries
of Owner's obligation to fund the Owner/Lessee Funding Obligations under the
leases. Wyndham hereby acknowledges that Marriott is a third party beneficiary
of its obligation to fund any Owner/Lessee Funding Obligation under the Primary
Management Agreements. Patriot agrees that Primary Manager and Marriott can
initiate legal proceedings directly against Patriot if any Owner fails to fund
the Owner/Lessee Funding Obligations, and Wyndham agrees that Marriott can
initiate legal proceedings directly against Wyndham if Wyndham fails to fund any
Owner/Lessee Funding Obligation under the Primary Management Agreement. Patriot
and Wyndham agree to satisfy any such claim without regard to any claims,
defenses or right of set-off or similar rights (except payment) that may be
available to the Owner or Wyndham in connection with the enforcement of the
corresponding obligations of the Owner or Wyndham under the lease or the Primary
Management Agreement and Marriott shall not be required to exhaust any of its
remedies against the Primary Manager. The
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Owner/Lessee Funding Obligations are the following (section references and
defined terms are to sections and defined terms in the Submanagement Agreement,
although the lease agreements between Patriot and Wyndham for the applicable
hotels and the Primary Management Agreement shall contain corresponding
provisions):
1. Preliminary installation of equipment (Section
1.02.B) and funding of Initial FF&E Reserve and
FF&E funding shortfalls described in 5-year
capital plans set forth in Exhibit B-1 to the
Submanagement Agreement (Section 5.02)
2. Restoration obligation in the event of casualty
(Section 6.03)
3. Funding of Capital Expenditures, including the
Capital Expenditures described in Exhibit B-2 to
the Submanagement Agreement (Section 5.03)
4. Funding of program for ADA and life-safety
compliance (Section 5.03.C and Section 5.03.E)
5. Assessments under CC&R's (Section 8.04) (all
non-capital costs to be funded solely by Wyndham)
6. Additional insurance premiums required to be paid
out of funds other than Gross Revenues (Section
6.02.D)
7. Funding necessary to maintain a reasonable amount
of Working Capital (Section 4.06) (funded solely
by Wyndham after initial working capital)
8. Payment of Impositions to the extent provided in
Sections 7.01.A and 7.01.B of the Submanagement
Agreement
9. Costs required to be funded by Primary Manager
pursuant to Section 11.12 of the Submanagement
Agreement
10. Obligations upon termination under Section 11.11
of the Submanagement Agreement (funded solely by
Wyndham)
11. Environmental removal and remediation costs
(Section 11.08)
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12. Costs incurred due to default by Primary Manager
(Section 9.03) (as a result of the failure of
Patriot or Wyndham to perform their respective
obligations, as applicable, under the lease
agreement and Primary Management Agreement)
13. Reimbursement for reasonable operating costs
(Section 4.01.C and Section 4.03.C) (funded
solely by Wyndham)
5.18 Xxxx Management. The parties acknowledge and
agree that Marriott intends to assume the management of the Marriott Hotel
located in Troy, Michigan, subject to and in accordance with the terms of the
Franchise Agreement and existing management agreement for such hotel. If
Marriott does not assume management of such hotel, then the Franchise Agreement
and management agreement shall be assumed by Newco.
5.19 Debt Repayment. On or prior to the Divestiture,
Patriot shall cause Newco, IHC II, LLC or Interstate Hotels LLC, as the case may
be, to pay off in full, refinance or purchase all presently existing third party
indebtedness due and owing with respect to any Exhibit A, B or C Hotel, except
for indebtedness in favor of the lenders Lincoln National relating to St. Louis
Marriott, Credit Lyonnais relating to Casa Marina and Harrisburg and
Massachusetts Mutual Life Insurance Company relating to the Reach, Syracuse and
Pittsburgh Airport Marriott, Harrisburg and Casa Marina.
6. REPRESENTATIONS AND WARRANTIES.
6.1 Representations and Warranties of Marriott.
Marriott International, Inc. hereby makes the following representations and
warranties to Patriot and Interstate as of the date hereof:
6.1.1 Organization and Authority; Good
Standing. Marriott International, Inc. is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and is
duly licensed or qualified to do business in all jurisdictions where in the
nature of its business or the character of its properties requires such
licensing or qualification, except where the failure to be so qualified could
not reasonably be expected to have a material adverse effect on its business,
operations or financial condition. Marriott has full and adequate corporate
power to own its property and to carry on its business as now conducted.
6.1.2 Due Authorization. All necessary
corporate action has been taken to authorize the execution and delivery of this
Agreement by Marriott International Inc., and the performance of this Agreement
by Marriott, and this Agreement has been duly executed and delivered by Marriott
International, Inc.
6.1.3 Non-Contravention. Neither the
execution and the delivery of this Agreement by Marriott International, Inc.,
nor the consummation by Marriott of the transactions
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contemplated hereby, will (i) violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree, ruling, charge, or other restriction
of any government, governmental agency, or court to which Marriott is subject,
(ii) violate any provision of its charter or bylaws, or (iii) conflict with,
result in a breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify, or cancel,
any material agreement, contract, lease, license, instrument, or other
arrangement to which Marriott is a party, by which it is bound or to which any
of its assets is subject.
6.1.4 Enforceability. This Agreement is the
legal, valid and binding obligation of Marriott, enforceable against Marriott in
accordance with its terms, except as the same may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws of general
application relating to or affecting the enforcement of creditor's rights and by
general principles of equity.
6.1.5 Litigation. Other than the Maryland
Case and the Texas Case, there is no litigation, investigation, suit, action or
other proceeding by or against Marriott, pending or, to the knowledge of
Marriott, threatened, before any court of competent jurisdiction or governmental
agency that seeks the restraint, prohibition, damages or other relief in
connection with this Agreement or the consummation of the transactions
contemplated hereby, or which otherwise challenges or would affect the validity
or enforceability of this Agreement or such transactions.
6.2 Representations and Warranties of Patriot.
Patriot American Hospitality, Inc. hereby makes the following representations
and warranties to Marriott and Interstate as of the date hereof:
6.2.1 Organization and Authority; Good
Standing. Patriot American Hospitality, Inc. is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and is duly licensed or qualified to do business in all jurisdictions where in
the nature of its business or the character of its properties requires such
licensing or qualification, except where the failure to be so qualified could
not reasonably be expected to have a material adverse effect on its business,
operations or financial condition. Patriot has full and adequate corporate power
to own its property and to carry on its business as now conducted.
