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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
dated as of June 3, 1998
PMC COMMERCIAL TRUST
and
SUPERTEL HOSPITALITY, INC.
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TABLE OF CONTENTS
ARTICLE 1 THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 The Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Effective Time. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2 CHARTER AND BYLAWS OF THE SURVIVING ENTITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Charter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Bylaws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 3 DIRECTORS AND OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.1 Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.2 Officers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 4 STH STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.1 Conversion of the STH Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4.2 Exchange of Certificates Representing STH Common Stock. . . . . . . . . . . . . . . . . . . . . . . . 4
4.3 Appraisal Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF STH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.1 Existence; Good Standing; Authority; Compliance with Law. . . . . . . . . . . . . . . . . . . . . . . 7
5.2 Authorization, Validity and Effect of Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.3 Capital Structure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.4 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.5 Other Interests. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.6 No Violation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.7 SEC Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.8 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.9 Absence of Certain Changes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.10 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.11 Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.12 Employee Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.13 Labor Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.14 No Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.15 Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.16 PMCT Share Ownership. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.17 Related Party Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.18 Contracts and Commitments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.19 Development Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.20 Certain Payments Resulting From Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.21 Convertible Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.22 Compliance with Applicable Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.23 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
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5.24 Subsidiaries of STH. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.25 Acquisitions by STH and its Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 6 ADDITIONAL REPRESENTATIONS AND WARRANTIES AND COVENANTS RELATING TO HOTELS AND REAL PROPERTY . . . . 16
6.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.2 STH Deliverables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.3 STH Property Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE 7 REPRESENTATIONS AND WARRANTIES OF PMCT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.1 Existence; Good Standing; Authority; Compliance with Law . . . . . . . . . . . . . . . . . . . . . . 22
7.2 Authorization, Validity and Effect of Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.3 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.4 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.5 Other Interests. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.6 No Violation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.7 SEC Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.8 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.9 Absence of Certain Changes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.10 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7.11 Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.12 Employee Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.13 Labor Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.14 No Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.15 Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.16 STH Share Ownership. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.17 PMCT Common Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.18 Convertible Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.19 Related Party Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.20 Contracts and Commitments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE 8 COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.1 Acquisition Proposals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.2 Earnings and Profits Dividend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.3 Conduct of Businesses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.4 Damage to Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.5 Meetings of Shareholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.6 Filings; Other Action. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.7 Inspection of Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.8 Publicity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.9 Registration Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.10 Listing Application. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.11 Further Action. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.12 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.13 Governance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
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8.14 Reorganization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.15 Third Party Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.16 Efforts to Fulfill Conditions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.17 Representations, Warranties and Conditions Prior to Closing. . . . . . . . . . . . . . . . . . . . . 38
8.18 Cooperation of the Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.19 Tax Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.20 Directors and Officers Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.21 PMCT Earnings and Profits Dividend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE 9 CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.1 Conditions to Each Party's Obligations to Effect the Merger. . . . . . . . . . . . . . . . . . . . . 39
9.2 Conditions to Obligations of STH to Effect the Merger. . . . . . . . . . . . . . . . . . . . . . . . 40
9.3 Conditions to Obligation of PMCT to Effect the Merger. . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE 10 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.1 Termination by Mutual Consent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.2 Termination by Either PMCT or STH. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.3 Termination by STH. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.4 Termination by PMCT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.5 Effect of Termination and Abandonment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.6 Extension; Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE 11 GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
11.1 Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
11.2 Nonsurvival of Representations, Warranties and Agreements. . . . . . . . . . . . . . . . . . . . . . 45
11.3 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
11.4 Assignment; Binding Effect; Benefit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
11.5 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
11.6 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
11.7 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
11.8 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
11.9 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
11.10 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
11.11 Interpretation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
11.12 Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
11.13 Incorporation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
11.14 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
11.15 Enforcement of Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
11.16 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
11.17 Non-Recourse. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
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SCHEDULES
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Schedule 5.3 - Capitalization
Schedule 5.4 - Subsidiaries
Schedule 5.7 - SEC Documents
Schedule 5.8 - Litigation
Schedule 5.9 - Absence of Certain Changes
Schedule 5.10 - Taxes
Schedule 5.12 - Employee Benefit Plans
Schedule 5.13 - Labor Matters
Schedule 5.16 - PMCT Share Ownership
Schedule 5.18 - Contracts and Commitments
Schedule 5.19 - Development Rights
Schedule 5.20 - Certain Payments Resulting From Transactions
Schedule 5.21 - Convertible Securities
Schedule 5.22 - Compliance with Applicable Regulations
Schedule 5.23 - Insurance
Schedule 6.1(a) - Title
Schedule 6.1(d) - Operating Agreements
Schedule 6.1(g) - Violations of Applicable Law
Schedule 6.1(i) - Administrative Actions
Schedule 6.1(j) - Zoning
Schedule 6.1(r) - Compliance with Architectural Barriers Legislation
Schedule 6.1(s) - Environmental
Schedule 7.3 - Capitalization
Schedule 7.4 - Subsidiaries
Schedule 7.7 - SEC Documents
Schedule 7.8 - Litigation
Schedule 7.10 - Taxes
Schedule 7.12 - Employee Benefit Plans
Schedule 7.16 - STH Share Ownership
Schedule 7.19 - Related Party Transactions
Schedule 7.20 - Contracts and Commitments
Exhibit 9.3(d) - Affiliates
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of June
3, 1998, is entered into by and between PMC Commercial Trust, a Texas real
estate investment trust ("PMCT") and Supertel Hospitality, Inc., a Delaware
corporation ("STH").
RECITALS
A. The Board of Trust Managers of PMCT and the Board of Directors
of STH each have determined that a business combination between PMCT and STH is
in the best interests of their respective shareholders and presents an
opportunity for their respective companies to achieve long-term strategic and
financial benefits, and accordingly have agreed to effect a merger subject to
the terms and conditions set forth herein.
B. For federal income tax purposes, it is intended that the
merger provided for herein shall qualify as a reorganization within the meaning
of Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code"), and for financial accounting purposes shall be accounted for as a
"purchase."
C. PMCT and STH desire to make certain representations,
warranties and agreements in connection with the merger.
NOW, THEREFORE, in consideration of the foregoing premises, the
representations, warranties, covenants and agreements contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, PMCT and STH hereby agree as follows:
ARTICLE 1
THE MERGER
1.1 The Merger. Subject to the terms and conditions of this
Agreement, and in accordance with the Delaware General Corporation Law (the
"DGCL") and the Texas Real Estate Investment Trust Act (the "REIT Act"), at the
Effective Time (as defined in Section 1.3), STH shall be merged with and into
PMCT (the "Merger"). Following the Merger, the separate existence of STH shall
cease and PMCT shall be the surviving entity in the Merger (the "Surviving
Entity"). The Merger shall have the effects specified in Section 254 of the
DGCL and Section 23.10 of the REIT Act.
1.2 The Closing. Subject to the terms and conditions of this
Agreement, the closing of the Merger (the "Closing") shall take place at the
offices of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ P.C., located at 1201 Elm, ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, at 9:00 a.m., local time, on the second
business day after satisfaction or waiver of the conditions set forth in
Article 9, or at such other time, date or place as PMCT and STH may agree. The
date on which the Closing occurs is hereinafter referred to as the "Closing
Date."
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1.3 Effective Time. If all the conditions to the Merger set forth
in Article 9 shall have been fulfilled or waived (and this Agreement shall not
have been terminated as provided in Article 10), PMCT and STH shall cause a
certificate of merger satisfying the requirements of the DGCL and articles of
merger satisfying the requirements of the REIT Act to be properly executed,
verified and delivered for filing in accordance with the DGCL and the REIT Act
and shall make all other filings or recordings required under the DGCL and the
REIT Act. The Merger shall become effective upon the later of (i) the filing
of the articles of merger with the County Clerk of Dallas County, Texas and
(ii) the filing of the certificate of merger with the Secretary of State of the
State of Delaware in accordance with the DGCL, or at such later time which PMCT
and STH shall have agreed upon and designated in such filings in accordance
with applicable law.
ARTICLE 2
CHARTER AND BYLAWS OF THE SURVIVING ENTITY
2.1 Charter. The Declaration of Trust of PMCT in effect
immediately prior to the Effective Time shall be the charter of the Surviving
Entity, until duly amended in accordance with applicable law.
2.2 Bylaws. The Bylaws of PMCT in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Entity, until duly amended
in accordance with applicable law.
ARTICLE 3
DIRECTORS AND OFFICERS
3.1 Directors. The Board of Trust Managers of PMCT immediately
prior to the Effective Time shall be the Board of Trust Managers of the
Surviving Entity as of the Effective Time and immediately following the
Effective Time ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ shall be elected as a trust manager of the
Surviving Entity.
3.2 Officers. The officers of PMCT immediately prior to the
Effective Time shall be the officers of the Surviving Entity as of the
Effective Time.
ARTICLE 4
STH STOCK
4.1 Conversion of the STH Stock.
(a) At the Effective Time, by virtue of the Merger and without any
action on the part of the holder thereof, each share of the common stock, par
value $0.01 per share (the "STH Common Stock"), of STH issued and outstanding
immediately prior to the Effective Time shall, except as provided in Section
4.3 with respect to shares of STH Common Stock as to which appraisal rights, if
available, shall have been exercised, cease to be outstanding and be converted
into the right to
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receive six-tenths (0.6) of a common share of beneficial interest, par value
$0.01 per share (the "PMCT Common Shares"), of PMCT (the "Exchange Ratio"). If
the Average PMCT Trading Price (as defined below) is (i) greater than $24.00,
PMCT shall have the right to terminate this Agreement, in the manner provided
in Section 4.1(b), unless STH shall elect, in the manner provided in Section
4.1(b), to decrease the Exchange Ratio to a fraction equal to (A) $14.40
divided by (B) the Average PMCT Trading Price, calculated to the nearest
one-one thousandth of a share, or (ii) less than $17.50, STH shall have the
right to terminate this Agreement, in the manner provided in Section 4.1(b)
unless PMCT shall elect, in the manner provided in Section 4.1(b), to increase
the Exchange Ratio to a fraction equal to (A) $10.50 divided by (B) the Average
PMCT Trading Price.
"Average PMCT Trading Price" shall mean the average of the closing
sale prices per PMCT Common Share on the American Stock Exchange for the ten
trading days ending on the fifth trading day immediately preceding the
scheduled date of the first of the meetings contemplated by Section 8.5 (the
"Determination Date").
(b) In the event that either PMCT or STH shall elect to terminate
this Agreement in the circumstances contemplated by Section 4.1(a), then the
party initiating the termination (the "Terminating Party") shall give notice of
termination (the "Termination Notice") to the other party hereto (the
"Receiving Party") prior to 6:00 p.m. (Dallas time) on the first trading day
following the Determination Date. Such termination shall become effective
automatically, without the action of either party, at 6:00 p.m. (Dallas time)
on the trading day immediately preceding the date of the first of the meetings
contemplated by Section 8.5, unless prior to 6:00 p.m. (Dallas time) on the
second trading day following the Determination Date, the Receiving Party shall
deliver notice to the Terminating Party to the effect that it has elected to
increase or decrease the Exchange Ratio, as the case may be, in the manner
contemplated by Sections 4(a)(i) and 4(a)(ii).
(c) As a result of the Merger and without any action on the part
of the holder thereof, at the Effective Time, except as provided in Section 4.3
with respect to shares of STH Common Stock as to which appraisal rights, if
available, shall have been exercised, each holder of a certificate (a
"Certificate") representing any shares of STH Common Stock shall thereafter
cease to have any rights with respect to such shares of STH Common Stock,
except the right to receive, without interest, the PMCT Common Shares and cash
for fractional shares of PMCT Common Shares in accordance with Sections 4.1(a)
and 4.2(d) upon the surrender of such Certificate.
(d) Each share of STH Common Stock issued and held in STH's
treasury at the Effective Time, if any, shall, by virtue of the Merger, cease
to be outstanding and shall be canceled and retired without payment of any
consideration therefor.
(e) (i) As soon as practicable following the date of this
Agreement, the Board of Directors of STH (or, if appropriate, any
committee administering STH's 1994 Stock Option Plan and 1997 Stock
Plan (together, the "STH Stock Option Plans")) shall adopt such
resolutions or take such other actions as may be required to effect
the following with respect to all options to purchase shares of STH
Common Stock granted under the STH Stock Option Plans or otherwise
("Options") not exercised prior to the Closing Date:
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(A) adjust the terms of all such Options to
purchase shares of STH Common Stock to provide that, at the
Effective Time, each Option outstanding and not otherwise
exercised immediately prior to the Effective Time shall expire
and the holder of such Option shall only be entitled to
receive, with respect to such Option, a number of PMCT Common
Shares equal to the quotient of (1) the product of (x) the
difference between the product of the Exchange Ratio
multiplied by the Average PMCT Trading Price minus the
exercise price per share of STH Common Stock issuable upon the
exercise of such Option multiplied by (y) the number of shares
of STH Common Stock for which such Option was exercisable
divided by (2) the Average PMCT Trading Price, calculated to
the nearest one-one thousandth of a share, subject to the
provisions of Section 4.1(c) hereof; and
(B) make such other changes to the STH Stock
Option Plans as it deems appropriate to give effect to the
Merger (subject to the approval of PMCT, which approval shall
not be unreasonably withheld).
(ii) The provisions in the STH Stock Option Plans
providing for the issuance, transfer or grant of any capital stock of
STH or any interest in respect of any capital stock of the STH shall
be deleted as of the Effective Time, and STH shall use its best
efforts to ensure that following the Effective Time no holder of an
Option or any participant in any STH Stock Option Plan shall have any
right thereunder to acquire any capital stock of STH, PMCT or the
Surviving Corporation, except as provided in Section 4.1(e)(i).
(iii) From and after the date of this Agreement, no
additional options shall be granted by STH or the STH Subsidiaries (as
hereinafter defined) under the STH Stock Option Plans or otherwise,
except as may be required by the terms of the STH Stock Option Plans
with respect to non-employee directors of STH.
4.2 Exchange of Certificates Representing STH Common Stock.
(a) As of the Effective Time, PMCT shall deposit, or shall cause
to be deposited, with an exchange agent selected by PMCT, which shall be PMCT's
Transfer Agent or such other party reasonably satisfactory to STH (the
"Exchange Agent"), for the benefit of the holders of shares of STH Common
Stock, for exchange in accordance with this Article 4, certificates
representing the shares of PMCT Common Shares and the cash in lieu of
fractional shares (such cash and certificates for shares of PMCT Common Shares
together with any dividends or distributions with respect thereto, being
hereinafter referred to as the "Exchange Fund") to be issued pursuant to
Section 4.1 and paid pursuant to this Section 4.2 in exchange for outstanding
shares of STH Common Stock.
(b) Promptly after the Effective Time, PMCT shall cause the
Exchange Agent to mail to each holder of record of a Certificate or
Certificates (i) a letter of transmittal which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Exchange Agent and shall be in
such form and have such other provisions as PMCT may reasonably specify and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for certificates representing shares of PMCT Common Shares and
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cash in lieu of fractional shares. Upon surrender of a Certificate for
cancellation to the Exchange Agent, together with such letter of transmittal,
duly executed and completed in accordance with the instructions thereto, and
such other documents as may be reasonably required by the Exchange Agent, the
holder of such Certificate shall be entitled to receive in exchange therefor
(A) a certificate representing the number of whole shares of PMCT Common Shares
and (B) a check representing the amount of cash in lieu of fractional shares,
if any, and unpaid dividends and distributions, if any, which such holder has
the right to receive in respect of the Certificate surrendered pursuant to the
provisions of this Article 4, after giving effect to any required withholding
tax, and the Certificate so surrendered shall forthwith be canceled.
No interest will be paid or accrued on the cash in lieu of fractional
shares and unpaid dividends and distributions, if any, payable to holders of
Certificates. In the event of a transfer of ownership of STH Common Stock
which is not registered in the transfer records of STH, a certificate
representing the proper number of shares of PMCT Common Shares, together with a
check for the cash to be paid in lieu of fractional shares, may be issued to
such a transferee if the Certificate representing shares of such STH Common
Stock is presented to the Exchange Agent, accompanied by all documents required
to evidence and effect such transfer and to evidence that any applicable stock
transfer taxes have been paid.
