EXHIBIT 2.2
FORM OF
SUBSCRIPTION AGREEMENT
This Subscription Agreement (the "Agreement"), dated as of _________ __,
1997, is entered into by and among Interstate Hotels Company, a Pennsylvania
corporation ("IHC"), Patriot American Hospitality Operating Company, a Delaware
corporation ("OPCO"), and Patriot American Hospitality, Inc., a Delaware
corporation ("Parent").
W I T N E S S E T H:
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WHEREAS, the shares of common stock, par value $.01 per share, of OPCO (the
"OPCO Stock") and the shares of common stock, par value $.01 per share (the
"Parent Stock"), of Parent are paired and trade as a single unit on the New York
Stock Exchange (the "Paired Shares");
WHEREAS, IHC, OPCO and Parent entered into an Agreement and Plan of Merger
dated as of December 2, 1997 (the "Merger Agreement");
WHEREAS, the Merger Agreement provides for the merger of IHC with and into
Parent (the "Merger") with Parent being the surviving corporation, and provides
that the stockholders of IHC will be entitled to receive Paired Shares pursuant
to the terms and subject to the conditions set forth therein;
WHEREAS, to maintain the paired share structure of Parent and OPCO, IHC
wishes to contract for the issuance to its stockholders as part of the Paired
Shares to be issued to the stockholders of IHC pursuant to the Merger, of, and
OPCO wishes to issue, an aggregate number of whole shares of OPCO Stock (each an
"Issuable Share" and collectively the "Issuable Shares") that will be equal to,
and paired with, the number of whole shares of Parent Stock to be issued to the
stockholders of IHC pursuant to the Merger, upon the terms and subject to the
conditions set forth in this Agreement; and
WHEREAS, to effect a distribution to the stockholders of IHC, IHC and
Parent desire to have OPCO issue the Issuable Shares directly to the
stockholders of IHC.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
contained herein, the parties hereto agree as follows:
1. Issuance of Shares.
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(a) Subject to the satisfaction or waiver of the conditions set
forth in Article VI of the Merger Agreement, IHC (or at Parent's option, Parent)
hereby agrees to pay or deliver to OPCO, immediately prior to the consummation
of the Merger, the aggregate Purchase Price (as defined below) for the Issuable
Shares. Subject to the satisfaction or waiver of the conditions set forth in
Article VI of the Merger Agreement, OPCO hereby agrees to issue the Issuable
Shares directly to the stockholders of IHC (the "Designees") in accordance with
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Sections 1(b) and 2 below. The purchase price (the "Purchase Price") for the
Issuable Shares shall be paid by IHC (or at Parent's option, Parent) in cash or
property and per Issuable Share shall be equal to, or in the case of property
have a value of, the product of (x) the Fair Market Value (as hereinafter
defined) of a Paired Share, multiplied by (y) the relative value of a share of
OPCO Stock as compared to a share of Parent Stock, which relative value shall be
determined by the parties to this Agreement. For purposes of this Agreement, the
term "Fair Market Value" shall mean the average per share closing price for a
Paired Share on the NYSE Composite Transactions Tape (as reported in the Wall
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Street Journal or, if not reported therein, by another authoritative source)
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over the 20 consecutive trading day period ending on the trading date
immediately preceding the Closing Date.
(b) The parties hereto acknowledge and agree that the Issuable Shares
will be issued directly to the stockholders of IHC in connection with the Merger
and will be paired with the Parent Stock issued in the Merger and neither IHC
nor Parent will at any time become a stockholder of OPCO or have any right to
receive OPCO Stock.
2. Payment and Issuance of Issuable Shares.
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(a) Subject to the terms and conditions of this Agreement and
subject to the satisfaction or waiver of the conditions set forth in Article VI
of the Merger Agreement, IHC (or at Parent's option, Parent) shall, immediately
prior to the consummation of the Merger, cause to be paid to OPCO the aggregate
Purchase Price for the Issuable Shares by check or wire transfer in immediately
available funds, if payment is to be made in cash, or delivered to OPCO as
evidenced by appropriate documentation conveying title to OPCO, if, at Parent's
option and after agreement of the parties to this Agreement as to relative value
of such property, payment is to be made by delivering property. Simultaneously
with the payment or delivery of the aggregate Purchase Price, the Designees
shall be identified as the recipients of the Issuable Shares.
(b) Immediately following payment or delivery of the aggregate
Purchase Price and the identification of the Designees pursuant to clause (a)
above, OPCO shall cause the Issuable Shares to be deposited with the Exchange
Agent pursuant to and in accordance with Section 2.02 of the Merger Agreement
for issuance in accordance with Sections 2.01(d) and (g) of the Merger
Agreement.
(c) No fractional Issuable Shares will be issued to any Designee
hereunder. In lieu thereof, payment, if any, will be made pursuant to, and in
accordance with, Section 2.02(e) of the Merger Agreement.
3. Authorization and Reservation. OPCO shall take all actions necessary
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to authorize and reserve for issuance the Issuable Shares pursuant to this
Agreement.