6.2.2 Due Authorization. All necessary
corporate action has been taken to authorize the execution and delivery of this
Agreement by Patriot American Hospitality, Inc., and the performance of this
Agreement by Patriot, and this Agreement has been duly executed and delivered by
Patriot American Hospitality, Inc.
6.2.3 Non-Contravention. Neither the
execution and the delivery of this Agreement by Patriot American Hospitality,
Inc., nor the consummation by Patriot of the transactions contemplated hereby,
will (i) violate any constitution, statute, regulation, rule,
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injunction, judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which Patriot is subject, (ii)
violate any provision of its charter or bylaws, or (iii) except for its
agreements with Equity Inns, conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, any material agreement, contract,
lease, license, instrument, or other arrangement to which Patriot is a party, by
which it is bound or to which any of its assets is subject.
6.2.4 Enforceability. This Agreement is the
legal, valid and binding obligation of Patriot, enforceable against Patriot in
accordance with its terms, except as the same may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws of general
application relating to or affecting the enforcement of creditor's rights and by
general principles of equity.
6.2.5 Litigation. Other than the Maryland
Case and the Texas Case, there is no litigation, investigation, suit, action or
other proceeding by or against Patriot, pending or, to the knowledge of Patriot,
threatened, before any court of competent jurisdiction or governmental agency
that seeks the restraint, prohibition, damages or other relief in connection
with this Agreement or the consummation of the transactions contemplated hereby,
or which otherwise challenges or would affect the validity or enforceability of
this Agreement or such transactions.
6.2.6 Consents. Except as set forth on
Schedule 6.2.6 and except for (x) the consent of Massachusetts Mutual Life
Insurance Company (secured lender) as to Pittsburgh Airport, (y) the consent of
Credit Lyonnais (secured lender) as to Harrisburg, and (z) the consent of Credit
Lyonnais (secured lender) as to Casa Marina, all necessary consents and
approvals required (i) in order for the Submanager to acquire the rights to
submanage the Exhibit B Hotels pursuant to the Submanagement Agreements, (ii) to
extend the Franchise Agreement relating to Warner Center and to accomplish the
other arrangements contemplated herein relating to Warner Center, (iii) to
terminate the Exhibit A Hotel Franchise Agreements pursuant to Section 3.1.1,
(iv) in order for Marriott to acquire the rights to continue to manage the
Tyson's Corner Marriott pursuant to the Amendment to Tyson's Corner Management
Agreement, and (v) to continue the effectiveness of the Franchise Agreements (as
modified pursuant to the express provisions of this Agreement) until otherwise
terminated by their terms or pursuant hereto, have in all cases been obtained
prior to the date hereof.
6.2.7 Voting Agreement. Exhibit C to the
Voting Agreement accurately includes all directors, officers (as defined in Rule
16a-1(f) under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) and holders of greater than 10% of the outstanding capital stock (other
than holders who are eligible to file Information Statements on Schedule 13G
(rather than Schedule 13D) pursuant to Rule 13d-1 under the Exchange Act) of
Patriot American Hospitality, Inc. and Wyndham International, Inc. For purposes
of stating and calculating the share ownership to be reflected on Exhibit C to
the Voting Agreement, each such director and executive officer shall be deemed
to own all shares beneficially owned by the members of such individual's
immediate family (including spouses), the spouses of the immediate family
members of such
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individual, trust, partnerships, corporations or similar entities controlled by
such individual, and any other Affiliates of such individual.
6.3 Representations and Warranties of Interstate.
Interstate Hotels Company and Interstate Hotels Corporation hereby make the
following representations and warranties to Marriott and Patriot as of the date
hereof:
6.3.1 Organization and Authority; Good
Standing. Each of Interstate Hotels Company and Interstate Hotels Corporation is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Pennsylvania and is duly licensed or qualified to do
business in all jurisdictions where in the nature of its business or the
character of its properties requires such licensing or qualification, except
where the failure to be so qualified could not reasonably be expected to have a
material adverse effect on its business, operations or financial condition.
Interstate has full and adequate corporate power to own its property and to
carry on its business as now conducted.
6.3.2 Due Authorization. All necessary
corporate action has been taken to authorize the execution and delivery of this
Agreement by each of Interstate Hotels Company and Interstate Hotels
Corporation, and the performance of this Agreement by Interstate, and this
Agreement has been duly executed and delivered by each of Interstate Hotels
Company and Interstate Hotels Corporation.
6.3.3 Non-Contravention. Neither the
execution and the delivery of this Agreement by either Interstate Hotels Company
or Interstate Hotels Corporation, nor the consummation by Interstate of the
transactions contemplated hereby, will (i) except with respect to the Maryland
case, violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which Interstate is subject, (ii) violate any
provision of its charter or bylaws or (iii) except for its agreements with
Promus, Patriot, Marriott and Equity Inns, conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, any material agreement,
contract, lease, license, instrument, or other arrangement to which Interstate
is a party, by which it is bound or to which any of its assets is subject.
6.3.4 Enforceability. This Agreement is the
legal, valid and binding obligation of Interstate, enforceable against
Interstate in accordance with its terms, except as the same may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws of
general application relating to or affecting the enforcement of creditor's
rights and by general principles of equity.
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6.3.5 Litigation. Other than the Maryland
Case and the Texas Case, there is no litigation, investigation, suit, action or
other proceeding by or against Interstate, pending or, to the knowledge of
Interstate, threatened, before any court of competent jurisdiction or
governmental agency that seeks the restraint, prohibition, damages or other
relief in connection with this Agreement or the consummation of the transactions
contemplated hereby, or which otherwise challenges or would affect the validity
or enforceability of this Agreement or such transactions.
6.4 Survival. The representations and warranties of
the parties set forth in this Section 6 and elsewhere in this Agreement shall
survive the execution of this Agreement.
7. CONDITIONS AND DELIVERIES.
7.1 Deliveries in Connection with the Execution of
this Agreement. Simultaneously with the execution and delivery of this
Agreement, the following agreements, documents, instruments, obligations,
payments and other items shall have been executed, delivered, made and/or
performed as provided below:
7.1.1 [INTENTIONALLY OMITTED].
7.1.2 [INTENTIONALLY OMITTED].
7.1.3 Payments to Marriott under Existing
Management Agreements and Franchise Agreements. All amounts not in dispute that
are currently past due and payable by Interstate or any Affiliate thereof under
the existing Franchise Agreements, and under the existing management agreement
governing the management of the Tyson's Corner Marriott, substantially all of
which amounts are set forth on Schedule 7.1.3 hereof, shall be paid by
Interstate to Marriott as follows: (1) a check for the Fort Lauderdale
receivable in the amount of $415,035.05 shall be sent to Marriott by overnight
courier on May 27, 1998 for delivery on May 28, 1998 and (2) all remaining
amounts set forth on Schedule 7.1.3 shall be paid in full by Interstate on or
before May 29, 1998.