(c) Notwithstanding any other provisions of this Agreement, no
dividends or other distributions on PMCT Common Shares shall be paid with
respect to any shares of STH Common Stock represented by a Certificate until
such Certificate is surrendered for exchange as provided herein. Subject to
the effect of applicable laws, following surrender of any such Certificate,
there shall be paid to the holder of the certificates representing whole shares
of PMCT Common Shares issued in exchange therefor, without interest, (i) at the
time of such surrender, the amount of dividends or other distributions with a
record date after the Effective Time theretofore payable with respect to such
whole shares of PMCT Common Shares and not paid, less the amount of any
withholding taxes which may be required thereon, and (ii) at the appropriate
payment date, the amount of dividends or other distributions with a record date
after the Effective Time but prior to surrender and a payment date subsequent
to surrender payable with respect to such whole shares of PMCT Common Shares,
less the amount of any withholding taxes which may be required thereon.
(d) At and after the Effective Time, there shall be no transfers
on the stock transfer books of STH of the shares of STH Common Stock which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to PMCT, they shall be delivered to the
Exchange Agent, canceled and exchanged for certificates for shares of PMCT
Common Shares and cash in lieu of fractional shares, if any, and unpaid
dividends and distributions deliverable in respect thereof pursuant to this
Agreement in accordance with the procedures set forth in this Article 4.
(e) No fractional shares of PMCT Common Shares shall be issued
pursuant hereto. Notwithstanding any other provision of this Agreement, each
holder of shares of STH Common Stock exchanged pursuant to the Merger who would
otherwise have been entitled to receive a fraction of a PMCT Common Share
(after taking into account all Certificates delivered by such
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holder) shall receive, from the Exchange Agent in accordance with the
provisions of this Section 4.1(e), a cash payment in lieu of such fractional
PMCT Common Shares.
(f) Any portion of the Exchange Fund (including the proceeds of
any investments thereof and PMCT Common Shares) that remains unclaimed by the
former stockholders of STH one year after the Effective Time shall be delivered
to PMCT. Any former stockholders of STH who have not theretofore complied with
this Article 4 shall thereafter look only to PMCT for delivery of their PMCT
Common Shares, and payment of cash in lieu of fractional shares and unpaid
dividends and distributions on the PMCT Common Shares deliverable in respect of
each share of STH Common Stock such stockholder holds as determined pursuant to
this Agreement, in each case, without any interest thereon.
(g) None of PMCT, STH, the Exchange Agent or any other person
shall be liable to any former holder of shares of STH Common Stock for any
amount properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
(h) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by PMCT or
the Exchange Agent, the posting by such person of a bond in such reasonable
amount as PMCT may direct as indemnity against any claim that may be made
against it with respect to such Certificate, the Exchange Agent or PMCT will
issue in exchange for such lost, stolen or destroyed Certificate the PMCT
Common Shares and cash in lieu of fractional shares, and unpaid dividends and
distributions on PMCT Common Shares as provided in Section 4.2(c), deliverable
in respect thereof pursuant to this Agreement.
4.3 Appraisal Rights. Notwithstanding the terms of Section
4.1(a), to the extent appraisal rights are available under Section 262 of the
DGCL, shares of STH Common Stock outstanding immediately prior to the Effective
Time and held by a holder who has properly exercised appraisal rights for such
shares in accordance with the DGCL and who, as of the Effective Time has not
effectively withdrawn or lost such appraisal rights (the "Dissenting Shares"),
shall not be converted into the right to receive PMCT Common Shares as provided
in Section 4.1(a), but shall be converted into the right to receive such
consideration as may be determined to be due with respect to such Dissenting
Shares pursuant to the DGCL. If after the Effective Time such holder fails to
perfect or withdraws or loses his or her appraisal rights, such shares of STH
Common Stock shall be treated as if they had been converted as of the Effective
Time into the right to receive PMCT Common Shares as provided in Section
4.1(a). STH shall give PMCT prompt written notice of any demands received by
STH for appraisals of shares of STH Common Stock. STH shall not, except with
the prior written consent of PMCT, make any payment with respect to, or settle
or offer to settle, any such demands.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF STH
STH represents and warrants to PMCT as set forth below and subject to those
matters set forth in the Disclosure Schedule.
5.1 Existence; Good Standing; Authority; Compliance with Law. STH
is a corporation duly incorporated, validly existing and in good standing under
the laws of the State of Delaware. STH is duly licensed or qualified to do
business as a foreign corporation and is in good standing under the laws of any
other state of the United States in which the character of the properties owned
or leased by it therein or in which the transaction of its business makes such
qualification necessary, except where the failure to be so qualified would not
have a material adverse effect on the business, results of operations or
financial condition of STH and the STH Subsidiaries taken as a whole (an "STH
Material Adverse Effect"). STH has all requisite corporate power and authority
to own, operate, lease and encumber its properties and carry on its business as
now conducted. Each STH Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, has the corporate power and authority to own its properties and
to carry on its business as it is now being conducted, and is duly qualified to
do business and is in good standing in each jurisdiction in which the ownership
of its property or the conduct of its business requires such qualification,
except for jurisdictions in which such failure to be so qualified or to be in
good standing would not have an STH Material Adverse Effect.
Neither STH nor any of the STH Subsidiaries is in violation of any
order of any court, governmental authority or arbitration board or tribunal, or
any law, ordinance, governmental rule or regulation to which STH or any STH
Subsidiary or any of their respective properties or assets are subject, where
such violation would have an STH Material Adverse Effect. STH and the STH
Subsidiaries have obtained all licenses, permits, contract rights, including,
without limitation, any necessary franchise arrangements, and other
authorizations and have taken all actions required by Applicable Law,
governmental regulations or otherwise in connection with their business as now
conducted, where the failure to obtain any such item or to take any such action
would have an STH Material Adverse Effect. Complete and correct copies of
STH's and the STH Subsidiaries' charters and bylaws, which reflect all
amendments made thereto, have been delivered or made available to PMCT and its
counsel. The minute books and other records of STH and the STH Subsidiaries
contain in all material respects accurate records of all meetings and
accurately reflect in all material respects all other corporate action of the
stockholders and directors and any committees of the boards of directors of STH
and the STH Subsidiaries. Neither STH nor the STH Subsidiaries are in default
under or in violation of any provision of their respective charters or bylaws.
For the purposes of this Agreement, the term "STH Subsidiary" shall include the
entities set forth on Schedule 5.4 hereto, which are all of STH's subsidiaries.
5.2 Authorization, Validity and Effect of Agreements. STH has the
requisite corporate power and authority to enter into the transactions
contemplated hereby and to execute and deliver this Agreement and all other
documents, agreements and instruments related to the transactions
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contemplated by this Agreement, including, without limitation, the Agreement of
Sale (the "Agreement of Sale") to be dated as of June 3, 1998 by and between
STH and Supertel Hospitality Management Co. ("Supertel Management") and the
Supertel Omnibus Assignment and Assumption Agreement (the "Super 8 Assignment
Agreement") by and among STH, PMCT, Supertel Management and Super 8 Motels,
Inc., in the forms previously provided (collectively, the "STH Ancillary
Agreements"). Subject only to the approval of this Agreement and the
transactions contemplated hereby by the holders of a majority of the
outstanding shares of STH Common Stock, the consummation by STH of this
Agreement, the STH Ancillary Agreements and the transactions contemplated
hereby and thereby have been duly authorized by all requisite corporate action
on the part of STH and no other corporate action on the part of STH is
necessary to authorize this Agreement, the STH Ancillary Agreements or the
transactions contemplated hereby or thereby. This Agreement has been duly
executed and delivered by STH and constitutes, and the STH Ancillary Agreements
to which STH is a party (when executed and delivered by STH pursuant thereto)
will constitute, the valid and legally binding obligations of STH, enforceable
against STH in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and general principles of equity.
5.3 Capital Structure. The authorized capital stock of STH
consists of ten million (10,000,000) shares of STH Common Stock and one million
(1,000,000) shares of Class A Preferred Stock, $1.00 par value per share (the
"STH Preferred Stock"). As of March 31, 1998, (a) there were 4,840,000 shares
of STH Common Stock issued and outstanding, and no shares of STH Preferred
Stock are issued and outstanding, (b) no shares of STH Common Stock or STH
Preferred Stock were held by STH in its treasury, and (c) 139,200 shares of STH
Common Stock were issuable upon the exercise of outstanding options (the "STH
Options") under the STH Stock Option Plan. STH has no outstanding bonds,
debentures, notes or other obligations the holders of which have the right to
vote (or which are convertible into or exercisable for securities having the
right to vote) with the stockholders of STH on any matter. All such issued and
outstanding shares of STH Common Stock are duly authorized, validly issued,
fully paid, nonassessable and free of preemptive rights. Except (i) for the
STH Options and (ii) as provided on Schedule 5.3 hereto, there are not at the
date of this Agreement any existing options, warrants, calls, subscriptions,
convertible securities, or other rights, agreements or commitments which
obligate STH or any of the STH Subsidiaries to issue, transfer or sell any
shares of capital stock of STH or any of the STH Subsidiaries. There are no
bonds, debentures, notes or other indebtedness of STH having the right to vote
(or convertible into, or exchangeable for, securities having the right to vote)
on any matters on which stockholders of STH may vote. There are no outstanding
contractual obligations of STH or any of the STH Subsidiaries to repurchase,
redeem or otherwise acquire any shares of capital stock of STH or any capital
stock, voting securities or other securities or other ownership interests in
any of the STH Subsidiaries or make any material investment (in the form of a
loan, capital contribution or otherwise) in any person (other than one of the
STH Subsidiaries). Except as provided in Section 4.1(d), after the Effective
Time, PMCT will have no obligation to issue, transfer or sell any shares of
capital stock or other equity interest of STH or PMCT pursuant to any STH
Benefit Plan (as defined in Section 5.12).
5.4 Subsidiaries. STH owns directly or indirectly all of the
outstanding shares of capital stock of the STH Subsidiaries listed on Schedule
5.4 hereto. Except as set forth on Schedule 5.4 hereto, each of the
outstanding shares of capital stock in each of the STH Subsidiaries is duly
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authorized, validly issued, fully paid and nonassessable, and is owned,
directly or indirectly, by STH free and clear of all liens, pledges, security
interests, claims or other encumbrances. The following information for each
STH Subsidiary is set forth on Schedule 5.4 hereto: (a) its name and
jurisdiction of incorporation; (b) its authorized capital stock; and (c) the
name of each stockholder and the number of issued and outstanding shares of
capital stock held by it.
5.5 Other Interests. Except for interests in the STH
Subsidiaries, neither STH nor any STH Subsidiary owns directly or indirectly
any interest or investment (whether equity or debt) in any corporation,
partnership, joint venture, business, trust or entity (other than investments
in short-term investment securities).
5.6 No Violation. Neither the execution and delivery by STH of
this Agreement or the STH Ancillary Agreements nor the consummation by STH of
the transactions contemplated hereby or thereby in accordance with the terms
hereof or thereof, will: (a) conflict with or result in a breach of any
provisions of the Certificate of Incorporation or Bylaws of STH or the charter
or bylaws of any of the STH Subsidiaries; (b) result in a breach or violation
of, a default under, or, except as set forth in the STH Stock Option Plans, the
triggering of any payment or other material obligations pursuant to, or
accelerate vesting under, the STH Stock Option Plans, or any grant or award
made under any of the foregoing; (c) except as contemplated by the STH
Ancillary Agreements or as forth in the schedules to this Agreement, violate,
or conflict with, or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination or in a right of
termination or cancellation of, or accelerate the performance required by, or
result in the creation of any lien, security interest, charge or encumbrance
upon any of the properties of STH or the STH Subsidiaries under, or result in
being declared void, voidable or without further binding effect, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, deed of
trust or any license, franchise, permit, lease, contract, agreement or other
instrument, commitment or obligation to which STH or any of the STH
Subsidiaries is a party, or by which STH or any of the STH Subsidiaries or any
of their properties is bound or affected, except for any of the foregoing
matters which, individually or in the aggregate, would not have an STH Material
Adverse Effect; or (d) other than any filings required under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), the Securities Act of
1933, as amended (the "Securities Act"), the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), applicable state
securities and "Blue Sky" laws or the filing of the Certificate of Merger with
the Secretary of State of the State of Delaware (collectively, the "Regulatory
Filings"), require any consent, approval or authorization of, or declaration,
filing or registration with, any domestic 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, individually or in the aggregate, have an STH Material
Adverse Effect.
5.7 SEC Documents. Schedule 5.7 hereto sets forth all reports,
schedules, forms, statements and other documents STH has filed with the U.S.
Securities and Exchange Commission (the "SEC") pursuant to the Securities Act
and the Exchange Act since March 1, 1994 (the "STH Reports") and such STH
Reports constitute all reports, schedules, forms, statements and other
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documents required to be filed by STH under the Securities Act, the Exchange
Act and the rules and regulations promulgated thereunder (the "Securities
Laws") since such date.
As of their respective dates, the STH Reports (a) complied as to form
in all material respects with the applicable requirements of the Securities
Laws and (b) did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements made therein, in the light of the circumstances under which they
were made, not misleading. Each of the consolidated balance sheets of STH
included in or incorporated by reference into the STH Reports (including the
related notes and schedules) (i) complied as to form in all material respects
with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto, (ii) were prepared in all material respects in
accordance with generally accepted accounting principles ("GAAP"), and (iii)
fairly presented in all material respects the consolidated financial position
of STH and the STH Subsidiaries as of its date in conformity with GAAP. Each
of the consolidated statements of income, retained earnings and cash flows of
STH included in or incorporated by reference into the STH Reports (including
any related notes and schedules), (A) complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, (B) were prepared in all material
respects in accordance with GAAP, and (C) fairly presented in all material
respects the results of operations, retained earnings or cash flows, as the
case may be, of STH and the STH Subsidiaries for the periods set forth therein
(subject, in the case of unaudited statements, to normal year-end audit
adjustments which would not be material in amount or effect) in conformity with
GAAP.
Except as and to the extent set forth in the STH Reports and except
for liabilities incurred in connection with this Agreement and the transactions
contemplated hereby, neither STH nor any of the STH Subsidiaries has any
material liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) that would be required to be reflected on, or reserved
against in, a balance sheet of STH or in the notes thereto, prepared in
accordance with generally accepted accounting principles consistently applied,
except liabilities arising in the ordinary course of business since such date
which would not have an STH Material Adverse Effect.
5.8 Litigation. To the knowledge of STH, except as set forth on
Schedule 5.8 hereto, there are (a) no continuing orders, injunctions or decrees
of any court, arbitrator or governmental authority to which STH or any STH
Subsidiary is a party or by which any of its properties or assets are bound or,
to the knowledge of STH, to which any of its directors, officers or affiliates
is a party or by which any of their properties or assets are bound, and (b) no
actions, suits or proceedings pending against STH or any STH Subsidiary or, to
the knowledge of STH, against any of its directors, officers or affiliates or,
to the knowledge of STH, threatened against STH or any STH Subsidiary or
against any of its directors, officers or affiliates, at law or in equity, or
before or by any federal or state commission, board, bureau, agency or
instrumentality.
5.9 Absence of Certain Changes. Except as disclosed in the STH
Reports filed with the SEC prior to the date hereof or on Schedule 5.9 hereto,
since the date of the most recent financial statements included in the STH
Reports (the "Financial Statement Date"), (a) STH and the STH Subsidiaries have
conducted their business in all material respects in the ordinary course of
such
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business (which for purposes of this Section 5.9 only, shall include all
acquisitions of real estate properties and financing arrangements made in
connection therewith and the operation of hotels located thereon or otherwise
set forth on Schedule 5.9 hereto); (b) no event has caused an STH Material
Adverse Effect and there has been no event, occurrence or circumstance that
with the passage of time would reasonably be expected to cause an STH Material
Adverse Effect; (c) as of the date hereof, there has not been any declaration,
setting aside or payment of any dividend or other distribution with respect to
the STH Common Stock or any split, combination or reclassification of STH's
capital stock; and (d) there has not been any material change in STH's
accounting principles, practices or methods. There are no material unsatisfied
judgments, orders (other than orders of general applicability), decrees or
stipulations affecting STH or any STH Subsidiary or to which one of them is a
party.