4. Representations and Warranties of OPCO. OPCO hereby represents and
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warrants to IHC as follows:
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(a) OPCO has all necessary corporate power and authority to execute
and deliver this Agreement and to perform its obligations hereunder. The
execution and delivery of this Agreement by OPCO has been duly and validly
authorized by all necessary corporate action, and no other corporate proceedings
on the part of OPCO are necessary to authorize this Agreement or to consummate
the transactions hereunder. This Agreement has been duly and validly executed
and delivered by OPCO and, assuming the due authorization, execution and
delivery hereof by IHC, constitutes the legal, valid and binding obligation of
OPCO, enforceable against it in accordance with its terms.
(b) The Issuable Shares, when issued, sold and delivered in
accordance with this Agreement, will be validly issued, outstanding, fully paid
and nonassessable, and free and clear of any and all liens, pledges,
encumbrances, charges or claims created by OPCO, and not subject to preemptive
or any other similar rights.
(c) The execution and delivery of this Agreement by OPCO does not,
and the performance of its obligations hereunder and the consummation of the
subscription by it will not, (A) conflict with or violate the certificate of
incorporation or bylaws or equivalent organizational documents of OPCO or any of
its subsidiaries, (B) subject to the making of the filings and obtaining the
approvals identified herein or in the Merger Agreement, conflict with or violate
any Laws applicable to OPCO or any of its subsidiaries or by which any property
or asset of OPCO or any of its subsidiaries is bound or affected, or (C)
conflict with or result in any breach of or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, result
in the loss or modification in a manner materially adverse to OPCO or its
subsidiaries of any material right or benefit under, or give to others any right
of termination, amendment, acceleration, repurchase or repayment, increased
payments or cancellation of, or result in the creation of a lien or other
encumbrance on any property or asset of OPCO or any of its subsidiaries pursuant
to, any contract to which OPCO or any of its subsidiaries is a party or by which
OPCO or any of its subsidiaries or any property or asset of OPCO or any
subsidiary is bound or affected, except, in the case of clauses (B) and (C) for
any such conflicts or violations which would not prevent or delay in any
material respect consummation of the Merger, or otherwise, individually or in
the aggregate, prevent OPCO from performing its obligations under this Agreement
in any material respect, and would not, individually or in the aggregate, have a
Parent MAE.
(d) The execution and delivery of this Agreement by OPCO does not,
and the performance of its obligations hereunder and the consummation of the
subscription by it will not, other than the Regulatory Filings, require any
consent, approval or authorization of, or declaration, filing or registration
with, any governmental or regulatory authority except where the failure to
obtain any such consent, approval or authorization of, or declaration, filing or
registration with, any governmental or regulatory authority could not reasonably
be expected to have a Parent MAE.
5. Representations and Warranties of IHC. IHC hereby represents and
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warrants to OPCO as follows:
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(a) IHC has all necessary power and authority to execute and
deliver this Agreement and to perform its obligations hereunder. The execution
and delivery of this Agreement by IHC and the performance by it of its
obligations hereunder have been duly and validly authorized by all necessary
action and no other proceedings on the part of IHC are necessary to authorize
this Agreement or to consummate the transactions hereunder. This Agreement has
been duly and validly executed and delivered by IHC and, assuming the due
authorization, execution and delivery hereof by OPCO, constitutes the legal,
valid and binding obligation of IHC, enforceable against it in accordance with
its terms, except as enforcement may be limited by bankruptcy, insolvency,
moratorium or other similar laws relating to creditors' rights generally and by
equitable principles to which the remedies of specific performance and
injunctive and similar forms of relief are subject.
(b) The execution and delivery by IHC of this Agreement does not,
and the consummation by IHC of the transactions contemplated hereby will not,
(i) violate any provision of, or result in a breach, default or acceleration of
any obligation under any contract, agreement or other instrument to which IHC is
a party or by which IHC is bound or (ii) require any consent, approval or
authorization of, or declaration, filing or registration with, any governmental
or regulatory authority except where the failure to obtain any such consent,
approval or authorization of, or declaration, filing or registration with, any
governmental or regulatory authority would not have a IHC Material Adverse
Effect.
6. Termination. This Agreement shall terminate effective upon
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termination of the Merger Agreement pursuant to Article VII thereof.
7. Effect on Cooperation Agreement. Nothing contained in this
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Agreement, shall alter, limit, amend or restrict any of Parent's rights pursuant
to that certain Cooperation Agreement, dated ________ __, 1997, between Parent
and OPCO.
8. Governing Law. This Agreement shall be governed by and construed in
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accordance with the laws of the State of Delaware.
9. Assignment; Binding Effect; Benefit. This Agreement shall be binding
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upon, and inure to the benefit of, the parties hereto and their respective
successors. This Agreement may not be assigned by either party without prior
written consent of the other party.
10. Severability. Any term or provision of this Agreement which is
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invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
11. Counterparts. This Agreement may be executed in any number of
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counterparts, each of which shall be deemed an original and all of which shall
constitute one agreement.
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12. Capitalized Terms. Capitalized terms used herein without definition
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shall have the respective meanings ascribed to such terms in the Merger
Agreement
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IN WITNESS WHEREOF the parties hereto have executed this Subscription
Agreement as of the date first set forth above.
PATRIOT AMERICAN HOSPITALITY, INC.
By:
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Name:
Title:
PATRIOT AMERICAN HOSPITALITY
OPERATING COMPANY
By:
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Name:
Title:
INTERSTATE HOTELS COMPANY
By:
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Name:
Title:
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