7.1.4 Opinion Letters. Marriott shall have
received opinions of Xxxxxxx, Procter & Xxxx LLP, counsel to Patriot, and Xxxxx,
Day, Xxxxxx & Xxxxx, counsel to Interstate, in the forms attached as Exhibits
N-1 and N-2, respectively.
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8. INDEMNIFICATION.
8.1 Indemnification by Patriot. Subject in all
respects to Section 8.2, Patriot hereby agrees to indemnify and hold harmless
Marriott and its Affiliates, and each of their respective directors, officers,
employees, successors and assigns (individually an "Indemnified Party" and
collectively, the "Indemnified Parties") from and against, any and all losses,
liabilities, claims, damages (including consequential, punitive or treble
damages), obligations, liens, assessments, judgments, awards, fines, costs or
expenses (including reasonable attorney's fees) (individually a "Covered
Liability" and collectively, the "Covered Liabilities") which any of the
Indemnified Parties may sustain by reason of:
(a) the execution and delivery of this Agreement (or any
agreements contemplated herein) by Marriott, the performance by Marriott of its
obligations under this Agreement (provided such obligations are performed in
accordance with the terms of this Agreement), or the consummation of any of the
transactions contemplated herein;
(b) any and all actions of any of the Indemnified Parties
taken in furtherance of this Agreement;
(c) the Merger;
(d) the Divestiture;
(e) any alleged negligent, grossly negligent, reckless or
intentionally tortious or other misconduct (including, but not limited to,
intentional interference with contract or intentional interference with economic
relations) of any of the Indemnified Parties arising out of or related to (a)
through (d) above.
(f) any and all Covered Liabilities resulting from the
termination of the Franchise Agreements on the Exhibit A Hotels.
The remedies provided in this Section 8.1 will not be exclusive of or limit
any other remedies that may be available to Marriott or the other Indemnified
Parties. Notwithstanding anything to the contrary in clauses (a) through (f)
above, if a court of competent jurisdiction determines that an Indemnified Party
in (a) through (f) above was grossly negligent or acted fraudulently, then this
Section 8 shall not apply.
8.2 Limitation on Indemnification. The obligations of
Patriot under this Section 8 shall apply only to claims made or actions brought
by or on behalf of (i) both the stockholders of Patriot or Interstate, as well
as third-party owners of hotels on Exhibit D only, with
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respect to Sections 8.1(a) - 8.1(e), and (ii) the third-party owners of Exhibit
A Hotels with respect to Section 8.2(f).
8.3 Procedure.
(a) Except as provided in subparagraph (b) below, if any Covered
Liability for which Patriot will be liable pursuant to this Section 8 is
asserted against or sought to be collected from any of the Indemnified Parties,
Marriott shall promptly notify Patriot in writing. No delay on the part of
Marriott (or any of the Indemnified Parties) in notifying Patriot shall relieve
Patriot or its Affiliates from any obligation hereunder unless (and then solely
to the extent) Patriot is prejudiced. Patriot shall, at its sole cost and
expense, defend against such claim or demand. Marriott may elect, at its sole
cost and expense, to retain its own counsel and participate in any such defense,
but the control of such defense and its settlement and resolution shall rest
with Patriot. Patriot shall keep Marriott fully informed of the status of the
defense of any such claims.
(b) If any Covered Liability for which Patriot is liable pursuant
to this Section 8 is asserted against or sought to be collected from any of the
Indemnified Parties and such claim arises out of or in connection with an
agreement between Marriott and a third party, Marriott shall have the right, but
not the duty, to defend against any claim or demand at its sole cost and
expense, provided, however, that Marriott's right to defend against any such
claim shall be conditioned upon Marriott's notification to Patriot as set forth
in the immediately succeeding sentence within twenty (20) business days of the
date on which such claim is first asserted against Marriott. In the event that
Marriott elects to exercise its right under this Section 8.3(b) to defend
against such claim or demand, Marriott shall promptly notify Patriot of its
election to defend against such claim or demand. Marriott shall have the right
to control and defend against such claim or demand by appropriate proceedings,
but Marriott will be responsible for its expenses and the cost of any judgment
against any Indemnified Party or any settlement of a demand or claim against any
Indemnified Party.
(c) Notwithstanding any other statement herein to the contrary,
neither Patriot nor any of its Affiliates shall, without the written consent of
Marriott, settle or compromise or consent to the entry of any judgment with
respect to any action or third party claim if the effect thereof is to admit
any criminal liability by Marriott, or to permit any injunctive relief or
other order providing non-monetary relief to be entered against Marriott.
8.4 Duty of Mitigation. Notwithstanding any language
to the contrary contained herein, in the case of any claims or demands made by
Third-Party Owners of Marriott brand hotels, Marriott shall attempt to mitigate
such claim or demand by offering to, and negotiating in good faith with, any
such claimant that has a management or franchise agreement with Interstate, a
Marriott management or franchise agreement containing terms and conditions
comparable to the terms of Marriott's standard franchise or management
agreement.
8.5 Payment of Indemnity. If Patriot and its
Affiliates elect not to defend against such claim or demand for which they do
not dispute indemnity is due, the amount of such
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claim or demand, or if the same be defended by Patriot or its Affiliates, that
portion thereof as to which such defense is unsuccessful, or any amount agreed
to be paid in settlement of such claim, shall be payable by wire transfer of
immediately available funds by Patriot (jointly and severally, in the event
Patriot's Affiliates are also indemnifying parties) to the party making demand
for payment immediately upon receipt of a final judgment, order or settlement.
9. LITIGATION.
9.1 State of the Maryland Case; Retention of Federal
Jurisdiction. Simultaneously with the execution of this Agreement, the parties
shall jointly request that the Maryland Case be stayed, pending consummation of
the transactions contemplated by this Agreement. Upon Divestiture, the parties
will file a joint request for an Order of Dismissal pursuant to Fed. R. Civ.
Pro. 41(a)(2), in the form attached as Exhibit O-1, attaching this Agreement as
part of the Order of Dismissal, conditioning dismissal on compliance with the
terms of this Agreement and providing that the Maryland Court retains
jurisdiction to enforce the terms of this Agreement and resolve any disputes
relating to this Agreement with the express purpose that the Maryland Court
retain ancillary jurisdiction over matters relating to this Agreement pursuant
to the Supreme Court's decision in Kokkomen v. Guardian Life Insurance Company
of America, 000 X.X. 000 (1994).
