Exhibit 99.15
SETTLEMENT AGREEMENT
This Settlement Agreement, dated as of May 26, 1998 (this "Agreement"), is
among Patriot American Hospitality, Inc., a Delaware corporation ("Patriot"),
Wyndham International, Inc., a Delaware corporation ("Wyndham"), Xxxxxx Xxxx
("Mr. Fine") and the persons named on the signature pages hereto (individually,
a "Shareholder" and collectively, the "Shareholders").
RECITALS:
A. The Shareholders consist of a limited partnership identified on Exhibit
A and six trusts established pursuant to the trust documents described on
Exhibit A;
B. Patriot, Wyndham and Interstate Hotels Company, a Pennsylvania
corporation (the "Company") are parties to an Agreement and Plan of Merger,
dated as of December 2, 1997 (as the same may be amended from time to time, the
"Merger Agreement"), which provides, on the terms and subject to the conditions
thereof, for the merger of the Company with and into Patriot (the "Merger");
C. As of the date hereof, each Shareholder owns the number of shares (the
"Shares") of Common Stock, par value $0.01 per share ("Company Stock"), of the
Company set forth on Exhibit A;
D. The parties desire to enter into this Agreement to settle and resolve
certain disputes that have arisen between Patriot and Wyndham, on the one hand,
and Mr. Fine and the other Shareholders, on the other hand, in connection with
the Merger Agreement and the Shareholders Agreement (as defined in the Merger
Agreement), and to consummate the transactions provided for herein; and
E. This Agreement is binding as of the date hereof but will not become
effective until the occurrence of the Effective Time (as defined in the Merger
Agreement) of the Merger.
NOW, THEREFORE, the parties hereto agree as follows:
I. RELEASES
1.1 Release of Mr. Fine and the Shareholders.
Each of Patriot and Wyndham, for and on behalf of themselves and each of
their respective current and/or former representatives, principals, agents,
employees, officers, directors, shareholders, predecessors, successors, assigns,
trustees, partners, general partners, limited partners, co-venturers, parents,
subsidiaries, affiliates, beneficiaries, heirs, executors, administrators,
insurers and attorneys (the "Patriot/Wyndham Releasing Parties"), hereby
completely and fully remise, release, acquit and forever discharge each of Mr.
Fine and the
Shareholders, and each of the Shareholders' respective current and/or former
representatives, principals, agents, employees, officers, directors,
shareholders, predecessors, successors, assigns, trustees, partners, general
partners, limited partners, co-venturers, parents, subsidiaries, affiliates,
beneficiaries, heirs, executors, administrators, insurers and attorneys, in
their capacities as such, (the "Shareholder Released Parties"), from any and all
claims, demands, suits, actions, causes of action, obligations, damages, costs,
losses, interest, expenses and liabilities of any kind or nature whatsoever
resulting from delays in consummation of the Merger, and any claims of breach
under the Merger Agreement or the Shareholders Agreement (as defined in the
Merger Agreement) through the date hereof.
1.2 Release of the Patriot/Wyndham Parties
Each of Mr. Fine and the Shareholders, for and on behalf of themselves and
each of their respective current and/or former representatives, principals,
agents, employees, officers, directors, shareholders, predecessors, successors,
assigns, trustees, partners, general partners, limited partners, co-venturers,
parents, subsidiaries, affiliates, beneficiaries, heirs, executors,
administrators, insurers and attorneys (including Mr. Fine, the "Shareholder
Releasing Parties"), hereby completely and fully remise, release, acquit, and
forever discharge each of Patriot and Wyndham, and each of their respective
current and/or former representatives, principals, agents, employees, officers,
directors, shareholders, predecessors, successors, assigns, trustees, partners,
general partners, limited partners, co-venturers, parents, subsidiaries,
affiliates, beneficiaries, heirs, executors, administrators, insurers and
attorneys, in their capacities as such, (the "Patriot/Wyndham Released Parties")
from any and all claims, demands, suits, actions, causes of action, obligations,
damages, costs, losses, interest, expenses and liabilities of any kind or nature
whatsoever resulting from delays in consummation of the Merger, and any claims
of breach under the Merger Agreement or the Shareholders Agreement (as defined
in the Merger Agreement) through the date hereof.