5.10 Taxes. Except as set forth on Schedule 5.10 hereto, STH and
each of its Subsidiaries (a) have timely filed all federal, state and foreign
tax returns, including, without limitation, information returns and reports
required to be filed by any of them for tax periods ended prior to the date of
this Agreement, or requests for extensions have been timely filed and any such
request has been granted and has not expired and all such returns are accurate
and complete to the knowledge of STH in all material respects, (b) has paid or
accrued in accordance with GAAP all taxes shown to be due and payable on such
returns or which have become due and payable pursuant to any assessment,
deficiency notice, 30-day letter or other notice received by it, and (c) has
properly accrued in accordance with GAAP all material taxes for such periods
and periods subsequent to the periods covered by such returns. Except as set
forth on Schedule 5.10 hereto, neither STH nor any of the STH Subsidiaries has
received written notice that the federal, state and local income and franchise
tax returns of STH or any STH Subsidiary will be examined by any taxing
authority. Except as set forth on Schedule 5.10 hereto, neither STH nor any of
the STH Subsidiaries has executed or filed with the Internal Revenue Service
(the "IRS") or any other taxing authority any agreement now in effect extending
the period for assessment or collection of any income or other taxes.
Except as set forth on Schedule 5.10, neither STH nor any of its
Subsidiaries is a party to any pending action or proceeding by any governmental
authority for assessment or collection of taxes, and no claim for assessment or
collection of taxes has been asserted against it. True, correct and complete
copies of all federal, state and local income or franchise tax returns filed by
STH and each of the STH Subsidiaries have been delivered to PMCT or made
available to representatives of PMCT. Except as set forth on Schedule 5.10
hereto, the tax returns filed by STH and any STH Subsidiary have not been, and
are not being, to the knowledge of STH, examined by the IRS or other relevant
taxing authorities for any period nor are there any pending or, to the
knowledge of STH, threatened examinations or tax claims asserted by any such
authorities. There are no tax liens on any of the property of STH. Except as
otherwise disclosed on Schedule 5.10, STH is not a party to, or bound by, any
tax indemnity, tax sharing or tax allocation agreement. Neither STH nor any of
the STH Subsidiaries holds any asset that is subject to a consent filed
pursuant to Section 341(f) of the Code and regulations thereunder. For
purposes of this Section 5.10, "taxes" includes any interest, penalty or
additional amount payable with respect to any tax.
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5.11 Books and Records. All books and records relating to
operating income and expenses of all of the Hotels furnished or made available
to PMCT by STH or STH's agent were and shall be those maintained by STH in
regard to the Hotels in accordance with GAAP. The books of account and other
financial records of STH and the STH Subsidiaries are accurately reflected in
all material respects in the financial statements included in the STH Reports.
5.12 Employee Benefit Plans. All employee benefits plans and other
benefit arrangements covering employees of STH and the STH Subsidiaries (the
"STH Benefit Plans") are set forth in Schedule 5.12 hereto. True and complete
copies of the STH Benefit Plans have been made available to PMCT. To the
extent applicable, the STH Benefit Plans comply, in all material respects, with
the requirements of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and the Code, and any STH Benefit Plan intended to be
qualified under Section 401(a) of the Code has been determined by the IRS to be
so qualified. No STH Benefit Plan is covered by Title IV of ERISA or Section
412 of the Code. Neither STH nor any STH Benefit Plan has incurred any
liability or penalty under Section 4975 of the Code or Section 502(i) of ERISA.
Each STH Benefit Plan has been maintained and administered in all material
respects in compliance with its terms and with ERISA and the Code to the extent
applicable thereto.
Except as set forth on Schedule 5.12 there are no pending or, to the
knowledge of STH, threatened claims against or otherwise involving any of the
STH Benefit Plans and no suit, action or other litigation (excluding claims for
benefits incurred in the ordinary course of STH Benefit Plan activities) has
been brought against or with respect to any such STH Benefit Plan, except for
any of the foregoing which would not have an STH Material Adverse Effect. All
material contributions required to be made as of the date hereof to the STH
Benefit Plans have been made or provided for. Neither STH nor any of the STH
Subsidiaries has any liabilities or obligations with respect to any such STH
Benefit Plan, whether accrued, contingent or otherwise, nor to the knowledge of
STH are any such liabilities or obligations expected to be incurred, except for
ongoing funding obligations or contributory obligations required by the terms
of any STH Benefit Plan. Neither STH nor any entity under "common control"
with STH within the meaning of ERISA Section 4001 has contributed to, or been
required to contribute to, any "multiemployer plan" (as defined in Sections
3(37) and 4001(a)(3) of ERISA).
Except as set forth on Schedule 5.12, STH does not maintain or
contribute to any plan or arrangement which provides or has any liability to
provide life insurance, medical or other employee welfare benefits to any
employee or former employee upon his retirement or termination of employment
and STH has never represented, promised or contracted (whether in oral or
written form) to any employee or former employee that such benefits would be
provided.
5.13 Labor Matters. Neither STH nor any of the STH Subsidiaries is
a party to, or bound by, any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor union organization,
except as set forth on Schedule 5.13. There is no unfair labor practice or
labor arbitration proceeding pending or, to the knowledge of STH, threatened
against STH or the STH Subsidiaries relating to their business, except for any
such proceeding which would not have an STH Material Adverse Effect. To the
knowledge of STH, there are no organizational efforts with respect to the
formation of a collective bargaining unit presently being made or
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threatened involving employees of STH or any of its Subsidiaries. There have
been no material work stoppages, strikes or other concerted actions by
employees of STH or any of the STH Subsidiaries other than those that would not
have an STH Material Adverse Effect.
5.14 No Brokers. Except the fee to be paid to ABN AMRO
Incorporated by STH as described below, STH has not entered into any contract,
arrangement or understanding with any person or firm which may result in the
obligation of STH or PMCT to pay any finder's fees, brokerage or agent's
commissions or other like payments in connection with the negotiations leading
to this Agreement or the consummation of the transactions contemplated hereby.
STH is not aware of any claim for payment of any finder's fees, brokerage or
agent's commissions or other like payments in connection with the negotiations
leading to this Agreement or the consummation of the transactions contemplated
hereby.
5.15 Opinion of Financial Advisor. STH has retained ABN AMRO
Incorporated to review the transactions contemplated by this Agreement and to
issue an opinion to the effect that, as of the date of such opinion the
consideration is fair to holders of STH Common Stock from a financial point of
view.
5.16 PMCT Share Ownership. Except as expressly described in the
Recitals hereto or as may be set forth in Schedule 5.16, neither STH nor any of
the STH Subsidiaries owns any PMCT Common Shares or other securities
convertible shares of beneficial interest of PMCT.
5.17 Related Party Transactions. Except for employment agreements
with its executive officers and option agreements (including loan transactions
in connection therewith) issued to STH officers, directors and other key
employees pursuant to the STH Stock Option Plans, copies of which have been
delivered to PMCT, and which are true, complete and correct when delivered or
made available, there are no arrangements, agreements or contracts entered into
by STH or any of the STH Subsidiaries with (a) any consultant, (b) any person
who is an officer, director or affiliate of STH or any of the STH Subsidiaries,
any relative of any of the foregoing or any entity of which any of the
foregoing is an affiliate, or (c) any person who acquired STH Common Stock in a
private placement.
5.18 Contracts and Commitments.
(a) Schedule 5.18 hereto (with paragraph references corresponding
to those set forth below) contains a true and complete list of each of the
following contracts (true and complete copies or, if none, reasonably complete
and accurate written descriptions of which, together with all amendments and
supplements thereto, have been delivered or made available to PMCT), to which
STH or any of the STH Subsidiaries is a party or by which any Hotel is bound:
(i) all contracts providing for the management of the
Hotels;
(ii) all franchise agreements (the "Franchise
Agreements");
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(iii) all material contracts providing for a commitment of
employment or consultation services for a specified or unspecified
term;
(iv) all contracts with any person containing any
provision or covenant prohibiting or materially limiting the ability
of STH or any of the STH Subsidiaries to engage in any business
activity or to compete with any person;
(v) all partnership, joint venture, stockholders' or
other similar contracts with any person;
(vi) all notes, debentures, bonds and other evidence of
indebtedness which are secured or collateralized by mortgages, deeds
of trust or other security interests in any Hotel or any personal
property of STH or any of the STH Subsidiaries;
(vii) all contracts relating to any business combination;
(viii) all contracts between or among STH or any of the STH
Subsidiaries, on the one hand, and any of their stockholders or
affiliates, on the other hand;
(ix) all collective bargaining or similar labor contracts;
and
(x) all other contracts that involve the annual payment
or potential annual payment pursuant to the terms of such contract, by
or to STH or any of the STH Subsidiaries of more than $25,000 or
aggregate payments in excess of $300,000 that will not (A) be fully
performed on or prior to the Effective Time, (B) expire by their terms
within 90 days following the Effective Time, or (C) be cancelable by
the Surviving Entity, without penalty, upon not more than 30 days
notice, including, without limitation, all leases, contracts for
purchase and sale of assets, advance booking contracts and banquet
contracts.
(b) Each contract required to be disclosed on Schedule 5.18 is in
full force and effect and constitutes a legal, valid and binding agreement,
enforceable in accordance with its terms and, except as disclosed on Schedule
5.18, neither STH, any of the STH Subsidiaries nor, to the knowledge of STH,
any other party to such contract is in violation, breach or default under any
such contract (or with notice or lapse of time or both would be in violation,
breach or default under any such contract), the effect of which, individually
or in the aggregate, could reasonably be expect to result in an STH Material
Adverse Effect.
(c) The Franchise Agreements disclosed on Schedule 5.18 constitute
all of the franchise or similar agreements necessary to operate and manage the
Hotels and neither STH nor any STH Subsidiary has received any notice or has
any knowledge of an event of default or termination or proposed termination
under any such Franchise Agreement.
5.19 Development Rights. Schedule 5.19 hereto sets forth a list of
all material agreements entered into by STH or any of the STH Subsidiaries
relating to the development, rehabilitation, capital improvement or
construction of hotels or additions thereto or other real estate properties,
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which development or construction has not been substantially completed as of
the date of this Agreement. Such agreements, true and correct copies of all of
which have been delivered to PMCT, have not been modified and are valid and
enforceable in accordance with their respective terms.
5.20 Certain Payments Resulting From Transactions. Except for the
payments described in Section 5.17 and except for option agreements (and loans
made in connection therewith) executed pursuant to the STH Stock Option Plan,
deferred compensation arrangements with certain STH executive officers and
employment agreements with certain STH officers each of which arrangements and
agreements is set forth on Schedule 5.20 hereto, the execution of, and
performance of the transactions contemplated by, this Agreement will not
(either alone or upon the occurrence of any additional or subsequent events)
(a) constitute an event under any STH Benefit Plan, policy, practice, agreement
or other arrangement or any trust or loan (the "Employee Arrangements") that
will or may result in any payment (whether of severance pay or otherwise),
acceleration, forgiveness of indebtedness, vesting, distribution, increase in
benefits or obligation to fund benefits with respect to any employee, director
or consultant of STH or any of the STH Subsidiaries or (b) result in the
triggering or imposition of any restrictions or limitations on the right of STH
or PMCT to amend or terminate any Employee Arrangement and receive the full
amount of any excess assets remaining or resulting from such amendment or
termination, subject to applicable taxes. Except as set forth on Schedule
5.20, no payment or benefit which will be required to be made pursuant to the
terms of any agreement, commitment or STH Benefit Plan, as a result of the
transactions contemplated by this Agreement, to any officer, director or
employee of STH or any of the STH Subsidiaries, will be characterized as an
"parachute payment" within the meaning of Section 280G(b)(2) of the Code.
5.21 Convertible Securities. Except as set forth on Schedule 5.21,
STH has no outstanding options, warrants or other securities exercisable for,
or convertible into, shares of STH Common Stock, the terms of which would
require any anti-dilution adjustments by reason of the consummation of the
transactions contemplated hereby.
5.22 Compliance with Applicable Laws.
(a) Except as disclosed on Schedule 5.22 hereto, all Hotels and
the operation thereof currently are in substantial compliance with the
requirements of all Applicable Laws, except where the failure to so comply
would not, individually or in the aggregate, be reasonably likely to result in
an STH Material Adverse Effect; and to the knowledge of STH, there are no
material commitments or agreements with any of such agencies affecting any
Hotel which have not been fully disclosed to PMCT in writing.
(b) Except as disclosed on Schedule 5.22 hereto, neither STH nor
any of the STH Subsidiaries has received any written notice of uncured
violations at any of the Hotels of zoning, building, fire, health or any other
applicable statute, ordinance or regulation, relating to any of the Hotels, the
construction or any occupancy thereof, except for violations that, individually
or in the aggregate with respect to any Hotel, would not be reasonably likely
to result in an STH Material Adverse Effect, nor are there presently pending
against STH or against any of the Hotels any judgments relating to any of the
above matters, any judicial proceedings or administrative actions
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or any state of facts which, to the knowledge of STH, with notice or lapse of
time, could reasonably be expected to give rise to any such proceedings or
actions, in either case that would be reasonably likely to result in an STH
Material Adverse Effect.
(c) Neither STH nor any of the STH Subsidiaries has received any
written notice that any material permits, licenses or consents not already
obtained are required by any governmental agencies in connection with the use
and occupancy of any of the Hotels or any material improvements thereto.
5.23 Insurance. The insurance policies listed and described on
Schedule 5.23 hereto are currently in force. Neither STH nor any of the STH
Subsidiaries has received any notice from any insurer of any of the Hotels or
any part thereof requesting any improvements, alterations, additions,
corrections or other work in, on or about the improvements thereto, whether
related to any of the Hotels or to the operation of any occupant thereof, which
have not been cured or satisfied.
5.24 Subsidiaries of STH. All subsidiaries of STH which were taxed
for federal income tax purposes as "S" corporations at the time of their
acquisition by STH were taxed as "S" corporations from their respective dates
of formation and had no earnings and profits prior to their acquisition by STH.
5.25 Acquisitions by STH and its Subsidiaries. Neither STH nor any
of it subsidiaries has made an acquisition which would constitute a
"reorganization" under Section 368(a) of the Code.
ARTICLE 6
ADDITIONAL REPRESENTATIONS AND WARRANTIES
AND COVENANTS RELATING TO HOTELS AND REAL PROPERTY
6.1 Representations and Warranties. STH represents and warrants
to PMCT as set forth below:
(a) Title to Hotels. Except as set forth on Schedule
6.1(a) hereto, STH has on the Effective Time and STH will have on the
Closing Date good and indefeasible fee simple title to the Hotels,
free and clear of all conditions, exceptions, or reservations.
(b) No Consents Required. No consent, except that of the
franchisor(s) listed on Schedule 6.1(b) hereto, those associated with
the Regulatory Filings, that of the STH shareholders and those
required by Section 8.15, waiver, approval, or authorization of, or
filing, registration, or qualification with, or notice to, any
Governmental Authority or any other entity or person (including,
without limitation, its directors is required to be made, obtained, or
given by STH in connection with the execution, delivery, and
performance of this Agreement, except such consent, waiver, approval,
authorization, filing, registration or qualification which has been
made, obtained or given.
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(c) STH Not a Foreign Person. STH is not a "foreign
person" but is a "United States person" as such terms are defined in
the Foreign Investment in the Real Property Tax Act of 1980 and
Sections 1445 and 7701 of the Code; that is to say, STH is a domestic
corporation or trust which is not a foreign estate or foreign trust
within the meaning of Section 7701(a)(30)(c) of the Code.