9.2 Status of Texas Case. Immediately following the
approval of this Agreement by the Maryland Court, Patriot shall move to have its
claims in the Texas Case, which claims are based on the fact that Marriott
sought to enjoin the Merger, dismissed with prejudice, pursuant to an Order of
Dismissal in the form attached as Exhibit O-2, provided, however, that the
parties agree and will so stipulate that said dismissal will not have any claim
preclusion or res judicata effect with respect to any other, unasserted claims,
not based on the fact that Marriott sought to enjoin the Merger.
9.3 Further Assurances. The parties agree in good
faith to take any and all such further action, and to execute and deliver such
other notices, documents, instruments, certificates, or agreements as may be
necessary to implement the purposes of the foregoing provisions of this Section
9.
10. FACTUAL ACKNOWLEDGMENTS; RELEASES. The following
releases, and factual acknowledgments concerning the operation of the Marriott
system, shall be conditioned upon and subject to the satisfaction by each of the
parties of its material obligations hereunder and the consummation of the
transactions set forth in this Agreement.
10.1 Factual Acknowledgments. Marriott and Patriot
acknowledge that the charges and monetary allocations of costs as set forth in
the Submanagement Agreements, the
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Amendment to Tyson's Corner Management Agreement and Franchise Agreements are
legally enforceable, appropriate, fair and equitable. In addition, without
limiting the foregoing, Patriot further acknowledges that it is aware of
Marriott's chain services, reservations system, and marketing programs, charges,
allocations and protocols. Upon the occurrence of a Forbearance Termination
Event, the factual acknowledgments in this Section 10.1 shall be null and void
in all respects.
10.2 Marriott Release. Effective only upon
consummation of the Divestiture, Marriott, for itself and its directors,
officers, employees, stockholders, agents, successors, assigns, attorneys and
trustees (collectively, the "Marriott Releasors"), does hereby irrevocably and
unconditionally remise, release, acquit, exonerate and forever discharge Patriot
and Interstate and their respective directors, officers, employees,
stockholders, agents, successors, assigns, attorneys, financial advisors,
investment bankers, lenders and trustees (collectively, the "Patriot and
Interstate Released Parties"), of and from any or all actions, causes of action,
suits, debts, dues, sums of money, accounts, claims, demands, covenants,
contracts, controversies, promises, agreements, damages, attorney's fees, costs
and expenses of suit, obligations, liabilities and judgments, of whatever kind
or nature, known or unknown, now existing or which may develop in the future, in
law or in equity, which Marriott ever had against the Patriot and Interstate
Released Parties, now has or which any of the Marriott Releasors hereafter can,
shall or may have, upon or by reason of any act, omission, matter, cause or
thing whatsoever, from the beginning of time through the date of this Agreement,
arising out of, related to, or in connection with the Merger, including without
limitation, claims arising under any statute or law of the United States and any
franchise law of any state (excepting only such state statutory claims as may
not be released, regardless of the agreement of the parties, as a matter of
law). This release of all claims shall survive the assignment or termination of
any of the Franchise Agreements entered into by and between Marriott and
Interstate or Patriot. This release shall not apply to (a) any accrued fees,
costs, or charges, whether billed or unbilled, that Interstate would be
obligated to pay under or in connection with the Franchise Agreements or
management contracts with respect to the period occurring after the Divestiture
Date, except for amounts due pursuant to Section 7.1.3; (b) any claim for
indemnification of Marriott and others under the Franchise Agreements or
management contracts; and (c) the $2,426,000 fee payable pursuant to the Tyson's
Corner Management Agreement (subject to (i) the acknowledgment by Marriott
herein that neither the consummation of the Merger, nor the consummation of the
Divestiture, causes such fee to be due or payable, and (ii) the agreement by
Marriott hereby that if Patriot successfully obtains an Amendment to Tyson's
Corner Management Agreement which deletes the "termination on sale" provision,
this fee shall no longer be payable, and (iii) the termination of the
Submanagement Agreement.
10.3 Patriot and Wyndham Release. Effective only upon
consummation of the Divestiture, each of Patriot and Wyndham, for itself and its
respective directors, officers, employees, stockholders, agents, successors,
assigns, attorneys and trustees (collectively, the "Patriot Releasors"), does
hereby irrevocably and unconditionally remise, release, acquit, exonerate and
forever discharge Marriott and its respective directors, officers, employees,
stockholders, agents, successors, assigns, attorneys, financial advisors,
investment bankers, lenders and trustees
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(collectively, the "Marriott Released Parties"), of and from any or all actions,
causes of action, suits, debts, dues, sums of money, accounts, claims, demands,
covenants, contracts, controversies, promises, agreements, damages, attorney's
fees, costs and expenses of suit, obligations, liabilities and judgments, of
whatever kind or nature, known or unknown, now existing or which may develop in
the future, in law or in equity, which Patriot or Wyndham ever had against the
Marriott Released Parties, now has or which any of the Patriot Releasors
hereafter can, shall or may have, upon or by reason of any act, omission,
matter, cause or thing whatsoever, from the beginning of time through the date
of this Agreement, arising out of, relating to, or in connection with (i) the
factual acknowledgments contained in Section 10.1, (ii) the Franchise Agreements
or any agreements related thereto, other than amounts thereunder that are being
disputed in good faith, or (iii) the Merger, including specifically claims
arising under any statute or law of the United States and any franchise law of
any state (excepting only such state statutory claims as may not be released,
regardless of the agreement of the parties, as a matter of law). This release of
all claims shall survive the assignment or termination of any of the Franchise
Agreements entered into by and between Marriott and Interstate or Patriot.
10.4 Interstate Release. Effective only upon
consummation of the Divestiture, Interstate, for itself and its directors,
officers, employees, stockholders, agents, successors, assigns, attorneys and
trustees (collectively, the "Interstate Releasors"), does hereby irrevocably and
unconditionally remise, release, acquit, exonerate and forever discharge the
Marriott Released Parties of and from any or all actions, causes of action,
suits, debts, dues, sums of money, accounts, claims, demands, covenants,
contracts, controversies, promises, agreements, damages, attorney's fees, costs
and expenses of suit, obligations, liabilities and judgments, of whatever kind
or nature, known or unknown, now existing or which may develop in the future, in
law or in equity, which Interstate ever had against the Marriott Released
Parties, now has or which any of the Interstate Releasors hereafter can, shall
or may have, upon or by reason of any act, omission, matter, cause or thing
whatsoever, from the beginning of time through the date of this Agreement,
arising out of, related to, or in connection with (i) the factual
acknowledgments contained in Section 10.1, (ii) the Franchise Agreements or any
agreements related thereto, or (iii) the Merger.