II. CERTAIN UNDERTAKINGS OF MR. FINE
2.1 Hotel-Related Business Activities after the Merger.
Since the date of the Merger Agreement, one of the Shareholders, FFC
Limited Partnership, L.P., has entered into three transactions, for the
development of hotels in Chicago, Colorado Springs and Denver which will be
operated under the Hilton Garden brand (the "Pending Projects"). Patriot and
Wyndham hereby confirm that, upon completion of the Merger, neither will object
to Mr. Fine's continued participation in the Pending Projects, and Mr. Fine
hereby confirms that, in all other respects, he will comply with the terms of
(i) his Employment Agreement as of May 28, 1996, as amended on December 30, 1997
("Employment Agreement") (including without limitation Sections 6 and 7
thereof), and (ii) his Severance Agreement, dated as of December 30, 1997
("Severance Agreement") (including without limitation Section 8 thereof), and
that, in the event that any of the restrictions imposed on his activities by one
of such
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agreements is greater than those imposed on him by the other, the more
restrictive provisions shall apply. Mr. Fine further agrees that, for a period
of one year after the Effective Date of the Merger, he will not directly or
indirectly engage in the hotel management business, either as an equity owner
(other than owning less than five percent of a publicly held company), lender,
director, officer, employee, consultant or otherwise.
2.2 Assistance to Patriot and Newco.
Commencing on the date hereof and until 120 days following the Effective
Time, Mr. Fine will use all reasonable efforts to persuade any senior officer or
officers of the Company designated by Patriot to accept positions with the
newly-formed company which is planned to be spun off by Patriot after the Merger
("Newco"), or one or more of Newco's affiliates. The preceding sentence shall
not be deemed to obligate Mr. Fine to incur any expense or to offer any
inducement which would result in any personal obligation on the part of Mr.
Fine. Mr. Fine also acknowledges and agrees that he will comply with the
restrictions imposed by Section 7(f) of the Employment Agreement and Section
8(h) of the Severance Agreement relating to the solicitation of employees, as
well as his other covenants under such agreements.
III. OPTIONS ON PATRIOT PAIRED SHARES
3.1 Grant of Options.
(a) By Shareholders.
Subject to the terms, provisions and conditions contained in this
Agreement, each Shareholder hereby grants to Patriot and its designees an option
to purchase all or any portion of the number of paired shares of Common Stock of
Patriot and Wyndham ("Paired Shares") set forth opposite such Shareholder's name
on Exhibit A hereto, which Paired Shares will be among those issued to such
Shareholder as consideration in the Merger, at the Call Exercise Price (as
hereinafter defined) per Paired Share (each, a "Call Option," and collectively,
the "Call Options"). An aggregate of 5,000,000 Paired Shares is subject to the
Call Options. If any Shareholder shall fail to perform its obligation to sell
Paired Shares pursuant to an exercise of a Call Option, the number of Paired
Shares subject to the Call Options granted by all other Shareholders shall be
automatically increased on a pro rata basis, based on the number of Paired
Shares set forth in Column II on Exhibit A, to the extent necessary to enable
the Call Options to be exercised for such aggregate number of Paired Shares.
Notwithstanding the foregoing provisions of this Section 3.1(a), commencing on
June 3, 1998, and on each day thereafter until the day on which the Effective
Time occurs, the total number of Paired Shares subject to the Call Options shall
be reduced by 333,333. (For example, if the Effective Time occurs on June 5,
1998, the total number of Paired Shares subject to the Call Options shall be
4,000,001). Any such reduction shall be allocated ratably among the shareholders
in accordance with their relative Share ownership interests, as shown on Exhibit
A. No reduction shall be made to the extent that the
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failure of the Effective Time to occur is the result of the Company's failure to
perform any of its obligations under the Merger Agreement.