(d) Operating Agreements. Except as set forth on
Schedule 6.1(d) hereto, no portion of any Hotel is subject to the
burdens or obligations of any Operating Agreement and all Operating
Agreements are current and not in default other than defaults that
will not, individually or in the aggregate, have an STH Material
Adverse Effect.
(e) Tenant Leases. Except as may be specifically noted
to the contrary on Schedule 6.1(e) hereto:
(i) STH or an STH Subsidiary is the sole owner of
the lessor's interest in all of the Leases and all Leases are
in full force and effect without current material default by
either STH or the respective tenants;
(ii) none of the Leases that are material to STH
has been modified in a material way, except as reflected in
amendments to which PMCT has had access;
(iii) all obligations of the lessor under the
Leases with respect to the performance of work or the
installation of equipment or materials required to have been
performed at or prior to the Effective Time have been fully
observed and performed, except for such failures that,
individually or in the aggregate, will not have an STH
Material Adverse Effect;
(iv) no tenant is or shall become entitled to any
material concession, rebate, allowance, or free rent for any
period subsequent to the Closing, without the prior written
consent of PMCT, except as set forth in the Lease with respect
to such tenant;
(v) no tenant has any purchase option or other
interest (other than its leasehold tenancy for a specified
term) in any of the Land and/or the Improvements; and
(vi) no tenant has given STH or any STH Subsidiary
notice of its intention to vacate its demised premises prior
to the end of the term of its lease.
(f) No Condemnation. There is no pending condemnation or
similar proceeding affecting any of the Land, the Improvements, or the
Personal Property or any portion thereof, and neither STH nor any STH
Subsidiary has received any written notice and each has no knowledge
that any such proceeding is contemplated.
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(g) No Violations of Applicable Law. To the knowledge of
STH, except as set forth on Schedule 6.1(g) hereto, the current
location, ownership, operation, use, and occupancy of all of the Land
and Improvements thereon do not violate any Applicable Law, including,
without limitation, all Environmental Laws and the Architectural
Barriers Legislation. To the knowledge of STH, except as set forth on
Schedule 6.1(g) hereto, there are no violations of any Applicable Law
affecting any portion of any of the Land, the Improvements or the
Personal Property, and no written notice of any such violation has
been issued by any Governmental Authority.
(h) Changes in Applicable Laws. Neither STH nor any STH
Subsidiary has any information or knowledge of any change contemplated
in any of the Applicable Laws or any judicial or administrative
action, or any action by adjacent landowners, or any fact or condition
relating to any of the Hotels which is reasonably likely to materially
adversely affect, prevent or limit the use of any of the Hotels as
hotels of the size and nature currently being operated.
(i) No Administrative Actions. To STH's or any STH
Subsidiary's knowledge, except as set forth on Schedule 6.1(i) hereto,
no Hotel is now, to STH's or any STH Subsidiary's knowledge, the
subject of any administrative investigation, action or judicial
proceeding in regard to sex, age, or racially discriminatory practices
initiated by any Governmental Authority, or any private citizen, and
no such investigation, administrative action, or judicial proceeding
is now pending, nor is any Hotel presently operating under any court
order or administrative agreement in regard to alleged sex, age, or
racially discriminatory practices.
(j) Zoning. To STH's or any STH Subsidiary's knowledge,
except as set forth on Schedule 6.1(j) hereto, there are no pending
or, to STH's knowledge, threatened requests, applications or
proceedings to alter or restrict the zoning or other use restrictions
applicable to any Hotel; neither STH nor any STH Subsidiary has
received any notice from any Governmental Authority of zoning,
building, fire, water, use, health, environmental or other violations
of Applicable Law issued in respect of any Hotel that have not been
heretofore corrected, and no such violations exist; all of the
Improvements and the present uses thereof are permitted, conforming
structures and uses under all applicable zoning and building laws and
ordinances.
(k) Parties in Possession. There are no adverse parties
in possession of any of the Hotels or of any part thereof and no
parties in possession thereof except STH and the tenants under the
Leases, except as otherwise expressly disclosed herein, and no party
has been granted any license, lease, or other right relating to the
use or possession of any of the Hotels except the tenants under the
Leases, or except as otherwise expressly disclosed herein.
(l) No Other Contracts. There are no contracts or other
obligations outstanding for the sale, exchange or transfer of any of
the Hotels or any portion thereof or the business operated thereon.
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(m) Utilities. All utilities required by Applicable Laws
for the operation of all of the Improvements including, but not
limited to, water, sewer, gas and electric, enter each parcel of Land
through adjoining public streets or if they pass through adjoining
private land, do so in accordance with valid public or private
easements which inure to the benefit of STH. All of said utilities
are installed and operating and all installation and connection
charges have been paid in full and no fact, condition, or proceeding
exists which would result in the termination or impairment of the
furnishing of or an increase in rates or services to any of the Hotels
of the foregoing utility services.
(n) Access to Land. There are adequate means of ingress
and egress for vehicular and pedestrian traffic to and from each
parcel of Land and each adjoining street, road or highway. All routes
of ingress and egress to and from each parcel of Land, to the extent
they pass through adjoining land do so in accordance with valid public
or private easements which inure to the benefit of STH. To STH's or
any STH Subsidiary's knowledge no parcel of Land or any Improvements
located thereon violates any restriction, condition or agreement
contained in any easement, reciprocal easement, restrictive covenant,
or similar instrument or agreement affecting such Land or Improvements
or any part thereof.
(o) Maintenance and No Defects. To STH's or any STH
Subsidiary's knowledge, the roofs of the buildings comprising all of
the Improvements are free of material leaks; the foundations and all
mechanical systems including air-conditioning, plumbing, heating,
sewage drainage and electrical have been maintained in all material
respects in accordance with industry practices.
(p) Insurance. Neither STH nor any STH Subsidiary has
received, and has no other knowledge or information of, any written
notice from any insurance company or board of fire underwriters
requesting the performance of any material work or alteration with
respect to any of the Hotels, or requiring an increase in the
insurance rates applicable to any of the Hotels. To the knowledge of
STH, all of the Hotels comply with the requirements of all insurance
carriers providing insurance therefor.
(q) Property Not in Flood Area. No portion of any parcel
of Land is situated in an area designated by the Secretary of the
United States Department of Housing and Urban Development (or by any
other federal, state, municipal, or other governmental
instrumentality) as having special flood or mudslide hazards.
(r) Compliance with Architectural Barriers Legislation.
To STH's knowledge, except as set forth on Schedule 6.1(r) hereto, all
of the Improvements were built and continue to be in full compliance
with all legal requirements relative to architectural barriers or
accommodations of disabled persons, including, without limitation,
applicable Architectural Barriers Legislation.
(s) Environmental. To STH's knowledge, except as set
forth on Schedule 6.1(s) hereto, there are no Environmental Conditions
and there is no Environmental Noncompliance
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with respect to any Hotel. All material Permits have been obtained,
are valid and in good standing. To STH's knowledge, all operations on
or at each Hotel are and have been conducted in material compliance
with all applicable Environmental Laws. Neither STH nor any STH
Subsidiary has received any Notification from any governmental
instrumentality seeking any information or alleging any violation of
any Applicable Law or Environmental Law. Neither STH nor any STH
Subsidiary has caused or permitted any Hotel to be used to generate,
manufacture, refine, transport, treat, recycle, store, handle, dispose
of, transfer, produce, or process any Hazardous Materials or solid
waste, except in small quantities utilized in connection with routine
maintenance or repair of the Hotel, all of which have been and will be
stored, used, handled, and disposed of in full compliance with all
Environmental Laws other than such noncompliance that, individually or
in the aggregate, will not have an STH Material Adverse Effect.
Neither STH nor any STH Subsidiary has caused or permitted, and has no
knowledge of, any Release of any such Hazardous Materials on-site or
off-site of any Hotel other than such releases that, individually or
in the aggregate, will not have an STH Material Adverse Effect.
6.2 STH Deliverables. STH has, prior to the execution of this
Agreement, delivered to PMCT, or provided PMCT access to, true and correct
copies of each of the following:
(a) Leases. Each Lease covering or relating to each
Hotel, together with any amendments thereto or other documents
creating further obligations or agreements in connection therewith.
(b) Operating Statements. Operating statements covering
the Hotel for the fiscal year ended December 31, 1997, which
statements are prepared in the ordinary course of STH's business and
form the basis for STH's financial statements.
(c) Tax Statements. Copies of the most recent ad valorem
and personal property tax statements with respect to each Hotel
received.
(d) Plans and Specifications. A full set of "as-built"
plans, specifications and architectural floor plans for all of the
Improvements to the extent available, and the name and address of the
project architects, if known.
(e) Operating Agreements. A list of all Operating
Agreements together with a copy of each Operating Agreement.
(f) List of Defects. A list of all defects or
malfunctions affecting any part of the Hotels and of which STH or any
STH Subsidiary has knowledge with respect to foundations, walls,
roofs, heating, electrical, plumbing or air conditioning equipment or
systems, and drainage or sewage equipment or systems other than such
defects or malfunctions that, individually or in the aggregate, will
not result in an STH Material Adverse Effect.
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(g) Insurance Policies. Copies of all of STH's or an STH
Subsidiary's fire, hazard, liability and other insurance policies
currently in force with respect to the Hotels.
(h) Commission Agreements. All leasing or other
commission agreements with respect to the Hotels and a list of all
unpaid commissions which identifies the payee, amount and date or
event upon which such commission will become due and payable.
(i) Updated record searches relating to existing
environmental site assessments for each Hotel.
(j) A written architectural review of each Hotel
previously identified and agreed upon by STH and PMCT (each an
"Architectural Review") to determine such Hotel's compliance with
Architectural Barriers Legislation by an architect certified as to
such matters and reasonably acceptable to PMCT. Such Architectural
Review shall contain an estimate of the cost of bringing any
noncomplying Hotel into compliance with all Architectural Barriers
Legislation.
6.3 STH Property Reports. STH shall, as soon as possible but in
no event later than forty-five (45) days from the date hereof (except as
provided below), cause to be furnished to PMCT:
(a) Copies of the current Title Policies held by STH as
to each Hotel;
(b) Title Updates as to each Hotel where there is
existing title insurance and, at STH's option, title reports or
updates to legal opinions where there are legal opinions, in all cases
dated as of a date following the date hereof. At such time as STH
causes the Title Updates or such reports or opinions to be furnished
to PMCT, STH shall further cause to be furnished to PMCT true,
correct, and legible copies of all instruments referred to in each
Title Update, report or opinion as conditions or exceptions to title
to each Hotel, including liens, which have not previously been
provided pursuant to Section 6.3(a), and a certificate stating that a
search has been made of both the state and county records wherein
financing statements and security agreements are filed pursuant to the
Uniform Commercial Code of the state in which the Hotel is located and
that such search indicates all security interests or liens of any kind
or nature, including, but not limited to, any equipment financing or
leasing arrangements, that are claimed by any person against the
Hotel, or any part thereof; and
(c) A copy of the Survey of each parcel of Land and the
Improvements located thereon previously identified and agreed upon by
STH and PMCT, prepared by the Surveyor, dated as of a date following
the issuance of the certificate of occupancy with respect to the
applicable Hotel, to the extent not previously provided to PMCT. Such
Surveys shall include a metes and bounds legal description of each
parcel of Land, shall accurately show the location and dimensions of
all the Improvements located thereon, encroachments, uses (including
the location of all highways, streets, roads, easements, alleys and
rights-of-way upon or adjacent to the Land) and encumbrances which are
visible on the ground or listed on the applicable Title Policy and
Title Update (identifying each by volume and page
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reference, if applicable), shall recite an exact area of the Land,
shall show all building set-back lines, shall contain a certificate
specifically addressed to PMCT and STH which shall substantially state
"(i) this survey is true and correct, was made on the ground as per
the field notes shown hereon, correctly shows the boundary lines and
dimensions and area of the land indicated hereon and each individual
parcel thereof indicated hereon, correctly shows the location of all
buildings, structures and other improvements and visible items on the
subject property, and correctly shows the location and dimensions of
all easements, alleys, streets, roads, rights-of-way, building
set-back lines and other matters of record of which the undersigned
has been advised affecting the subject property according to the legal
description in such easements and other matters (with instrument, book
and page number indicated); (ii) except as shown, there are no
improvements, easements, rights-of-way, party walls, visible uses,
conflicts, or other matters of record of which the undersigned has
been advised affecting the subject property, there are no
encroachments or protrusions onto adjoining premises, streets or
alleys by any buildings, structures or other improvements on the
subject property, there are no encroachments on the subject property
by buildings, structures or other improvements situated on adjoining
premises, and there are no encroachments on any easements located on
the subject property by any buildings, structures or other
improvements situated on the subject property; (iii) the distance from
the nearest intersecting street and road to the subject property is as
shown hereon; and (iv) no part of the subject property is within an
area designated on a Federal Flood Insurance Rate Map or Flood Hazard
Boundary Map as having special flood hazards." The Survey (i) as to
Hotels located in Texas, must conform to the current Texas Surveyors
Association Standards and Specifications for a Category IA, Condition
II Survey and (ii) as to Hotels located in all other states, must be
prepared as an "Urban" class survey according to "Minimum Standard
Detail Requirements for ALTA/ACSM Land Title Surveys" as adopted by
the American Land Title Association and the American Congress on
Surveying and Mapping in 1992. STH shall provide the Surveyor with a
copy of this Section 6.3(c) when the Survey is ordered.
(d) A schedule of all operating inventory at the Hotels
as of a date no more than five business days prior to the Closing
Date.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF PMCT
PMCT represents and warrants to STH as set forth below.
7.1 Existence; Good Standing; Authority; Compliance with Law.
PMCT is a real estate investment trust duly organized, validly existing and in
good standing under the laws of the State of Texas. PMCT is duly licensed or
qualified to do business and is in good standing under the laws of any other
state of the United States in which the character of the properties owned or
leased by it therein or in which the transaction of its business makes such
qualification necessary, except where the failure to be so qualified would not
have a material adverse effect on the business, results of operations or
financial condition of PMCT and its subsidiaries (each a "PMCT Subsidiary")
taken
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as a whole (a "PMCT Material Adverse Effect"). PMCT has all requisite power
and authority to own, operate, lease and encumber its properties and carry on
its business as now conducted. Each PMCT Subsidiary is a corporation, limited
liability company or partnership duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or organization,
has the corporate or partnership power and authority to own its properties and
to carry on its business as it is now being conducted, and is duly qualified to
do business and is in good standing in each jurisdiction in which the ownership
of its property or the conduct of its business requires such qualification,
except for jurisdictions in which such failure to be so qualified or to be in
good standing would not have a PMCT Material Adverse Effect.
Neither PMCT nor any PMCT Subsidiary is in violation of any order of
any court, governmental authority or arbitration board or tribunal, or any law,
ordinance, governmental rule or regulation to which PMCT or any PMCT Subsidiary
or any of their respective properties or assets is subject, where such
violation would have a PMCT Material Adverse Effect. PMCT and the PMCT
Subsidiaries have obtained all licenses, permits and other authorizations and
have taken all actions required by applicable law or governmental regulations
in connection with their business as now conducted, where the failure to obtain
any such item or to take any such action would have a PMCT Material Adverse
Effect. Complete and correct copies of PMCT's Declaration of Trust and the
PMCT Subsidiaries' charters and bylaws, which reflect all amendments made
thereto, have been delivered or made available to STH and its counsel. The
minute books and other records of PMCT and the PMCT Subsidiaries contain in all
material respects accurate records of all meetings and accurately reflect in
all material respects all other corporate action of the stockholders and
directors and any committees of the Board of Trust Managers of PMCT and the
boards of directors of the PMCT Subsidiaries. Neither PMCT nor any PMCT
Subsidiary is in default under or in violation of any provision of their
respective charters or bylaws. For the purposes of the immediately preceding
sentence, the term "PMCT Subsidiary" shall include the entities set forth on
Schedule 7.4 attached hereto, which are all of PMCT's subsidiaries.