Additionally, upon the execution hereof, Interstate, for itself and the
Interstate Releasors, does hereby irrevocably and unconditionally remise,
release, acquit, exonerate and forever discharge the Marriott Released Parties
of and from any or all actions, causes of action, suits, debts, dues, sums of
money, amounts, claims, demands, damages, attorney's fees, costs and expenses of
suit, obligations, liabilities and judgments, of whatever kind or nature, known
or unknown, now existing or which may develop in the future, in law or in
equity, which Interstate ever had against the Marriott Released Parties, now has
or which any of the Interstate Releasers hereafter can, shall or may have, upon
or by reason of any act, omission, matter, cause or thing whatsoever, from the
beginning of time through the date of this Agreement, arising out of, related
to, or in connection with, Marriott's actions in attempting to enjoin the Merger
or which otherwise form the basis of the Texas Case.
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10.5 California. Insofar as the releases given in
this Section 10 apply to any hotel, conduct or cause of action in the State of
California (or any jurisdiction in which principles comparable to California
Civil Code Section 1542, quoted below, apply by reason of statute or precedent),
the following is included in such release:
INTERSTATE, PATRIOT AND MARRIOTT HAVE EACH BEEN INFORMED OF AND ARE
AWARE OF THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH
READS AS FOLLOWS:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE
TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."
INTERSTATE, PATRIOT AND MARRIOTT EACH UNDERSTAND THAT SECTION 1542
GIVES THEM THE RIGHT NOT TO RELEASE EXISTING CLAIMS OF WHICH THEY ARE
NOT AWARE, UNLESS THEY VOLUNTARILY CHOOSE TO WAIVE THIS RIGHT. HAVING
BEEN SO APPRISED, THEY NEVERTHELESS HEREBY VOLUNTARILY ELECT TO, AND
DO, WAIVE THE RIGHTS DESCRIBED IN SECTION 1542 AND AGREE THAT THE
RELEASE STATED IN THIS SECTION 10 APPLIES TO ANY AND ALL LIABILITIES,
CLAIMS, DAMAGES, DEMANDS, COSTS, INDEBTEDNESS, EXPENSES, INDEMNITIES,
COMPENSATION, ACTIONS AND CAUSES OF ACTION OF ANY KIND WHATSOEVER,
WHETHER DEVELOPED OR UNDEVELOPED, KNOWN OR UNKNOWN, SUSPECTED OR
UNSUSPECTED.
11. [INTENTIONALLY OMITTED].
12. PATRIOT AND NEWCO FRANCHISE AGREEMENT COMMITMENTS AND
GENERAL MODIFICATIONS OF FRANCHISE AGREEMENTS. Patriot and Marriott each agrees
that it shall perform under the Franchise Agreements in accordance with the
terms of each and in accordance with the further provisions of this Agreement,
including without limitation, this Section 12. Patriot shall cause these same
obligations to be binding upon Newco, Interstate Hotels, LLC and IHC II, LLC
(prior to the Divestiture) and upon Patriot's Affiliates (prior to and following
the Divestiture). Finally, Patriot shall take all actions necessary in order to
cause such Affiliates to be bound by all of the terms and provisions of this
Agreement, and, to the extent an Affiliate is a party thereto, the Franchise
Agreements, Submanagement Agreements, and the Amendment to Tyson's Corner
Management Agreement (as such Agreements are modified hereby), as though such
Affiliates were parties hereto. For any Franchise Agreement to which Interstate
is a party, this Agreement shall be deemed an amendment to each such Franchise
Agreement. Notwithstanding anything to the contrary, no Franchise Agreement
shall be amended, and no owner of a hotel whose joint venture partner or lender
has the right to consent to any amendment of a Franchise Agreement, as indicated
on Schedule 6.2.6, shall be bound by the terms hereof.
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12.1 Use of Marks. Patriot shall use Marriott's
trade names, service marks, trademarks, and other proprietary rights (the
"Marks") only as allowed and required by the applicable Franchise Agreements
relating to such Marks and Marriott's standards and policies. Patriot will not
market or advertise the Marks or Marriott hotels with any trademarks, tradename
or service xxxx not approved by Marriott. Patriot will further agree not to use
Marriott hotel customers or customer information generated by the Marriott
system to sell or market other business activities in which Patriot is engaged
and which compete with Marriott (except that Patriot may use such customer
information if legally obtained from a third party). Patriot will cause its
employees not to use the Marks, or any other proprietary information concerning
Marriott, the Marks or the Marriott system, in any way, directly or indirectly,
other than for the purpose of managing and operating Marriott hotels. In
connection with Patriot's operation of its Marriott hotels, Patriot will not
direct customers or business that originates at a Marriott hotel or in or
through the Marriott system to any other lodging system or chain or to any hotel
not in the Marriott system. Marriott shall be entitled to injunctive relief to
enforce its rights under this section in addition to any other remedies at law
it may have. Marriott shall additionally have the right to recover an additional
amount equal to 300% of the liquidated damages for the hotel in question (as set
forth on Schedules 3.1.4, 3.2.7, 3.3.5, and 4.3.1); provided, however, that
these damage provisions shall not apply to any documents filed pursuant to the
Securities Exchange Act of 1934, as amended, or the Securities Act of 1933, as
amended (collectively, "Securities Filings"). Patriot shall have no obligation
to obtain Marriott's prior approval of the use of Marriott's Marks, which use
shall be pursuant to the Marriott standards, in any table or chart describing
Marriott hotels used in a Securities Filing, and Marriott shall not unreasonably
withhold or delay its consent to any other use of its Marks (in a non-derogatory
manner) in such a Securities Filing.