(b) By Patriot.
Subject to the terms, provisions and conditions contained in this
Agreement, Patriot hereby grants to each Shareholder an option to sell to
Patriot all or any portion of the number of paired shares of Common Stock of
Patriot and Wyndham ("Paired Shares") set forth opposite such Shareholder's name
on Exhibit A hereto, which Paired Shares will be among those issued to such
Shareholder as consideration in the Merger, at the Put Exercise Price (as
hereinafter defined) per Paired Share (each, a "Put Option," and collectively,
the "Put Options," and such Put Options, collectively with the Call Options, the
"Options"). An aggregate of 5,000,000 Paired Shares is subject to the Put
Options. The Call Options and Put Options are granted with respect to the same
shares and are not intended to be duplicative. In the event that a Call Option
is exercised with respect to a given number of Paired Shares held by a
Shareholder, the number of Paired Shares subject to the corresponding Put Option
shall be reduced by the same amount (and vice versa in the event of a the
exercise of a Put Option).
3.2 Notice of, and Procedures for, Exercise of Options.
(a) Each Option may, subject to Section 3.6 hereof, be exercised in whole
or in part from time to time from and after the Effective Time by written notice
(the "Option Exercise Notice") from the party in whose favor the Option was
granted (or, in the case of a Call Option, such person as Patriot may have
designated) (the "Exercising Party"), stating the Exercising Party's intention
to exercise the Option, which notice shall include a date and time at which the
closing for such exercise (the "Option Closing") shall occur, such date to be
not less than two business day and not more than five business days after the
giving of such notice. (As used in this Agreement, the term "business day" shall
mean any day on which the New York Stock Exchange is open for trading.) The sale
and delivery and the purchase and acceptance of the Paired Shares shall take
place at the offices of Xxxxxxx, Procter & Xxxx LLP at 000 Xxxxxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx, or such other place as the parties to such Option shall mutually
agree.
(b) At the Option Closing, the Patriot (or, in the case of the Call
Option, such person as Patriot may have designated) shall pay the applicable
Exercise Price (as determined pursuant to Section 3.3 below) for each Paired
Share being purchased in cash by a cashiers check or federal funds wire transfer
to an account designated by the Shareholder against delivery of any necessary or
appropriate stock certificates and duly executed instruments of transfer to the
Exercising Party.
3.3 Exercise Prices.
The exercise price (the "Exercise Price") for each Paired Share under the
Options shall be as follows:
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(a) in the case of any Call Option, the Exercise Price shall be the
amount equal to (i) the per share closing price of the Paired Shares
on the New York Stock Exchange on the day on which the Option
Exercise Notice is given with respect to such Call Option (or, if
such day is not a business day, the first business day preceding
such day) (the "Market Price"), less (ii) $3.00; provided, however,
that (x) in no event shall the Exercise Price for any Call Option be
less than the amount equal to (A) the average per share closing
price of the Paired Shares for the three business days ending on the
day on which the Effective Time occurs (or, if such day is not a
business day, ending on the first business day preceding such day)
(the "Effective Time Price"), less (B) $3.00, and (y) if the Option
Exercise Notice is given on any day other than the date on which the
Effective Time occurs, and if the Market Price exceeds the Effective
Time Price, then the Exercise Price for such Call Option shall be
the amount equal to (I) 331/3% of the amount of such excess, (II)
plus the Effective Time Price, less (III) $3.00.