7.2 Authorization, Validity and Effect of Agreements. PMCT has
the requisite power and authority to enter into the transactions contemplated
hereby and to execute and deliver this Agreement and all other documents,
agreements and instruments related to the transactions contemplated by this
Agreement to which each of them is a party (the "PMCT Ancillary Agreements").
Subject only to the approval of the issuance of the shares of PMCT Common
Shares pursuant to the Merger contemplated hereby by the holders of two-thirds
of the outstanding shares of PMCT Common Shares, present and voting thereon,
the consummation by PMCT of this Agreement, the PMCT Ancillary Agreements and
the transactions contemplated hereby and thereby have been duly authorized by
all requisite action on the part of PMCT and no other action on the part of
PMCT is necessary to authorize this Agreement, the PMCT Ancillary Agreements or
the transactions contemplated hereby or thereby. This Agreement constitutes,
and the PMCT Ancillary Agreements (when executed and delivered pursuant hereto
for value received) will constitute, the valid and legally binding obligations
of PMCT enforceable against PMCT in accordance with their respective terms,
subject to applicable bankruptcy, insolvency, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and general principles
of equity.
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7.3 Capitalization. The authorized capital stock of PMCT consists
of 100,000,000 shares of beneficial interest, which may consist of PMCT Common
Shares or such other types of classes of securities as PMCT's Board of Trust
Managers may, from time to time, create. As of June 3, 1998, (a) there were
6,509,231 shares of PMCT Common Shares issued and outstanding and (b) no shares
of PMCT Common Shares were held by PMCT in its treasury. PMCT has no
outstanding bonds, debentures, notes or other obligations the holders of which
have the right to vote (or which are convertible into or exercisable for
securities having the right to vote) with the shareholders of PMCT on any
matter. All such issued and outstanding shares of PMCT Common Shares are duly
authorized, validly issued, fully paid, nonassessable and free of preemptive
rights. Except as set forth on Schedule 7.3 hereto, there are not at the date
of this Agreement any existing options, warrants, calls, subscriptions,
convertible securities, or other rights, agreements or commitments which
obligate PMCT or any of the PMCT Subsidiaries to issue, transfer or sell any
shares of stock or other equity interest of PMCT or any of the PMCT
Subsidiaries, other than the issuance, by PMCT of up to 95,021 PMCT Common
Shares upon the exercise of stock options issued to employees and trust
managers. There are no agreements or understandings to which PMCT is a party
with respect to the voting of any shares of PMCT Common Shares or which
restrict the transfer of any such shares, except in order to protect its REIT
status. There are no bonds, debentures, notes or other indebtedness of PMCT
having the right to vote (or convertible into, or exchangeable for, securities
having the right to vote) on any matters on which shareholders of PMCT may
vote. There are no outstanding contractual obligations of PMCT or any of the
PMCT Subsidiaries to repurchase, redeem or otherwise acquire any shares of PMCT
or any capital stock, voting securities or other securities or other ownership
interests in any of the PMCT Subsidiaries or make any material investment (in
the form of a loan, capital contribution or otherwise) in any person (other
than one of the PMCT Subsidiaries).
7.4 Subsidiaries. Except as set forth in Schedule 7.4 hereto,
PMCT owns directly or indirectly all of the outstanding shares of capital stock
or all of the partnership or other equity interests of each of the PMCT
Subsidiaries listed on Schedule 7.4 free and clear of all liens, pledges,
security interests, claims or other encumbrances. Each of the outstanding
shares of capital stock of or other equity interest in each of the PMCT
Subsidiaries is duly authorized, validly issued, fully paid and nonassessable.
The following information for each PMCT Subsidiary is set forth on Schedule
7.4, if applicable: (a) its name and jurisdiction of incorporation or
organization; (b) its authorized capital stock or share capital or partnership
or other interests; (c) the name of each shareholder or owner of an equity
interest and the number of issued and outstanding shares of capital stock or
share capital or percentage ownership for non-corporate entities held by it;
and (d) the name, ownership structure and equity owners of the general
partner(s).
7.5 Other Interests. Except for interests in the PMCT
Subsidiaries, neither PMCT nor any PMCT Subsidiary owns directly or indirectly
any interest or investment (whether equity or debt) in any corporation,
partnership, joint venture, business, trust or entity (other than investments
in short-term investment securities).
7.6 No Violation. Neither the execution and delivery by PMCT of
this Agreement or the PMCT Ancillary Agreements nor the consummation by PMCT of
the transactions contemplated
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hereby or thereby in accordance with the terms hereof or thereof, will: (a)
conflict with or result in a breach of any provisions of the Declaration of
Trust or Bylaws of PMCT; (b) result in a breach or violation of, a default
under, or the triggering of any payment or other material obligations pursuant
to, or accelerate vesting under, any of PMCT's Stock Option Plans, or any grant
or award made under any of the foregoing; (c) violate, or conflict with, or
result in a breach of any provision of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
or result in the termination or in a right of termination or cancellation of,
or accelerate the performance required by, or result in the creation of any
lien, security interest, charge or encumbrance upon any of the properties of
PMCT or the PMCT Subsidiaries under, or result in being declared void, voidable
or without further binding effect, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, deed of trust or any license,
franchise, permit, lease, contract, agreement or other instrument, commitment
or obligation to which PMCT or any of the PMCT Subsidiaries is a party, or by
which PMCT or any of the PMCT Subsidiaries or any of their properties is bound
or affected, except for any of the foregoing matters which, individually or in
the aggregate, would not have a PMCT Material Adverse Effect; or (d) other than
the Regulatory Filings require any consent, approval or authorization of, or
declaration, filing or registration with, any domestic governmental or
regulatory authority, except where the failure to obtain such consent, approval
or authorization of, or declaration, filing or registration with, any
governmental or regulatory authority would not have a PMCT Material Adverse
Effect.
7.7 SEC Documents. Schedule 7.7 hereto sets forth all reports,
schedules, forms, statements and other documents PMCT has filed with the SEC
pursuant to the Securities Act and the Exchange Act since June 25, 1993 (the
"PMCT Reports") and such PMCT Reports constitute all reports, schedules, forms,
statements and other documents required to be filed by PMCT under the
Securities Laws since such date.
As of their respective dates, the PMCT Reports (a) complied as to form
in all material respects with the applicable requirements of the Securities
Laws and (b) did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements made therein, in the light of the circumstances under which they
were made, not misleading. Each of the consolidated balance sheets of PMCT
included in or incorporated by reference into the PMCT Reports (including the
related notes and schedules) (i) complied as to form in all material respects
with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto, (ii) were prepared in all material respects in
accordance with GAAP, and (iii) fairly presented in all material respects the
consolidated financial position of PMCT and the PMCT Subsidiaries as of its
date in conformity with GAAP. Each of the consolidated statements of income,
retained earnings and cash flows of PMCT included in or incorporated by
reference into the PMCT Reports (including any related notes and schedules) (A)
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, (B) were prepared in accordance with GAAP, and (C) fairly presented
the results of operations, retained earnings or cash flows, as the case may be,
of PMCT and the PMCT Subsidiaries for the periods set forth therein (subject,
in the case of unaudited statements, to normal year-end audit adjustments which
would not be material in amount or effect) in conformity with GAAP.
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Except as and to the extent set forth in the PMCT Reports and except
for liabilities incurred in connection with this Agreement and the transactions
contemplated hereby, neither PMCT nor any of the PMCT Subsidiaries has any
material liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) that would be required to be reflected on, or reserved
against in, a balance sheet of PMCT or in the notes thereto, prepared in
accordance with generally accepted accounting principles consistently applied,
except liabilities arising in the ordinary course of business since such date
which would not have a PMCT Material Adverse Effect.
7.8 Litigation. There are (a) no continuing orders, injunctions
or decrees of any court, arbitrator or governmental authority to which PMCT or
any PMCT Subsidiary is a party or by which any of its properties or assets are
bound or, to the knowledge of PMCT, to which any of its directors, officers, or
affiliates is a party or by which any of their properties or assets are bound,
and (b) except as set forth in Schedule 7.8 hereto, no actions, suits or
proceedings pending against PMCT or any PMCT Subsidiary or, to the knowledge of
PMCT, against any of its directors, officers, or affiliates or, to the
knowledge of PMCT, threatened against PMCT or any PMCT Subsidiary or against
any of its directors, officers, or affiliates, at law or in equity, or before
or by any federal or state commission, board, bureau, agency or
instrumentality, that in the case of clause (a) or (b) above are reasonably
likely, individually or in the aggregate, to have a PMCT Material Adverse
Effect.
7.9 Absence of Certain Changes. Except as disclosed in the PMCT
Reports filed with the SEC prior to the date hereof, since the date of the most
recent financial statements included in the PMCT Reports (the "Financial
Statement Date"), (a) PMCT and the PMCT Subsidiaries have conducted their
business in all material respects in the ordinary course of such business
(which, for purposes of this Section 7.9 only, shall include all financing
arrangements made in connection with the acquisition and/or development of real
estate properties); (b) no event has caused a PMCT Material Adverse Effect and
there has been no event, occurrence or circumstance that with the passage of
time would reasonably be expected to cause a PMCT Material Adverse Effect; (c)
except as otherwise permitted pursuant to the terms of this Agreement, as of
the date hereof there has not been any declaration, setting aside or payment of
any dividend or other distribution with respect to the PMCT Common Shares or
any split, combination or reclassification of the PMCT Common Shares; and (d)
there has not been any material change in PMCT's accounting principles,
practices or methods. There are no material unsatisfied judgments, orders
(other than orders of general applicability), decrees or stipulations affecting
PMCT or any PMCT Subsidiary or to which one of them is a party.
7.10 Taxes. Except as set forth on Schedule 7.10 hereto, PMCT and
each of its Subsidiaries (a) have timely filed all federal, state and foreign
tax returns, including, without limitation, information returns and reports
required to be filed by any of them for tax periods ended prior to the date of
this Agreement, or requests for extensions have been timely filed and any such
request has been granted and has not expired and all such returns are absolute
and complete to the knowledge of PMCT in all material respects, (b) has paid or
accrued in accordance with GAAP all taxes shown to be due and payable on such
returns or which have become due and payable pursuant to any assessment,
deficiency notice, 30-day letter or other notice received by it, and (c) has
properly accrued in accordance with GAAP all material taxes for such periods
subsequent to the periods
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covered by such returns. Except as set forth on Schedule 7.10 hereto, neither
PMCT nor any of the PMCT Subsidiaries has received written notice that the
federal, state and local income and franchise tax returns of PMCT or any PMCT
Subsidiary will be examined by any taxing authority. Except as set forth on
Schedule 7.10 hereto, neither PMCT nor any of the PMCT Subsidiaries has
executed or filed with the IRS or any other taxing authority any agreement now
in effect extending the period for assessment or collection of any income or
other taxes.
Except as set forth on Schedule 7.10 hereto, neither PMCT nor any of
the PMCT Subsidiaries is a party to any pending action or proceeding by any
governmental authority for assessment or collection of taxes, and no claim for
assessment or collection of taxes has been asserted against it. True, correct
and complete copies of all federal, state and local income or franchise tax
returns filed by PMCT and each of the PMCT Subsidiaries have been delivered to
STH or made available to representatives of STH. Except as set forth on
Schedule 7.10 hereto, the tax returns filed by PMCT and any PMCT Subsidiary
have not been, and are not being, to the knowledge of PMCT, examined by the IRS
or other relevant taxing authorities for any period nor are there any pending
or, to the knowledge of PMCT, threatened examinations or tax claims asserted by
any such authorities. There are no tax liens on any of the property of PMCT.
Except as otherwise disclosed on Schedule 7.10, PMCT is not a party to, or
bound by, any tax indemnity, tax sharing or tax allocation agreement. PMCT (i)
has qualified to be taxed as a REIT pursuant to Sections 856 through 859 of the
Code for its taxable years ended December 31, 1994 through 1997, inclusive (ii)
has operated, and intends to continue to operate, in such a manner as to
qualify to be taxed as a REIT pursuant to Sections 856 through 859 of the Code
for its taxable year ended on the effective date of the Merger, and (iii) has
not taken or omitted to take and will not take or omit to take any action which
could result in, and each of the executive officers of PMCT, each acting in his
or her respective capacity as such, has no actual knowledge of, a challenge to
its status as a REIT. Following consummation of the Merger in accordance with
the provisions of this Agreement, PMCT will continue to meet the requirements
for qualification and taxation as a REIT under the Code. PMCT represents that
each of its Subsidiaries which is a corporation for federal income tax purposes
and of which all the outstanding capital stock is owned solely by PMCT (or by
PMCT and one or more of the PMCT Subsidiaries or by one or more of the PMCT
Subsidiaries) is a Qualified REIT Subsidiary as defined in Section 856(i) of
the Code. Neither PMCT nor any of the PMCT Subsidiaries holds any asset (i) the
disposition of which could be subject to rules similar to Section 1374 of the
Code as a result of an election under IRS Notice 88-19 or (ii) that is subject
to a consent filed pursuant to Section 341(f) of the Code and regulations
thereunder. For purposes of this Section 7.10, "taxes" includes any interest,
penalty or additional amount payable with respect to any tax.
7.11 Books and Records. The books of account and other financial
records of PMCT and the PMCT Subsidiaries are accurately reflected in all
material respects in the financial statements included in the PMCT Reports.
7.12 Employee Benefit Plans. All employee benefits plans and other
benefit arrangements covering employees of PMCT and the PMCT Subsidiaries (the
"PMCT Benefit Plans") are set forth on Schedule 7.12. True and complete copies
of the PMCT Benefit Plans have been or will be made available to STH. To the
extent applicable, the PMCT Benefit Plans comply, in all material respects,
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with the requirements of ERISA, and the Code, and any PMCT Benefit Plan
intended to be qualified under Section 401(a) of the Code has been determined
by the IRS to be so qualified. No PMCT Benefit Plan is covered by Title IV of
ERISA or Section 412 of the Code. No PMCT Benefit Plan nor PMCT has incurred
any liability or penalty under Section 4975 of the Code or Section 502(i) of
ERISA. Each PMCT Benefit Plan has been maintained and administered in all
material respects in compliance with its terms and with ERISA and the Code to
the extent applicable thereto.
Except as set forth on Schedule 7.12, there are no pending or, to the
knowledge of PMCT, threatened claims against or otherwise involving any of the
PMCT Benefit Plans and no suit, action or other litigation (excluding claims
for benefits incurred in the ordinary course of PMCT Benefit Plan activities)
has been brought against or with respect to any such PMCT Benefit Plan, except
for any of the foregoing which would not have a PMCT Material Adverse Effect.
All material contributions required to be made as of the date hereof to the
PMCT Benefit Plans have been made or provided for. Neither PMCT nor any PMCT
Subsidiary has any liabilities or obligations with respect to any such PMCT
Benefit Plan, whether accrued, contingent or otherwise, nor to the knowledge of
PMCT are any such liabilities or obligations expected to be incurred. Neither
PMCT nor any entity under "common control" with PMCT within the meaning of
ERISA Section 4001 has contributed to, or been required to contribute to, any
"multiemployer plan" (as defined in Sections 3(37) and 4001(a)(3) of ERISA).
Except as set forth on Schedule 7.12, PMCT does not maintain or
contribute to any plan or arrangement which provides or has any liability to
provide life insurance, medical or other employee welfare benefits to any
employee or former employee upon his retirement or termination of employment
and PMCT has never represented, promised or contracted (whether in oral or
written form) to any employee or former employee that such benefits would be
provided.
7.13 Labor Matters. Neither PMCT nor any of the PMCT Subsidiaries
is a party to, or bound by, any collective bargaining agreement, contract or
other agreement or understanding with a labor union or labor union
organization. There is no unfair labor practice or labor arbitration
proceeding pending or, to the knowledge of PMCT, threatened against PMCT or the
PMCT Subsidiaries relating to their business, except for any such proceeding
which would not have a PMCT Material Adverse Effect. To the knowledge of PMCT,
there are no organizational efforts with respect to the formation of a
collective bargaining unit presently being made or threatened involving
employees of PMCT or any of the PMCT Subsidiaries. There have been no material
work stoppages, strikes or other concerted actions by employees of PMCT or any
of the PMCT Subsidiaries other than those that would not have a PMCT Material
Adverse Effect.