12.2 Treatment of Sensitive Information. Patriot
acknowledges that Marriott may provide its franchisees with certain sensitive
and confidential hotel operating and trademark information, including
information concerning pricing, market strategy, hotel rate structures, Marriott
customers and customer accounts (the "Sensitive Information"). Patriot agrees
that if Marriott provides Sensitive Information to the management team of a
Marriott hotel in which Patriot has an interest, or to a regional manager of
such Marriott hotel, Patriot shall treat such Sensitive Information as
confidential and shall not disclose any such Sensitive Information to any person
involved in the operation of any competing hotels that are not Marriott hotels
(or use such Sensitive Information for the benefit of same), and shall not
disclose such Sensitive Information to any person directly involved in the
operation of Wyndham Hotels. Sensitive information shall not include any
information that: (i) was publicly known or generally known within the trade at
the time of the disclosure; (ii) is obtained from a third party who is under no
obligation of confidentiality with respect to such information, or (iii) is
required to be disclosed by applicable law. Patriot agrees that Marriott may, in
its sole discretion, decide either to provide Sensitive Information directly to
Patriot or provide similar or replacement information or services in a way that
has the effect of giving the
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Sensitive Information to the management teams of hotels but does not give
Patriot access to the Sensitive Information.
12.3 Operation. Prior to the Merger, Interstate
shall (i) be responsible for causing all Marriott franchised hotels to be
managed in a good faith manner as a full participant in the Marriott system,
consistent with Marriott's standards, policies and capital and expenditure
requirements, including participation in all mandatory national, regional and
area-wide marketing or promotional programs being implemented for hotels in the
Marriott system, all in accordance with the applicable Franchise Agreements, and
(ii) fund any and all capital expenditures required to maintain each such hotel
to Marriott standards in accordance with the applicable Franchise Agreements.
Following the Merger and prior to (x) the consummation of the Divestiture or (y)
the Final Divestiture Date, whichever comes first, the obligations imposed on
Interstate by this Section 12.3 shall instead be those of Patriot or its
Affiliates, and following the Divestiture, such obligations shall instead be
those of Newco and its Affiliates (including without limitation IHC II, LLC and
Interstate Hotels, LLC).
12.4 Liquidated Damages.
12.4.1 Effective on the Divestiture Date and
subject to Sections 3.2.2.2 and 3.3.3 and the consents set forth on Schedule
6.2.6, the Exhibit B Hotel Franchise Agreements are hereby amended to delete the
Existing Franchise Agreement Liquidated Damages payable under the Exhibit B
Hotel Franchise Agreements and the Exhibit B Liquidated Damages are hereby
substituted in lieu thereof. Except for the substitution of Exhibit B Liquidated
Damages for Existing Franchise Agreement Liquidated Damages, the provisions
relating to the payment of liquidated damages under the Exhibit B Hotel
Franchise Agreements shall remain in full force and effect, subject to the other
sections of this Agreement.
12.4.2 Effective on the Divestiture Date and
subject to Sections 3.2.2.2 and 3.3.3 and the consents set forth on Schedule
6.2.6, the Exhibit C Hotel Franchise Agreements are hereby amended to delete the
Existing Franchise Agreement Liquidated Damages payable under the Exhibit C
Hotel Franchise Agreements and the Exhibit C Liquidated Damages are hereby
substituted in lieu thereof. Except for the substitution of Exhibit C Liquidated
Damages for Existing Franchise Agreement Liquidated Damages, the provisions
relating to the payment of liquidated damages under the Exhibit C Hotel
Franchise Agreements shall remain in full force and effect, subject to the other
sections of this Agreement.
12.4.3 Effective on the Divestiture Date and
subject to the consents of the respective Third-Party Owners, the Exhibit D
Hotel Franchise Agreements as to which Patriot or Interstate is the franchisee
are hereby amended to delete the Existing Franchise Agreement Liquidated Damages
payable under the Exhibit D Hotel Franchise Agreements and the Exhibit D
Liquidated Damages are hereby substituted in lieu thereof. Except for the
substitution of Exhibit D Liquidated Damages for Existing Franchise Agreement
Liquidated Damages, the provisions relating to the payment of liquidated damages
under the Exhibit D Hotel Franchise Agreements
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shall remain in full force and effect, subject to the other sections of this
Agreement.
13. PRESS RELEASES. Unless otherwise required by law, no party
will issue any press release relating to this Agreement, or the Divestiture,
without each of the other party's reasonable consent to such release. The
parties designate the following individuals for purpose of reviewing such press
releases: Marriott -- Xxxxx Xxxxx; Patriot -- Xxxx Xxxxx; and prior to the
Merger, Interstate -- Xxxx Xxxxxxxxxx.
14. COOPERATION. The parties mutually agree to cooperate in
good faith and to deal fairly with one another to accomplish the terms of this
Agreement, including the Divestiture and the parties agree to take all actions
reasonably necessary to implement the Divestiture. No party hereto shall object
to, directly or indirectly, interfere with, or delay, the consummation of the
Divestiture, provided that the Divestiture is effected in accordance with the
provisions of this Agreement.
15. [INTENTIONALLY OMITTED].
16. [INTENTIONALLY OMITTED].
17. MISCELLANEOUS.
17.1 Applicable Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of Maryland, without
regard to principles of conflict of laws.
17.2 Notices. All notices, requests, demands,
statements and other communications required or permitted to be given under the
terms of this Agreement shall be in writing and delivered by hand against
receipt, sent by certified mail (postage prepaid and return receipt requested),
or carried by reputable overnight/ international courier service, to the
respective party at the following addresses:
If to Marriott:
Marriott International, Inc.
00000 Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: Law Department
with a copy to:
Xxxxxx X. Xxxx, Esq.
Venable, Baetjer and Xxxxxx, LLP
Xxx Xxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
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If to Interstate:
Xxxxxx Xxxx
Interstate Hotels Corporation
000 Xxxxxxxx Xxxxx
Xxxxxx Xxxxx Xxx
Xxxxxxxxxx, XX 00000
with a copy to:
Xxxxxx X. Xxxx
Senior Vice President and General Counsel
Interstate Hotels Corporation
000 Xxxxxxxx Xxxxx
Xxxxxx Xxxxx Xxx
Xxxxxxxxxx, XX 00000
If to Patriot:
Xxxx X. Xxxxxxxx
Patriot American Hospitality, Inc.
0000 Xxxxxxxx Xxxxxxx
Xxxxx 0000
Xxxxxx, XX 00000
with a copy to:
Xxxxxxx X. Xxxxx, P.C. and
Xxxxxxx X. Xxxxxxx, Esq.
Xxxxxxx, Procter & Xxxx XXX
Xxxxxxxx Xxxxx
Xxxxxx, XX 00000
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If to Wyndham:
Xxxxx X. Xxxxxxxx
0000 Xxxxxxxx Xxxxxxx
Xxxxx 0000
Xxxxxx, XX 00000
with a copy to:
Xxxxxxx X. Xxxxx, P.C. and
Xxxxxxx X. Xxxxxxx, Esq.