(B) in the case of the Put Option, the Exercise Price shall be the
amount equal to the per share closing price of the Paired Shares on
the New York Stock Exchange on the day on which the Option Exercise
Notice is given with respect to the Put Option (or, if such day is
not a business day, the first business day preceding such day), less
(ii) $7.00; provided, however, that if the Option Exercise Notice is
given on any day other than the date on which the Effective Time
occurs, and if the Market Price exceeds the Effective Time Price,
then the Exercise Price for such Put Option shall be the amount
equal to (x) 331/3% of the amount of such excess, (y) plus the
Effective Time Price, less (z) $7.00.
3.4 Term of Options.
The Options shall become exercisable upon the Effective Time and will
expire at 6:00 p.m., New York City Time, on the 60th calendar day following the
date on which the Effective Time occurs.
3.5 Ownership of Shares.
Each Shareholder represents, warrants and covenants to Patriot and its
designee that (i) on the date hereof and at all times prior to the Option
Closing such Shareholder has and will continue to have legal and beneficial
ownership of the Shares set forth opposite such Shareholders name on Exhibit A,
free and clear of all proxies, voting trusts and voting agreements,
understandings or arrangements and free and clear of all liens, claims, security
interests and any other encumbrances whatsoever, and (ii) upon payment of the
Exercise Price at any Option Closing, such Shareholder shall have transferred to
Patriot or its designee the legal and beneficial ownership of the Paired Shares,
free and clear of all proxies, voting trusts and voting agreements,
understandings or arrangements and free and clear of all liens, claims, security
interests and any other encumbrances whatsoever.
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IV. MISCELLANEOUS; GENERAL PROVISIONS
4.1 Status of Claims
The parties each represent and warrant that the rights and claims released
pursuant to this Agreement have not in any way been assigned, transferred,
hypothecated or otherwise encumbered, and that they are the sole and absolute
owners of such rights and claims.
4.2 Sufficiency of Consideration
The parties acknowledge that the covenants contained in this Agreement
provide good and sufficient consideration for every promise, duty, release,
obligation, agreement and right contained in this Agreement.
4.3 Denial of Liability or Wrongdoing
The terms of this Agreement are not merely recitals and the agreements
made herein and the consideration transferred is to compromise disputed claims,
avoid litigation and buy peace. No releases or other consideration given shall
be construed as an admission of liability or wrongdoing. All liability and
wrongdoing is expressly denied.
4.4 Authorization
Each party to this Agreement represents that he or it is duly authorized
to execute this Agreement, and to enter into the settlement described herein,
and that he or it has obtained all approvals, consents, and votes necessary to
take said actions and perform his or its obligations set forth herein. Each
party to this Agreement represents that he or it is not breaching or interfering
with any Agreement, actual or prospective business relationship or obligation to
any person, entity, party or non-party by entering into the settlement or any of
the transactions provided for herein. The execution and delivery of this
Agreement by the Shareholders do not, and the performance of this Agreement by
the Shareholders will not, require any consent, approval, authorization or
permit of, or filing with (except for applicable requirements, if any, of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) or
notification to, any government or regulatory authority by the Shareholders.
4.5 Severability.
If any term or other provision of this Agreement is determined to be
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement will nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or
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incapable of being enforced, the parties hereto will negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible to the fullest extent permitted by applicable law in an
acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the extent possible.
4.6 Entire Agreement.
This Agreement constitutes the entire agreement of the parties and
supersedes all prior agreements and undertakings, both written and oral, among
the parties with respect to the subject matter hereof.
4.7 Amendments.
This Agreement may not be modified, amended, waived, altered or
supplemented, except upon the execution and delivery of a written agreement
executed by the parties hereto.
4.8 Assignment.
This Agreement may not be assigned, except that Patriot may assign any or
all of the Options to any affiliate of Patriot, or to Wyndham or any affiliate
of Wyndham.
4.9 Parties in Interest.
This Agreement is binding upon, and shall inure solely to the benefit of,
each party hereto and nothing in this Agreement, express or implied, is intended
to or will confer upon any other person any right, benefit or remedy of any
nature whatsoever under or by reason of this Agreement.