7.14 No Brokers. Except the fee to be paid to ▇.▇. ▇▇▇▇▇▇▇▇ & Co.
by PMCT as described below, PMCT has not entered into any contract, arrangement
or understanding with any person or firm which may result in the obligation of
PMCT or STH to pay any finder's fees, brokerage or agent's commissions or other
like payments in connection with the negotiations leading to this Agreement or
the consummation of the transactions contemplated hereby. PMCT is not aware of
any claim for payment of any finder's fees, brokerage or agent's commissions or
other like payments in
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connection with the negotiations leading to this Agreement or the consummation
of the transactions contemplated hereby.
7.15 Opinion of Financial Advisor. PMCT has retained ▇.▇. ▇▇▇▇▇▇▇▇
& Co. to review the transactions contemplated by this Agreement and to issue an
opinion to the effect that, as of the date of such opinion, the Exchange Ratio
is fair, from a financial point of view, to PMCT and the holders of PMCT Common
Shares.
7.16 STH Share Ownership. Except as expressly described in the
Recitals hereto or as may be set forth in Schedule 7.16, neither PMCT nor any
of the PMCT Subsidiaries owns any shares of capital stock of STH or other
securities convertible into capital stock of STH.
7.17 PMCT Common Shares. The issuance and delivery by PMCT of PMCT
Common Shares in connection with the Merger and this Agreement have been duly
and validly authorized by all necessary action on the part of PMCT except for
the approval of its shareholders contemplated by this Agreement. The PMCT
Common Shares to be issued in connection with the Merger and this Agreement,
when issued in accordance with the terms of this Agreement, will be validly
issued, fully paid and nonassessable.
7.18 Convertible Securities. PMCT has no outstanding options,
warrants or other securities exercisable for, or convertible into, shares of
PMCT Common Shares, the terms of which would require any anti-dilution
adjustments by reason of the consummation of the transactions contemplated
hereby.
7.19 Related Party Transactions. Schedule 7.19 hereto sets forth a
list of all arrangements, agreements and contracts entered into by PMCT or any
of the PMCT Subsidiaries with (a) any consultant, or (b) any person who is an
officer, director or affiliate of PMCT or any of the PMCT Subsidiaries, any
relative of any of the foregoing or any entity of which any of the foregoing is
an affiliate. Copies of such documents, all of which have been or will be
delivered or made available to STH prior to May 8, 1998, are or will be true,
complete and correct when delivered or made available.
7.20 Contracts and Commitments. Except for loan commitments made
by PMCT in the ordinary course of its business, Schedule 7.20 sets forth (a)
all unsecured notes or other obligations of PMCT and the PMCT Subsidiaries
which individually may result in total payments in excess of $750,000, (b)
notes, debentures, bonds and other evidence of indebtedness which are secured
or collateralized by mortgages, deeds of trust or other security interests in
the PMCT properties or personal property of PMCT and the PMCT Subsidiaries, and
(c) each Commitment entered into by PMCT or any of the PMCT Subsidiaries which
individually may result in total payments or liability in excess of $750,000.
True and correct copies of the foregoing have been delivered or made available
to STH. None of PMCT or any of the PMCT Subsidiaries has received any notice
of a default that has not been cured under any of the documents described in
clause (a) or (b) above or is in default respecting any payment obligations
thereunder beyond any applicable grace periods. All joint venture agreements
to which PMCT or any of the PMCT Subsidiaries is a party are set forth
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on Schedule 7.20 and PMCT or the PMCT Subsidiaries are not in default with
respect to any obligations, which individually or in the aggregate are
material, thereunder.
ARTICLE 8
COVENANTS
8.1 Acquisition Proposals. Prior to the Effective Time, STH and
PMCT each agree (a) that neither of them nor any of their Subsidiaries shall,
and each of them shall direct and use its best efforts to cause its respective
officers, trust managers, directors, employees, agents, affiliates and
representatives (including, without limitation, any investment banker, attorney
or accountant retained by it or any of its Subsidiaries) not to, initiate,
solicit or encourage, directly or indirectly, any inquiries or the making or
implementation of any proposal or offer (including, without limitation, any
proposal or offer to its shareholders) with respect to a merger, acquisition,
tender offer, exchange offer, consolidation or similar transaction involving,
or any purchase 20% or more of the assets or equity securities (or any debt
securities convertible into equity securities) of, such party or any of its
Subsidiaries, other than the transactions contemplated by this Agreement (any
such proposal or offer being hereinafter referred to as an "Acquisition
Proposal") or engage in any negotiations concerning, or provide any
confidential information or data to, or have any discussions with, any person
relating to an Acquisition Proposal, or otherwise facilitate any effort or
attempt to make or implement an Acquisition Proposal; (b) that it will
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing and each will take the necessary steps to inform the
individuals or entities referred to above of the obligations undertaken in this
Section 8.1; and (c) that it will notify the other party immediately if any
such inquiries or proposals are received by, any such information is requested
from, or any such negotiations or discussions are sought to be initiated or
continued with, it; provided, however, that nothing contained in this Section
8.1 shall prohibit the Board of Trust Managers or the Board of Directors of
such party from (i) furnishing information to or entering into discussions or
negotiations with, any person or entity that makes an unsolicited bona fide
Acquisition Proposal, if, and only to the extent that, (A) the Board of Trust
Managers or Board of Directors of such party determines in good faith that such
action is required for such body to comply with its fiduciary duties to
shareholders imposed by law as advised by counsel, (B) prior to furnishing such
information to, or entering into discussions or negotiations with, such person
or entity, such party provides written notice to the other party to this
Agreement to the effect that it is furnishing information to, or entering into
discussions with, such person or entity, and (C) subject to any confidentiality
agreement with such person or entity (which such party determined in good faith
was required to be executed in order for such body to comply with its fiduciary
duties to shareholders imposed by law as advised by counsel), such party keeps
the other party to this Agreement informed of the status (but not the terms) of
any such discussions or negotiations; and (ii) to the extent applicable,
complying with Rule 14e-2 promulgated under the Exchange Act with regard to an
Acquisition Proposal.
Nothing in this Section 8.1 shall (x) permit any party to terminate
this Agreement (except as specifically provided in Article 10 hereof), (y)
permit any party to enter into any agreement with
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respect to an Acquisition Proposal during the term of this Agreement (it being
agreed that during the term of this Agreement, no party shall enter into any
agreement with any person that provides for, or in any way facilitates, an
Acquisition Proposal (other than a confidentiality agreement in customary
form)), or (z) affect any other obligation of any party under this Agreement.
8.2 Earnings and Profits Dividend. The Earnings and Profits
Dividend shall be paid to STH shareholders of record as of a date not more than
five (5) trading days nor fewer than three (3) trading days before the Closing
Date. STH shall declare such dividend not less than 10 days nor more than 15
days prior to the record date for such dividend. STH and PMCT shall cause the
Earnings and Profits Dividend to be distributed immediately following the
Closing.
8.3 Conduct of Businesses.
(a) Prior to the Effective Time, except as may be set forth in the
schedules to this Agreement or as contemplated by this Agreement, unless the
other party has consented in writing thereto, PMCT and STH:
(i) Shall use their reasonable efforts, and shall cause
each of their respective Subsidiaries to use their reasonable efforts,
to preserve intact their business organizations and goodwill and keep
available the services of their respective officers and employees;
(ii) Shall confer on a regular basis with one or more
representatives of the other to report operational matters of
materiality and, subject to Section 8.1, any proposals to engage in
material transactions;
(iii) Shall promptly notify the other of any material
emergency or other material change in the condition (financial or
otherwise), business, properties, assets, liabilities, prospects or
the normal course of their businesses or in the operation of their
properties, any material governmental complaints, investigations or
hearings (or communications indicating that the same may be
contemplated), or the breach in any material respect of any
representation, warranty, covenant or agreement contained herein; and
(iv) Shall promptly deliver to the other true and correct
copies of any report, statement or schedule filed with the SEC
subsequent to the date of this Agreement.
(b) Prior to the Effective Time, except as may be set forth in the
schedules to this Agreement, unless PMCT has consented (such consent not to be
unreasonably withheld or delayed) in writing thereto, STH:
(i) Shall, and shall cause each of the STH Subsidiaries
to, conduct its operations according to their usual, regular and
ordinary course in substantially the same manner as heretofore
conducted;
(ii) Shall not amend its Certificate of Incorporation or
Bylaws;
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(iii) Shall not merge or consolidate with any other person;
(iv) Shall not (A) except pursuant to the exercise of
options, warrants, conversion rights and other contractual rights
existing on the date hereof and disclosed pursuant to this Agreement,
issue any shares of its capital stock, effect any stock split, reverse
stock split, stock dividend, recapitalization or other similar
transaction, (B) grant, confer or award any option, warrant,
conversion right or other right (other than so-called "reload options"
which have heretofore been authorized for issuance in connection with
the application of existing STH Common Stock to the exercise price of
existing options) not existing on the date hereof to acquire any
shares of its capital stock, (C) increase any compensation or enter
into or amend any employment agreement with any of its present or
future officers or directors, or (D) adopt any new employee benefit
plan (including any stock option, stock benefit or stock purchase
plan) or amend any existing employee benefit plan in any material
respect, except for changes which are less favorable to participants
in such plans;
(v) Except for the payment of the Earnings and Profits
Dividend in accordance with Section 8.2, shall not declare, set aside
or pay any dividend or make any other distribution or payment with
respect to any shares of its capital stock;
(vi) Other than in the ordinary course of its business,
shall not, and shall not permit any of the STH Subsidiaries to, sell
or otherwise dispose of (A) any Land, Hotel Improvements, Personal
Property or any of its capital stock of or other interests in the STH
Subsidiaries, in each case which are material, individually or in the
aggregate, or (B) except as otherwise contemplated by the Agreement of
Sale, any of its other assets which are material, individually or in
the aggregate;
(vii) Other than in the ordinary course of its business,
shall not, and shall not permit any of the STH Subsidiaries to, make
any loans, advances or capital contributions to, or investments in,
any other person;
(viii) Shall not, and shall not permit any of the STH
Subsidiaries to, pay, discharge or satisfy any material claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or
satisfaction in the ordinary course of business consistent with past
practice or in accordance with their terms, of liabilities reflected
or reserved against in, or contemplated by, the most recent
consolidated financial statements (or the notes thereto) of STH
included in the STH Reports or incurred in the ordinary course of
business consistent with past practice;
(ix) Shall not, and shall not permit any of the STH
Subsidiaries to, enter into any commitment which individually may
result in total payments or liability by or to it in excess of $50,000
in the case of any one commitment or in excess of $125,000 for all
commitments;
(x) Shall not, and shall not permit any of the STH
Subsidiaries to, enter into any commitment with any officer, director
or affiliate of STH or any of the STH Subsidiaries
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except to the extent the same occur in the ordinary course of business
consistent with past practice and would not have an STH Material
Adverse Effect;
(xi) Shall manage and operate each Hotel in all material
respects in accordance with the practices and in the manner it was
managed and operated on the date hereof;
(xii) Shall maintain in all material respects the
Improvements and FF&E in a manner consistent with past practices;
(xiii) Shall enter into no material agreement with respect
to the operation or maintenance of any portion of any Hotel without
the prior written consent of PMCT;
(xiv) Other than in the ordinary course of business, shall
not, without the prior written consent of PMCT, permit any material
structural modifications or additions to any Hotel, or sell or permit
to be sold or otherwise dispose of any item or group of items
constituting a portion of any Hotel;
(xv) Shall maintain STH's existing or comparable insurance
coverage with respect to each Hotel from the date of execution of this
Agreement through the Effective Time or earlier termination of this
Agreement;
(xvi) Shall not further encumber or permit encumbrance of
any Hotel in any manner;
(xvii) Shall promptly notify PMCT in writing of the receipt
by STH of any material written levy (or threatened levy) against any
Hotel of any special governmental assessment or similar occurrence;
(xviii) Shall promptly notify PMCT in writing of any
violation, alleged violation or anticipated violation, of any
Applicable Law or Environmental Law, of which it gains knowledge or is
notified which is likely to have a STH Material Adverse Effect;
(xix) Shall not execute an assignment of any Lease, an
assignment of any rent accruing under any Lease or the assignment of
any room rent or booking; and
(xx) To the extent a notice of assumed name or similar
document relating to any name, trademark, trade style or trade name
assigned or passed to PMCT hereunder has been filed with any federal,
state, county or local governmental agency, shall, at PMCT's request,
withdraw such filing and assist PMCT in any reasonable manner to
protect PMCT's interest in any such name, trademark, trade style,
trade name or Servicemark assigned or passed to PMCT hereunder.
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(c) Prior to the Effective Time, except as may be set forth in the
schedules to this Agreement, unless STH has consented (such consent not to be
unreasonably withheld or delayed) in writing thereto, PMCT:
(i) Shall, and shall cause each of the PMCT Subsidiaries
to, conduct its operations according to their usual, regular and
ordinary course in substantially the same manner as heretofore
conducted;
(ii) Shall not amend its Declaration of Trust or Bylaws;
(iii) Shall not merge or consolidate with any other person;
(iv) Shall not (A) except pursuant to the exercise of
options, warrants, conversion rights and other contractual rights
existing on the date hereof and disclosed pursuant to this Agreement,
issue any of its shares of beneficial interest, effect any share
split, reverse share split, share dividend, recapitalization or other
similar transaction, (B) grant, confer or award any option, warrant,
conversion right or other right not existing on the date hereof to
acquire any of its shares of beneficial interest, (C) amend any
employment agreement with any of its present or future officers or
trust managers, or (D) adopt any new employee benefit plan (including
any share option, share benefit or share purchase plan);
(v) Shall not declare, set aside or pay any dividend or
make any other distribution or payment with respect to any shares of
its capital stock, except (A) its regular quarterly dividends not to
exceed per quarter $0.50 per share of PMCT Common Shares, (B) a
special dividend payable to PMCT shareholders contemporaneously with
the Closing in an amount not to exceed $0.50 per share, and (C) any
other dividend or distribution necessary for PMCT to maintain its
ability to qualify to be taxed as a REIT under the Code;
(vi) Except as will be set forth in the schedules to this
Agreement, shall not, and shall not permit any of the PMCT
Subsidiaries to, sell or otherwise dispose of, except in the ordinary
course of business, any of its assets which are material, individually
or in the aggregate;
(vii) Shall not, and shall not permit any of the PMCT
Subsidiaries to, pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the
ordinary course of business consistent with past practice or in
accordance with their terms, of liabilities reflected or reserved
against in, or contemplated by, the most recent consolidated financial
statements (or the notes thereto) of PMCT included in the PMCT Reports
or incurred in the ordinary course of business consistent with past
practice;
(viii) Shall not, and shall not permit any of the PMCT
Subsidiaries to, enter into any Commitment which individually may
result in total payments or liability by or to it in excess of
$750,000 other than in the ordinary course of business; and
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(ix) Shall not, and shall not permit any of the PMCT
Subsidiaries to, enter into any Commitment with any officer, director
or affiliate of PMCT or any of the PMCT Subsidiaries, except as
provided herein or in the Schedules to this Agreement and except in
the ordinary course of business.
8.4 Damage to Property. STH agrees to give PMCT prompt notice of
any material fire or other material casualty affecting any of the Hotels
between the date hereof and the Closing Date or of any actual or threatened
taking or condemnation of all or any portion of any of the Land or the
Improvements.
8.5 Meetings of Shareholders. Each of PMCT and STH will take all
action necessary in accordance with applicable law and its organizational
documents to convene a meeting of its shareholders as promptly as practicable
to consider and vote upon or otherwise to obtain the consent of its
shareholders to (a) in the case of PMCT, the approval of the issuance of the
shares of PMCT Common Shares pursuant to the Merger and (b) in the case of STH,
the approval of this Agreement and the transactions contemplated hereby. The
Board of Trust Managers of PMCT and the Board of Directors of STH shall each
recommend such approval and PMCT and STH shall each take all lawful action to
solicit such approval, including, without limitation, timely mailing the Proxy
Statement (as defined in Section 8.9); provided, however, that such
recommendation or solicitation is subject to any action taken by, or upon
authority of, the Board of Trust Managers of PMCT or the Board of Directors of
STH, as the case may be, in the exercise of its good faith judgment as to its
fiduciary duties to its shareholders imposed by law as advised by counsel.