Xxxxxxx, Procter & Xxxx XXX
Xxxxxxxx Xxxxx
Xxxxxx, XX 00000
or to such other address as a party provides to the other parties from time to
time. Any such notice or communication shall be deemed to have been given at the
date and time of: (A) receipt of or first refusal of delivery, if sent via
certified mail or delivered by hand; or (B) one day after the posting thereof,
if sent via reputable overnight/international courier service.
17.3 Entire Agreement; Amendment. All Exhibits,
Schedules and other documents attached hereto or delivered in connection
herewith are deemed to be an integral part of the parties agreement with respect
to the subject matter hereof, and are incorporated herein by reference. This
Agreement, such Exhibits and Schedules, and all documents delivered in
connection herewith shall constitute the entire Agreement between the parties
pertaining to the subject matter hereof, and shall supersede any and all prior
and contemporaneous agreements, understandings, negotiations, and discussions of
the parties, whether oral or written. No amendment, modification, waiver or
termination of this Agreement shall be binding unless executed in writing by all
of the parties hereto, or in the case of a waiver, by the party for whom such
benefit was intended.
17.4 Waiver. The failure of any party to enforce at
any time the provisions of this Agreement shall in no way be construed to be a
waiver of any such provision nor in any way to affect the validity of this
Agreement nor any part hereof, or the rights of any party to enforce thereafter
each and every such provision. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other provision of
this Agreement, whether or not similar, nor shall such waiver constitute a
continuing waiver unless otherwise expressly so provided in writing.
17.5 Expenses. Except as expressly stated otherwise
herein, each party shall pay the fees of its legal counsel, accountants,
advisors and any other expenses incurred by it in connection with the
negotiation and preparation of this Agreement and the consummation of the
transactions contemplated by this Agreement.
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17.6 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. No party shall assign any of its rights or
obligations hereunder without the prior written consent of each of the other
parties.
17.7 Severability. If any provision or clause of this
Agreement is determined by a court of competent jurisdiction to be invalid or
unenforceable, the validity of the rest of the Agreement shall not be affected
and the rights and obligations of the parties shall be construed and enforced as
if this Agreement did not contain the particular part held to be invalid or
unenforceable.
17.8 Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, and all of
which together shall constitute one and the same Agreement.
17.9 No Third Party Beneficiaries. Nothing contained
in this Agreement shall be deemed to confer any rights or benefits upon any
third parties.
17.10 Captions. Caption and section headings are used
herein for convenience of reference only. They are not part of this Agreement
and shall not be used in construing it.
17.11 Personal Jurisdiction. Each party hereby
expressly and irrevocably submits itself to the exclusive jurisdiction of the
Maryland Court in any suit, action, or proceeding arising, directly or
indirectly, out of or relating to this Agreement, and to the maximum extent
permitted under applicable law, this consent to personal jurisdiction shall be
self-operative; provided that nothing in this Section 17.11 shall preclude
Patriot from maintaining the Texas Case referred to in Section 9.2 to the extent
such case is not ultimately dismissed in accordance with Section 9.2.
17.12 Interpretation. The parties each acknowledge that
they and their respective legal counsel have actively participated in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties, and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of any
of the provisions of this Agreement.
17.13 Specific Performance. Each party agrees that a
breach of any of the terms, conditions, representations or warranties, or other
obligations under this Agreement, may result in irreparable harm to the
non-breaching party, and shall give rise to a right in the non-breaching party
to seek enforcement of this Agreement in a court of equity by a decree of
specific performance. This remedy is intended to be cumulative and in addition
to any other remedy a party may have.
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17.14 Confidentiality. Except as required by law or
judicial or administrative proceedings, including proceedings between the
parties with respect to the transactions contemplated hereby, and then only to
the extent specifically required in any such proceedings, each of the parties
agrees (i) to take any and all action reasonably necessary to preserve the
confidentiality of the terms of this Agreement, and all settlement discussions
and negotiations held prior to the execution of this Agreement, including any
and all oral and written communications exchanged by the parties hereto (or
their legal counsel) as part of such discussions and negotiations, (ii) not to
disclose any confidential or proprietary information ("Confidential
Information") obtained from any other party in connection with the transactions
contemplated hereby, to any individual or entity (other than its directors,
officers, employees, agents and representatives with a need to know such
Confidential Information in order to consummate the transactions contemplated
hereby), and (iii) not to use any Confidential Information for any purpose. If
the parties fail to close the transactions contemplated hereby, each party
agrees to return to the other party or to destroy all Confidential Information
obtained from the other party in its possession upon the written request of the
other party. Notwithstanding anything in this Section 17.14 to the contrary, the
parties acknowledge and agree that (x) Patriot may file a copy of this Agreement
or any part hereof (including the Exhibits and Schedules hereto) with the
Securities and Exchange Commission as a part of any Form 8-K filing of Patriot;
provided, however, that Patriot shall avoid including the Exhibits and Schedules
attached hereto as a part of any such Form 8-K filing if it determines in good
faith that such Exhibits and Schedules are not necessary or appropriate in
connection with such filing and (y) each of Marriott and Patriot may provide a
copy of this Agreement to any party from whom it is obligated to seek to obtain
a consent or approval in connection herewith.
17.15 Dispute Resolution. The parties intend and desire
for the United States District Court for the District of Maryland to have sole
and exclusive jurisdiction to resolve any and all disputes that may arise under
or in connection with this Agreement and the transactions contemplated herein;
provided that nothing in this Section 17.11 shall preclude Patriot from
maintaining the Texas Case referred to in Section 9.2 to the extent such case is
not ultimately dismissed in accordance with Section 9.2.
17.16 Operation of this Agreement. Interstate has
entered into this Agreement solely to facilitate the consummation of the Merger
in accordance with the terms of the Agreement and Plan of Merger dated December
2, 1997. Accordingly, Sections 3 and 4 (except for Section 4.3) of this
Agreement will not impose any obligations or otherwise be binding on Interstate,
Patriot, or Marriott unless and until the Merger is completed in accordance with
the terms of such Agreement and Plan of Merger. In the event that the Merger
does not occur on or prior to the date and time specified in the Agreement and
Plan of Merger, then, as between Interstate and each of the other parties
hereto, Interstate will be restored to the position it had prior to the
execution of this Agreement. Each of Marriott, Patriot and Wyndham acknowledges
and agrees that neither the
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existence of this Agreement, the discussions giving rise thereto nor any event
referred to herein or contemplated hereby will limit or otherwise affect
Interstate's rights under or in respect of the Agreement and Plan of Merger or
otherwise or Marriott's rights with respect to the Franchise Agreements.