4.10 Specific Performance.
The parties hereto agree that irreparable damage would occur in the event
any provision of this Agreement was not performed in accordance with the terms
hereof or was otherwise breached. It is accordingly agreed that the parties will
be entitled to specific relief hereunder, including, without limitation, an
injunction or injunctions to prevent and enjoin breaches of the provisions of
this Agreement and to enforce specifically the terms and provisions hereof, in
any state or federal court in the Commonwealth of Pennsylvania, in addition to
any other remedy to which they may be entitled at law or in equity. Any
requirements for the securing or posting of any bond with respect to any such
remedy are hereby waived.
4.11 Governing Law; Jurisdiction and Venue.
This Agreement will be governed by, and construed in accordance with, the
internal laws of the Commonwealth of Pennsylvania without regard to its rules of
conflict of laws. The parties
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hereto hereby irrevocably and unconditionally consent to and submit to the
exclusive jurisdiction of the courts of the Commonwealth of Pennsylvania and any
court of the Western District of Pennsylvania of the United States of America
(the "Pennsylvania Courts") for any litigation arising out of or relating to
this Agreement and the transactions contemplated hereby (and agrees not to
commence any litigation relating thereto except in such courts), waives any
objection to the laying of venue of any such litigation in the Pennsylvania
Courts and agrees not to plead or claim in any Pennsylvania Court that such
litigation brought therein has been brought in any inconvenient forum.
4.12 Counterparts.
This Agreement may be executed in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
will be deemed to be an original but all of which taken together will constitute
one and the same agreement.
4.13 Voting Agreement.
Each Shareholder agrees that, immediately prior to and as a condition to,
such Shareholder's receipt of shares of common stock of Newco pursuant to the
proposed spin-off of such shares by Patriot, such Shareholder will execute and
deliver to Patriot a Voting Agreement in substantially the form of Exhibit B
hereto.
4.14 Tax Treatment of Settlement.
The parties hereto agree that the grant of the Options pursuant to Section
3.1 hereof represent adjustments to the purchase price otherwise payable
pursuant to the Merger Agreement by Patriot to the Shareholders, including Mr.
Fine, and shall consistently be treated as such by the parties hereto for all
tax and financial accounting purposes.
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4.15 Notices.
All notices and other communications under this Agreement will be in
writing and will be deemed given if delivered personally, telecopied (which is
confirmed) or sent by overnight courier (providing proof of delivery) to the
parties at the following addresses (or at such other address for a party as
specified by like notice):
(a) if to Patriot, to:
Patriot American Hospitality, Inc.
0000 Xxxxxxxx Xxxxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx
(Telecopier: 214-863-1805)
with copies to:
Xxxxxxx, Procter & Xxxx XXX
Xxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx, P.C. and
Xxxxxx Xxxxxxxxxx III, P.C.
(Telecopier: 617-523-1231)
(b) if to Mr. Fine or any Shareholder, to:
Xxxxxx Xxxx
___________________________
___________________________
(Telecopier: )
with a copy to:
___________________________
___________________________
___________________________
Attn: _____________________
(Telecopier: )
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4.16. Effectiveness of Agreement.
This Agreement is binding as of its execution by the parties hereto
but will not become effective unless and until the Effective Time occurs. In the
event the Merger Agreement is terminated, each of the parties will be restored
to the position it had prior to the execution of this Agreement and each of the
parties acknowledges and agrees that, in the event of such termination none of
the existence of this Agreement, the discussions giving rise thereto and any
event referred to herein or contemplated hereby will limit or otherwise affect
any party's rights (if any) under or in respect of the Merger Agreement or
otherwise.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first written above.
PATRIOT AMERICAN HOSPITALITY, INC.
By: /s/ Xxxxxxx X. Xxxxx III
------------------------------
Name: Xxxxxxx X. Xxxxx III
Title: President and Chief Operating
Officer
WYNDHAM INTERNATIONAL, INC.