PMCT and STH shall coordinate and cooperate with respect to the timing of such
meetings and shall use their best efforts to hold such meetings on the same
day.
8.6 Filings; Other Action. Subject to the terms and conditions
herein provided, STH and PMCT shall: (a) use all reasonable efforts to
cooperate with one another in (i) determining which filings are required to be
made prior to the Effective Time with, and which consents, approvals, permits
or authorizations are required to be obtained prior to the Effective Time from
governmental or regulatory authorities of the United States, the several
states, third party secured and unsecured lenders and rating agencies in
connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby and (ii) timely making all
such filings and timely seeking all such consents, approvals, permits or
authorizations; (b) use all reasonable efforts to obtain in writing any
consents required from third parties in form reasonably satisfactory to STH and
PMCT necessary to effectuate the Merger; and (c) use all reasonable efforts to
take, or cause to be taken, all other action and do, or cause to be done, all
other things necessary, proper or appropriate to consummate and make effective
the transactions contemplated by this Agreement. If, at any time after the
Effective Time, any further action is necessary or desirable to carry out the
purpose of this Agreement, the proper officers and directors or trust managers
of PMCT and STH shall take all such necessary action.
8.7 Inspection of Records. From the date hereof to the Effective
Time, each of STH and PMCT shall allow all designated officers, attorneys,
accountants and other representatives of the other access at all reasonable
times to the records and files, correspondence, audits and properties,
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as well as to all information relating to commitments, contracts, titles and
financial position, or otherwise pertaining to the business and affairs of STH
and PMCT and their respective Subsidiaries.
8.8 Publicity. The initial press release relating to this
Agreement shall be a joint release and thereafter STH and PMCT shall, subject
to their respective legal obligations (including requirements of stock
exchanges and other similar regulatory bodies), consult with each other, and
use reasonable efforts to agree upon the text of any press release, before
issuing any such press release or otherwise making public statements with
respect to the transactions contemplated hereby and in making any filings with
any federal or state governmental or regulatory agency or with any national
securities exchange with respect thereto.
8.9 Registration Statement. As soon as practicable following the
date of this Agreement, PMCT and STH shall prepare and file with the SEC a
preliminary proxy statement (the "Proxy Statement") in form and substance
satisfactory to each of PMCT and STH, and PMCT shall prepare and file with the
SEC a Registration Statement on Form S-4 (the "Registration Statement"), in
which the Proxy Statement will be included as a prospectus. Each of PMCT and
STH shall use its best efforts to (a) respond to any comments of the SEC and
(b) have the Registration Statement declared effective under the Securities Act
and the rules and regulations promulgated thereunder as promptly as practicable
after such filing and to keep the Registration Statement effective as long as
is reasonably necessary to consummate the Merger. Each party will notify the
other promptly of the receipt of any comments from the SEC and of any request
by the SEC for amendments or supplements to the Registration Statement or the
Proxy Statement or for additional information and will supply the other with
copies of all correspondence between such party or any of its representatives
and the SEC, with respect to the Registration Statement or the Proxy Statement.
Whenever any event occurs which is required to be set forth in an amendment or
supplement to the Registration Statement or the Proxy Statement, PMCT or STH,
as the case may be, shall promptly inform the other of such occurrence and
cooperate in filing with the SEC and/or mailing to the shareholders of PMCT and
the stockholders of STH such amendment or supplement. PMCT shall use its best
efforts to obtain, prior to the effective date of the Registration Statement,
all necessary state securities law or "Blue Sky" permits or approvals required
to carry out the transactions contemplated by this Agreement and will pay all
expenses incident thereto. PMCT agrees the Proxy Statement and each amendment
or supplement thereto, at the time of mailing thereof and at the time of the
respective meetings of shareholders of PMCT and STH, or, in the case of the
Registration Statement and each amendment or supplement thereto, at the time it
is filed or becomes effective, will not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, however, the foregoing shall
not apply to the extent that any such untrue statement of a material fact or
omission to state a material fact was made by PMCT in reliance upon and in
conformity with written information concerning STH furnished to PMCT by STH
specifically for use in the Proxy Statement. STH agrees the written
information provided by it specifically for inclusion in the Proxy Statement
and each amendment or supplement thereto, at the time of mailing thereof and at
the time of the respective meetings of shareholders of PMCT and STH, or, in the
case of written information provided by STH specifically for inclusion in the
Registration Statement or any amendments or supplement thereto, at the time it
is filed or becomes
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effective, will not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. PMCT will advise STH, promptly after it receives notice
thereof, of the time when the Registration Statement has become effective or
any supplement or amendment has been filed, the issuance of any stop order, the
suspension of the qualification of the PMCT Common Shares issuable in
connection with the Merger for offering or sale in any jurisdiction, or any
request by the SEC for amendment of the Proxy Statement or the Registration
Statement or comments thereon and responses thereto or requests by the SEC for
additional information.
8.10 Listing Application. PMCT shall promptly prepare and submit
to the American Stock Exchange ("AMEX") a listing application covering the PMCT
Common Shares issuable in the Merger, and shall use its reasonable efforts to
obtain, prior to the Effective Time, approval for the listing of such PMCT
Common Shares, subject to official notice of issuance.
8.11 Further Action. Each party hereto shall, subject to the
fulfillment at or before the Effective Time of each of the conditions of
performances set forth herein or the waiver thereof, perform such further acts
and execute such documents as may reasonably be required to effect the Merger.
8.12 Expenses. Subject to Section 10.5, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby, other than those associated with the filing, printing and distribution
of the Proxy Statement and the Registration Statement which shall be borne by
PMCT, shall be paid by the party incurring such expenses.
8.13 Governance. PMCT's Board of Trust Managers shall take all
action necessary to cause the full Board of Trust Managers of PMCT at the
Effective Time to take all such action necessary to cause ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ to be
selected and elected as a trust manager of PMCT for a term expiring at the 1999
annual meeting of shareholders, following the Effective Time, to fill one new
position to be created in connection with the transaction contemplated hereby;
provided that, notwithstanding the foregoing, the shareholders of PMCT at the
1999 annual meeting of shareholders shall vote on the election of ▇▇. ▇▇▇▇▇▇▇
for a one year term. If, prior to the Effective Time, such person shall
decline or be unable to serve as a trust manager, STH shall designate another
person to serve in such person's stead, which person shall be reasonably
acceptable to PMCT.
8.14 Reorganization. From and after the date hereof and until the
Effective Time, neither PMCT nor STH nor any of their respective Subsidiaries
or other affiliates shall (a) knowingly take any action, or knowingly fail to
take any action, that would jeopardize qualification of the Merger as a
reorganization within the meaning of Section 368(a) of the Code; or (b) enter
into any contract, agreement, commitment or arrangement with respect to the
foregoing. Following the Effective Time, PMCT shall not take any action that
would not jeopardize the characterization of the Merger as a reorganization
within the meaning of Section 368(a) of the Code.
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8.15 Third Party Consents. PMCT and STH each shall take all
necessary corporate and other action and will use its commercially reasonable
efforts to obtain the consents and applicable approvals from third parties that
may be required to enable it to carry out the transactions contemplated by this
Agreement.
8.16 Efforts to Fulfill Conditions. PMCT and STH each shall use
commercially reasonable efforts to insure that all conditions precedent to its
obligations hereunder are fulfilled at or prior to the Closing.
8.17 Representations, Warranties and Conditions Prior to Closing.
Neither PMCT nor STH shall voluntarily take any action that would reasonably be
expected to cause its representations and warranties contained in this
Agreement not to be true and correct on and as of the Closing Date in all
material respects. Prior to Closing, PMCT and STH each shall promptly notify
the other in writing (a) if any representation or warranty contained in this
Agreement is discovered to or becomes untrue in any material respect or (b) if
PMCT or STH fails to perform or comply in any material respect with any of its
covenants or agreements contained in this Agreement or it is reasonably
expected that it will be unable to perform or comply in any material respect
with any of its covenants or agreements contained in this Agreement.
8.18 Cooperation of the Parties. PMCT and STH each will cooperate
with the other in supplying such information as may be reasonably requested by
the other in connection with obtaining consents or approvals to the
transactions contemplated by this Agreement.
8.19 Tax Election. PMCT agrees to timely file a Notice 88-19
Election with respect to built-in gain assets acquired by PMCT as a result of
the Merger, which election will provide that PMCT will be taxed upon built-in
gain with respect to the sale of any such property within ten years after the
Closing Date to the extent the fair market value of such property at Closing
exceeds the adjusted tax basis of such property at Closing.
8.20 Directors and Officers Insurance.
(a) PMCT shall provide, or shall cause the Surviving Entity to
provide, STH's current covered insureds continuation coverage under STH's
existing Directors and Officers Liability and Employment Practice Liability
insurance and indemnification policy (including any fiduciary liability policy)
to provide coverage with respect to any claims made during the six-year period
following the Effective Time for events occurring prior to the Effective Time
(the "D&O Insurance") or, if substantially equivalent insurance coverage is
unavailable, the best available coverage and PMCT shall pay the deductible
amounts associated with claims made under such D&O Insurance; provided,
however, that the Surviving Entity shall not be required to pay one-time
premium for the D&O Insurance in excess of $125,000, but if such annual premium
would but for this proviso exceed such amount, the PMCT shall purchase as much
coverage as possible for such amount.
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(b) The provisions of this Section 8.20 are intended to be for the
benefit of, and shall be enforceable by, each such covered insured, and such
covered insured's heirs and personal representatives and shall be binding on
all successors and assigns of PMCT.
8.21 PMCT Earnings and Profits Dividend. To the extent the
Earnings and Profits Amount has been reduced as provided in the definition
thereof, PMCT hereby agrees to pay to its shareholders of record as of a date
after Closing, on a pro rata basis, the amount by which the Earnings and
Profits Amount was so reduced on or prior to December 31, 1998. Such dividend
payment shall be in addition to PMCT's regular quarterly dividend for such
period.
ARTICLE 9
CONDITIONS
9.1 Conditions to Each Party's Obligations to Effect the Merger.
The respective obligation of each party to effect the Merger shall be subject
to the fulfillment at or prior to the Closing Date of the following conditions:
(a) This Agreement and the transactions contemplated
hereby shall have been approved in the manner required by the
Declaration of Trust of PMCT and the Certificate of Incorporation and
Bylaws of STH, and by applicable law or by applicable regulations of
any stock exchange or other regulatory body and by the holders of the
issued and outstanding shares of capital stock of STH and PMCT
entitled to vote thereon.
(b) Neither of the parties hereto shall be subject to any
order or injunction of a court of competent jurisdiction which
prohibits the consummation of the transactions contemplated by this
Agreement. In the event any such order or injunction shall have been
issued, each party agrees to use its reasonable efforts to have any
such injunction lifted.
(c) The Registration Statement shall have become
effective and all necessary state securities law or "Blue Sky" permits
or approvals required to carry out the transactions contemplated by
this Agreement shall have been obtained and no stop order with respect
to any of the foregoing shall be in effect.
(d) PMCT shall have obtained the approval for the listing
of the PMCT Common Shares issuable in the Merger on the AMEX, subject
to official notice of issuance.
(e) All consents, authorizations, orders and approvals of
(or filings or registrations with) any governmental commission, board,
other regulatory body or third parties required in connection with the
execution, delivery and performance of this Agreement shall have been
obtained or made, except for filings in connection with the Merger and
any other documents required to be filed after the Effective Time and
except where the failure to have obtained or made any such consent,
authorization, order, approval,
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filing or registration would not have a material adverse effect on the
business, results of operations or financial condition of PMCT and STH
(and their respective Subsidiaries), taken as a whole, following the
Effective Time.
9.2 Conditions to Obligations of STH to Effect the Merger. The
obligation of STH to effect the Merger shall be subject to the fulfillment at
or prior to the Closing Date of the following conditions, unless waived by STH:
(a) PMCT shall have performed its agreements contained in
this Agreement required to be performed on or prior to the Closing
Date and the representations and warranties of PMCT contained in this
Agreement shall be true and correct in all material respects as of the
Closing Date as if made on the Closing Date, except representations
and warranties made as of a specific date (which shall be true and
correct in all material respects as of such date), and STH shall have
received a certificate of the President or an Executive Vice President
of PMCT, dated the Closing Date, certifying to such effect.
(b) STH shall have received the opinion of ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ P.C. of Dallas, Texas ("PMCT's Counsel"), dated the
Closing Date, to the effect that commencing with its taxable year
ended December 31, 1994, PMCT was organized and has operated in
conformity with the requirements for qualification as a REIT under the
Code and that, after giving effect to the Merger, PMCT's proposed
method of operation will enable it to continue to meet the
requirements for qualification and taxation as a REIT under the Code
(with customary exceptions, assumptions and qualifications and based
upon customary representations) and to the effect that the Merger will
be treated for federal income tax purposes as a reorganization within
the meaning of Section 368(a) of the Code, that STH and PMCT will each
be a party to that reorganization within the meaning of Section 368(a)
of the Code and as to such other customary matters as STH may
reasonably request, such opinion to be reasonably satisfactory to STH.
In rendering its opinion, PMCT's Counsel shall be entitled to rely as
to any factual matter upon certificates given by executive officers of
STH and PMCT.
(c) From the date of the Agreement through the Effective
Time, there shall not have occurred any change in the financial
condition, business or operations of PMCT and the PMCT Subsidiaries,
taken as a whole, that would have or would be reasonably likely to
have a PMCT Material Adverse Effect.
(d) The opinion of ABN AMRO Incorporated addressed to the
Board of Directors of STH that the consideration to be received by the
stockholders of STH is fair, from a financial point of view, shall not
have been withdrawn or materially modified.
(e) PMCT shall have entered into the Super 8 Assignment
Agreement.
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9.3 Conditions to Obligation of PMCT to Effect the Merger. The
obligations of PMCT to effect the Merger shall be subject to the fulfillment at
or prior to the Closing Date of the following conditions, unless waived by
PMCT:
(a) STH shall have performed its agreements contained in
this Agreement required to be performed on or prior to the Closing
Date and the representations and warranties of STH contained in this
Agreement shall be true and correct in all material respects as of the
Closing Date as if made on the Closing Date and PMCT shall have
received a certificate of the Chief Executive Officer, President or an
Executive Vice President of STH dated the Closing Date, certifying to
such effect.
(b) PMCT shall have received the opinion of PMCT's
Counsel, dated the Closing Date, to the effect that the Merger will be
treated for federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code, that PMCT and STH will each be
a party to that reorganization within the meaning of Section 368(a) of
the Code. PMCT shall also have received an opinion from ▇▇▇▇▇▇▇,
North, ▇▇▇▇▇▇ & ▇▇▇▇▇, P.C. ("STH's Counsel") as to such customary
matters as PMCT may reasonably request, such opinion to be reasonably
satisfactory to PMCT. In rendering its opinion, STH's Counsel shall
be entitled to rely as to any factual matter upon certificates given
by executive officers of PMCT and STH.
(c) From the date of this Agreement through the Effective
Time, there shall not have occurred any change in the financial
condition, business or operations of STH and the STH Subsidiaries,
taken as a whole, that would have or would be reasonably likely to
have an STH Material Adverse Effect.
(d) Each "affiliate" of STH (within the meaning of the
Securities Laws) listed on Exhibit 9.3(d) hereto shall have delivered
to PMCT a written agreement to the effect that such person will not
offer to sell, sell or otherwise dispose of any of the PMCT Common
Shares issued in the Merger, except, in each case, pursuant to an
effective registration statement or in compliance with Rule 145, as
amended from time to time, or in a transaction which, in the opinion
of legal counsel reasonably satisfactory to PMCT, is exempt from the
registration requirements of the Securities Act and that the
certificates representing the PMCT shares issued to him or her in the
Merger may bear a legend to such effect.