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IN WITNESS WHEREOF, each of the parties hereto has caused its duly
authorized representatives to execute this Agreement as of the day and year
first written above.
ATTEST: MARRIOTT INTERNATIONAL, INC.
________________________________ By:__________________________(SEAL)
Xxxx X. Xxxxxxxx,
Senior Vice President
INTERSTATE HOTELS CORPORATION
________________________________ By:__________________________(SEAL)
J. Xxxxxxx Xxxxxxxxxx,
Executive Vice President
INTERSTATE HOTELS COMPANY
________________________________ By:__________________________(SEAL)
J. Xxxxxxx Xxxxxxxxxx,
Executive Vice President
PATRIOT AMERICAN HOSPITALITY, INC.
________________________________ By:__________________________(SEAL)
Xxxxxxx X. Xxxxx III
President and Chief Operating
Officer
X-0
00
XXXXXXX INTERNATIONAL, INC.
________________________________ By:__________________________(SEAL)
Xxxxxxx X. Xxxxx III
Executive Vice President
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List Of Exhibits
----------------
Exhibit A Exhibit A Hotels
B Exhibit B Hotels
B-1 Form Submanagement Agreement
C Exhibit C Hotels
C-1 Form Amendment to Tyson's Corner Management Agreement
D Exhibit D Hotels
D-1 Form Letter to Third-Party Owners
E-1 Form Newco Charter
E-2 Form Newco Bylaws
F-1 Form IHC II, LLC Operating Agreement
F-2 Form Interstate Hotels, LLC Operating Agreement
G Form Voting Agreement
H Form Owners Agreement
I Hotel Management Structure
J Form Lease between Patriot and Wyndham
K Form Primary Management Agreement between Wyndham and IHC II, LLC
L Form Guarantee
M Patriot Interests in Exhibit B Hotels
N-1 Form Opinion of Xxxxxxx, Procter & Xxxx LLP
N-2 Form Opinion of Xxxxx, Day, Xxxxxx & Xxxxx
O-1 Form Order of Dismissal of Maryland Case
O-2 Form Order of Dismissal of Texas Case
P Form Amendment to Marriott Inn Franchise Agreement
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List Of Schedules
-----------------
Schedule 2 Special Fee
3.1.4 Liquidated Damages (Exhibit A Hotels)
3.2.7 Forbearance Termination Event Liquidated Damages
(Exhibit B Hotels)
3.3.5 Forbearance Termination Event Liquidated Damages
(Exhibit C Hotels)
4.3.1 Forbearance Termination Event Liquidated Damages
(Exhibit D Hotels)
6.2.6 Required Consents
7.1.3 Settlement Agreement Payments
12.4-B Exhibit B Liquidated Damages
12.4-C Exhibit C Liquidated Damages
12.4-D Exhibit D Liquidated Damages
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EXHIBIT A
Hotels Terminated by Patriot
Hotel Termination Date Brand
----- ---------------- -----
1. Andover, MA One Year After MHRS
Date of Divestiture
2. Arlington, TX Date of Divestiture MHRS
3. Casa Marina, FL One Year After MHRS
Date of Divestiture
4. Colorado Springs, CO One Year After MHRS
Date of Divestiture
5. Valley Forge, PA One Year After MHRS
Date of Divestiture
6. Reach, FL Date of Divestiture MHRS
7. Roanoke, VA Date of Divestiture MHRS
8. St. Louis, MO One Year After MHRS
Date of Divestiture
9. Syracuse, NY Date of Divestiture MHRS
10. Westborough, MA Date of Divestiture MHRS
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EXHIBIT B
Hotels Managed by Marriott
Hotel Effective Date Brand
----- -------------- -----
1. Albany, NY Date of Divestiture MHRS
2. Atlanta North, GA 1 Year after Date of MHRS
Divestiture
3. Conshohocken, PA 1 Year after Date of MHRS
Divestiture
4. Harrisburg, PA 1 Year after Date of MHRS
Divestiture
5. Houston, TX 1 Year after Date of MHRS
Divestiture
6. Indian River Plantation, FL Date of Divestiture MHRS
7. San Diego Mission Valley, CA Date of Divestiture MHRS
8. Minneapolis, MN 1 Year after Date of MHRS
Divestiture
9. Warner Center, CA Date of Divestiture MHRS
10. Pittsburgh Airport, PA Date of Divestiture MHRS
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EXHIBIT C
Hotels with Contracts Assumed
Hotel Brand
--------------------- -----
1. New Haven Orange, CT CY
2. Tyson's Corner, VA MHRS
3. Troy, MI MHRS
4. Xxxxxxxxxxx, XX XX
0. Xx. Xxxxx, XX CY
6. Pittsburgh Airport, PA RI
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EXHIBIT D
Hotels Owned by 3rd Parties
Hotel Brand
----------------------- --------------
1. Boca Raton, FL MHRS
2. Charlotte Executive Park, NC MHRS
3. Cincinnati, OH* MHRS
4. Ft. Lauderdale North, FL MHRS
5. Laguna Cliffs Dana Point, CA MHRS
6. Manhattan Beach, CA MHRS
7. Memphis, TN MHRS
8. Ontario Airport, CA MHRS
9. Orlando Airport, FL MHRS
10. Pittsburgh City Center, PA MHRS
11. Pittsburgh Green Tree, PA MHRS
12. Providence, RI MHRS
13. San Francisco, CA MHRS
14. Sawgrass, FL MHRS
15. Trumbull, CT MHRS
16. Waterford Oklahoma City, OK MHRS
17. Orlando I Drive, FL* MHRS
18. Moscow, Russia MHRS
19. Albany, NY (CY) CY
20. Burlington, VT (RI) RI
21. Chambersberg, PA (FFI) FFI
22. Colorado Springs, CO (RI) RI
23. Eagan Minneapolis, MN (RI) RI
24. Jackson, MS (FFI) FFI
25. Madison, WI (RI) RI
26. Manhattan, NY (CY) CY
27. Memphis, MS (FFI) FFI
28. Mobile Gulf, AL (CY) CY
29. Oklahoma City, OK (RI) RI
30. Omaha Central NE (RI) RI
31. Princeton, NJ (RI) RI
32. Xxxxxx Xxxxx, XX (RI) RI
33. Tucson, AZ (RI) RI
34. Vicksburg, MS (FFI) FFI
35. Boise, Idaho RI
36. Portland, Oregon RI
* The parties acknowledge that these hotels will exit the system
without any payments to either party.
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