By: /s/ Xxxxxxx X. Xxxxx III
------------------------------
Name: Xxxxxxx X. Xxxxx III
Title: Executive Vice President
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/s/ Xxxxxx Xxxx
------------------------------
Xxxxxx Xxxx
Xxxxxx Xxxx, Trustee
U/A dated 11/11/94
FBO Xxxxxx Xxxx
By: /s/ Xxxxxx Xxxx
------------------------------
Name:
Title:
Xxxxxx Xxxx, Trustee under
The Xxxxxx Xxxx 1997
Charitable Remainder Unitrust
By: /s/ Xxxxxx Xxxx
------------------------------
Name:
Title:
FFC Limited Partnership, L.P.
By: /s/ Xxxxxx Xxxx
------------------------------
Its General Partner
By: /s/ Xxxxxx Xxxx
------------------------------
Name:
Title:
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FCT-D DELCO 1 TRUST, a Delaware business trust
By: FCT Administration, Inc., Administrative
Trustee
By: /s/ Xxxxx X. Fine
------------------------------
Xxxxx X. Fine
President
FCT-D DELCO 2 TRUST, a Delaware business
trust
By: FCT Administration, Inc., Administrative
Trustee
By: /s/ Xxxxx X. Fine
------------------------------
Xxxxx X. Fine
President
FCT-D DELCO 3 TRUST, a Delaware business
trust
By: FCT Administration, Inc., Administrative
Trustee
By: /s/ Xxxxx X. Fine
------------------------------
Xxxxx X. Fine
President
FCT-S DELCO 1 TRUST, a Delaware business trust
By: FCT Administration, Inc., Administrative
Trustee
By: /s/ Xxxxx X. Fine
------------------------------
Xxxxx X. Fine
President
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FCT-S DELCO 2 TRUST, a Delaware business trust
By: FCT Administration, Inc., Administrative
Trustee
By: /s/ Xxxxx X. Fine
------------------------------
Xxxxx X. Fine
President
FCT-S DELCO 3 TRUST, a Delaware business trust
By: FCT Administration, Inc., Administrative
Trustee
By: /s/ Xxxxx X. Fine
------------------------------
Xxxxx X. Fine
President
FCT-C DELCO 1 TRUST, a Delaware business
trust
By: FCT Administration, Inc., Administrative
Trustee
By: /s/ Xxxxx X. Fine
------------------------------
Xxxxx X. Fine
President
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EXHIBIT A
---------
I II
Number of Shares of Number of Paired Shares
Name and Address Company Stock Owned Subject to Call Options/
of Shareholder of Record by Shareholder* Put Options under Section 3.1
-------------- ----------------------------------------------------------
Xxxxxx Xxxx, Trustee 2,761,278 1,080,394
U/A dated 11/11/94
FBO Xxxxxx Xxxx
Xxxxxx Xxxx, Trustee under 1,428,752 559,022
The Xxxxxx Xxxx 1997
Charitable Remainder Unitrust
Xxxxx X. Fine, Trustee 1,315,482 514,703
for the Xxxxxx Xxxx Grantor
Annuity Trust U/A dated 3/31/96
FFC Limited Partnership 3,000,000 1,173,798
FCT-C Delco 1 Trust 1,106,138 432,794
FCT-C Delco 2 Trust 284,310 111,241
FCT-C Delco 3 Trust 34,058 13,326
FCT-D Delco 1 Trust 1,106,138 432,794
FCT-D Delco 2 Trust 284,310 111,241
FCT-D Delco 3 Trust 34,058 13,326
FCT-S Delco 1 Trust 1,106,138 432,794
FCT-S Delco 2 Trust 284,310 111,241
FCT-S Delco 3 Trust 34,058 13,326
--------- --------
TOTAL: 12,779,030 5,000,000
----------
* No shares of Company Stock are held beneficially, but not of record, by
any Shareholder.
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EXHIBIT B
---------
[Form of Voting Agreement]
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