(e) STH and Supertel Management shall have entered into
the STH Ancillary Documents.
(f) The opinion of ▇.▇. ▇▇▇▇▇▇▇▇ & Co. addressed to the
Board of Trust Managers of PMCT that the Exchange Ratio is fair, from
a financial point of view, to PMCT and the holders of PMCT Common
Shares, shall not have been withdrawn or materially modified.
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ARTICLE 10
TERMINATION
10.1 Termination by Mutual Consent. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, before or after the approval of this Agreement by the shareholders of STH
or PMCT or by the mutual written consent of PMCT and STH, with the prior
approval of their Boards of Trust Managers or Directors, respectively.
10.2 Termination by Either PMCT or STH. This Agreement may be
terminated and the Merger may be abandoned by action of the Board of Directors
of STH or the Board of Trust Managers of PMCT if (a) the Merger shall not have
been consummated by November 30, 1998, (b) a meeting of STH's stockholders
shall have been duly convened and held and the approval of STH's stockholders
required by Section 9.1(a) shall not have been obtained at such meeting or at
any adjournment thereof, (c) a meeting of PMCT's shareholders shall have been
duly convened and held and the approval of PMCT's shareholders required by
Section 9.1(a) shall not have been obtained at such meeting or at any
adjournment thereof, (d) PMCT or STH elects to terminate this Agreement
pursuant to Section 4.1(a), or (e) a United States federal or state court of
competent jurisdiction or United States federal or state governmental,
regulatory or administrative agency or commission shall have issued an order,
decree or ruling or taken any other action permanently restraining, enjoining
or otherwise prohibiting the transactions contemplated by this Agreement and
such order, decree, ruling or other action shall have become final and
non-appealable, provided that the party seeking to terminate this Agreement
pursuant to this clause (e) shall have used commercially reasonable efforts to
remove such order, decree, ruling or injunction, and provided, in the case of a
termination pursuant to clause (a) above, that the terminating party shall not
have breached in any material respect its obligations under this Agreement in
any manner that shall have proximately contributed to the occurrence of the
failure referred to in said clause. The notice of termination shall include
the reasons, if any, for such termination and shall be considered Confidential
Material under Section 11.6.
10.3 Termination by STH. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, before or
after the adoption and approval by the stockholders of STH referred to in
Section 9.1(a), by action of the Board of Directors of STH, if (a) in the
exercise of its good faith judgment as to its fiduciary duties to its
stockholders imposed by law, as advised by counsel, the Board of Directors of
STH determines that such termination is required by reason of an STH
Acquisition Proposal being made, (b) the Board of Trust Managers of PMCT
withdraws, materially modifies or changes in a manner materially adverse to STH
its recommendations to PMCT's shareholders of this Agreement or the Merger, (c)
the Board of Trust Managers of PMCT postpones the date scheduled for the
meeting of shareholders of PMCT to approve this Agreement and the transactions
contemplated hereby beyond October 31, 1998 or fails to set a date for such
meeting by such date, except with the written consent of STH, (d) there has
been a breach by PMCT of any representation or warranty contained in this
Agreement which would have or would be reasonably likely to have a PMCT
Material Adverse Effect, which breach is not curable by October 31, 1998, (e)
there has been material breach of any of the covenants or
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agreements set forth in this Agreement on the part of PMCT, which breach is not
curable or, if curable, is not cured within 30 days after written notice of
such breach is given by STH to PMCT, or (f) the per share Earnings and Profits
Dividend payable to each holder of STH Common Stock at Closing would be less
than $3.00 per share.
10.4 Termination by PMCT. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, before or
after the approval by the shareholders of PMCT referred to in Section 9.1(a),
by action of the Board of Trust Managers of PMCT, if (a) the Board of Directors
of STH withdraws, materially modifies or changes in a manner materially adverse
to PMCT its recommendation to STH's stockholders of this Agreement or the
Merger, (b) the Board of Directors of STH postpones the date scheduled for the
meeting of stockholders of STH to approve this Agreement and the transactions
contemplated hereby beyond October 31, 1998 or fails to set a date for such
meeting by such date, except with the written consent of PMCT, (c) there has
been a breach by STH of any representation or warranty contained in this
Agreement which would have or would be reasonably likely to have an STH
Material Adverse Effect, which breach is not curable by October 31, 1998, (d)
there has been a material breach of any of the covenants or agreements set
forth in this Agreement on the part of STH, which breach is not curable or, if
curable, is not cured within 30 days after written notice of such breach is
given by PMCT to STH, or (e) the aggregate amount of Indebtedness is greater
than $73 million, unless such excess is the result of general market
conditions.
10.5 Effect of Termination and Abandonment.
(a)(i) If an election to terminate this Agreement is made by PMCT
pursuant to Section 10.2(b) or by STH pursuant to Section 10.3(a), and
an Acquisition Proposal relating to STH shall have been made and,
within one year from the date of such termination, STH consummates
that STH Acquisition Proposal or enters into an agreement to
consummate an STH Acquisition Proposal which is subsequently
consummated within 18 months from the date of such termination, STH
shall pay to PMCT, provided PMCT was not in material breach of its
obligations hereunder at the time of such termination, as liquidated
damages and not as a penalty or forfeiture, an amount equal to the
lesser of (A) $1,200,000 (the "Liquidated Damages Amount") and (B) the
maximum amount permitted as liquidated damages pursuant to applicable
Delaware law, provided that the Liquidated Damages Amount shall not
exceed the sum of (1) the maximum amount that can be paid to PMCT
without causing PMCT to fail to meet the requirements of Sections
856(c)(2) and (3) of the Code determined as if the payment of such
amount did not constitute income described in Sections
856(c)(2)(A)-(H) and 856(c)(3)(A)-(I) of the Code ("Qualifying
Income"), as determined by PMCT's certified public accountants, plus
(2) an amount equal to the Liquidated Damages Amount less the amount
payable under clause (1) above in the event PMCT receives a letter
from PMCT's Counsel indicating that PMCT has received a ruling from
the IRS to the effect that Liquidated Damages Amount payments
constitute Qualifying Income. In addition to the Liquidated Damages
Amount, PMCT shall be entitled to receive from STH (or its successor
in interest) up to $700,000, the first $400,000 of which will consist
of an unaccountable reimbursement of PMCT's costs and expenses and the
remaining
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$300,000 will be for reimbursement of documented out-of-pocket costs
and expenses in connection with this Agreement and the transactions
contemplated hereby incurred by PMCT.
(ii) If an election to terminate this Agreement is made by
STH pursuant to Section 10.2(c) or by PMCT pursuant to Section
10.4(a), and an Acquisition Proposal relating to PMCT shall have been
made and, within one year from the date of such termination, PMCT
consummates that PMCT Acquisition Proposal or enters into an agreement
or consummate a PMCT Acquisition Proposal which is subsequently
consummated within 18 months from the date of such termination, PMCT
shall pay to STH, provided STH was not in material breach of its
obligations hereunder at the time of such termination, as liquidated
damages and not as a penalty or forfeiture, the Liquidated Damages
Amount. In addition to the Liquidated Damages Amount, STH shall be
entitled to receive from PMCT (or its successor in interest) up to
$700,000, the first $400,000 of which will constitute of an
unaccountable reimbursement of STH's costs and expenses and the
remaining $300,000 will be for reimbursement of documented
out-of-pocket costs and expenses in connection with this Agreement and
the transactions contemplated hereby incurred by STH.
(iii) The payments to which PMCT and STH are entitled under
this Section 10.5(a) shall be their sole remedy with respect to the
termination of this Agreement under the circumstances contemplated by
this Section 10.5(a).
(b) (i) If an election to terminate this Agreement is made by PMCT
pursuant to (A) Section 10.2(b) (except as a result of a default or breach
hereunder by PMCT) and no Acquisition Proposal with respect to STH is in
existence at such time or (B) Section 10.4(e), PMCT shall be entitled to
receive from STH all documented out-of-pocket costs and expenses in connection
with this Agreement and the transactions contemplated hereby (the "Expenses")
incurred by PMCT, up to a maximum of $700,000. If an election to terminate
this Agreement is made by STH pursuant to Section 10.3(f), PMCT shall be
entitled to receive from STH all Expenses incurred by PMCT, up to a maximum of
$300,000. The payments to which PMCT is entitled under this paragraph shall be
its sole remedy with respect to the termination of the Agreement under the
circumstances contemplated in this paragraph.
(ii) If an election to terminate this Agreement is made by STH
pursuant to Section 10.2(c) (except as a result of a default or breach
hereunder by STH) and no Acquisition Proposal with respect to PMCT is in
existence at such time, STH shall be entitled to recover from PMCT all Expenses
incurred by STH, up to a maximum of $700,000. The payment to which STH is
entitled under this paragraph shall be its sole remedy for termination of the
Agreement in such circumstances.
(c) If this Agreement is terminated pursuant to Section 10.3(d),
Section 10.3(e), Section 10.4(c) or Section 10.4(d), the non-terminating party
shall, provided that the terminating party was not in material breach of its
obligations hereunder at the time of such termination, pay the
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terminating party all Expenses, up to a maximum of $700,000, incurred by it and
the non-terminating party shall remain liable to the terminating party for its
breach.
(d) The payment of the Liquidated Damages Amount or any of the
Expenses pursuant to this Article 10 shall be by wire transfer or bank check,
within 10 days of the date of the event that triggers the payment requirements
set forth in this Article 10.
(e) In the event of termination of this Agreement and the
abandonment of the Merger pursuant to this Article 10, all obligations of the
parties hereto shall terminate, except the obligations of the parties pursuant
to this Section 10.5 and Sections 8.8 and 8.12 and except for the provisions of
Sections 11.4, 11.5, 11.6, 11.7, 11.8, 11.9, 11.11, 11.14, 11.15 and 11.17. In
the event PMCT is required to file suit to seek all or a portion of such
Liquidated Damages Amount, and it ultimately succeeds, it shall be entitled to
all expenses, including attorney's fees and expenses, which it has incurred in
enforcing its right hereunder.
10.6 Extension; Waiver. At any time prior to the Effective Time,
any party hereto, by action taken by its Board of Directors or Trust Managers,
as the case may be, may, to the extent legally allowed, (a) extend the time for
the performance of any of the obligations or other acts of the other parties
hereto, (b) waive any inaccuracies in the representations and warranties made
to such party contained herein or in any document delivered pursuant hereto and
(c) waive compliance with any of the agreements or conditions for the benefit
of such party contained herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party.
ARTICLE 11
GENERAL PROVISIONS
11.1 Certain Definitions. Except as may otherwise be set forth in
this Agreement, capitalized terms used but not defined herein shall have the
meanings set forth in the glossary attached hereto as "Appendix A".
11.2 Nonsurvival of Representations, Warranties and Agreements.
All representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall not survive the Merger;
provided, however, that the agreements contained in Article 4, Sections 8.2,
8.6, 8.13, 8.14, 8.19, 8.20 and 8.21, and this Article 11 shall survive the
Merger.
11.3 Notices. Any notice required to be given hereunder shall be
in writing and shall be sent by facsimile transmission (confirmed by any of the
methods that follow), courier service (with proof of service), hand delivery or
certified or registered mail (return receipt requested and first-class postage
prepaid) and addressed as follows:
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If to PMCT:
PMC Commercial Trust
Department 101
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President
PMC Commercial Trust
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
and with a copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ P.C.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to STH:
▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chief Executive Officer
Supertel Hospitality, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇, North, ▇▇▇▇▇▇ & ▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Street
Omaha, Nebraska 68102
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
delivered.
11.4 Assignment; Binding Effect; Benefit. Neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned by
any of the parties hereto (whether by operation of law or otherwise) without
the prior written consent of the other parties. Subject to the preceding
sentence, this Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and assigns.
Notwithstanding anything contained in this Agreement to the contrary, except as
provided in the following sentence, nothing in this Agreement, expressed or
implied, is intended to confer on any person other than the parties hereto or
their respective heirs, successors, executors, administrators and assigns any
rights, remedies, obligations or liabilities under or by reason of this
Agreement. The provisions of Article 4 and Sections 7.12, 7.13 and 7.14
(collectively, the "Third Party Provisions") shall benefit the persons
identified therein.
11.5 Entire Agreement. This Agreement, the Exhibits, the
Schedules, the STH Ancillary Agreements, the PMCT Ancillary Agreements and any
documents delivered by the parties in connection herewith constitute the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings among the parties with
respect thereto. No addition to or modification of any provision of this
Agreement shall be binding upon any party hereto unless made in writing and
signed by all parties hereto.
11.6 Confidentiality. (a) As used herein, "Confidential Material"
means, with respect to either party hereto (the "Providing Party"), all
information (written or oral) furnished (whether before or after the date
hereof) by the Providing Party and its trust managers, directors, officers,
employees, affiliates or representatives of advisors, including counsel,
lenders and financial advisors (collectively, the "Providing Party
Representatives") to the other party hereto (the "Receiving Party") or such
Receiving Party's directors, officers, employees, affiliates or representatives
of advisors, including counsel, lenders and financial advisors or the Receiving
Party's potential sources of financing for the transactions contemplated by
this Agreement (collectively "the Receiving Party Representatives") and all
analyses, compilations, forecasts and other studies or other documents prepared
by the Providing Party or the Providing Party Representatives in connection
with its or their review of the transactions contemplated by this Agreement
which contain or reflect such information. The term "Confidential Material"
does not include, however, information which (i) at the time of disclosure or
thereafter is generally available to and known by the public other than as a
result of a disclosure directly or indirectly by the Receiving Party or the
Receiving Party Representatives in violation of this Agreement, (ii) at the
time of disclosure was available on a nonconfidential basis from a source other
than the Providing Party or the Providing Party Representatives, providing that
such source is not and was not bound by a confidentiality agreement with the
Providing Party, (iii) was known by the Receiving Party prior to receiving the
Confidential Material from the Providing Party or has been independently
acquired or developed by the Receiving Party without violating any of its
obligations under this Agreement, or (iv) is contained in any STH Reports or
PMCT Reports or the Proxy Statement/Prospectus.
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(b) Subject to paragraph (c) below or except as required by law,
the Confidential Material will be kept confidential and will not, without the
prior written consent of the Providing Party, be disclosed by the Receiving
Party or its Representatives, in whole or in part and will not be used by the
Receiving Party or its Representatives, directly or indirectly, for any purpose
other than in connection with this Agreement, the Merger or the evaluating,
negotiating or advising with respect to a transaction contemplated herein.
Moreover, each Receiving Party agrees to transmit Confidential Material to its
Representatives only if and to the extent that such Representatives need to
know the Confidential Material for purposes of such transaction and are
informed by such Receiving Party of the confidential nature of the Confidential
Material and of the terms of this Section.
(c) In the event either Receiving Party, its Representatives or
anyone to whom such Receiving Party or its Representatives supply the
Confidential Material, are requested or required (by oral questions,
interrogatories, requests for information or documents, subpoena, civil
investigative demand, any informal or formal investigation by any government or
governmental agency or authority or otherwise in connection with legal
processes) to disclose any Confidential Material, such Receiving Party agrees
(i) to immediately notify the Providing Party of the existence, terms and
circumstances surrounding such a request, (ii) to consult with the Providing
Party on the advisability of taking legally available steps to resist or narrow
such request and (iii) if disclosure of such information is required, to
furnish only that portion of the Confidential Material which, in the opinion of
such Receiving Party's counsel, such Receiving Party is legally compelled to
disclose and to cooperate with any action by the Providing Party to obtain an
appropriate protective order or otherwise reliable assurances that confidential
treatment will be accorded the Confidential Material (it being agreed that the
Providing Party shall reimburse the Receiving Party for all reasonable
out-of-pocket expenses incurred by the Receiving Party in connection with such
cooperation).
(d) In the event of the termination of this Agreement in
accordance with its terms, promptly upon request from either Providing Party,
the Receiving Party shall, except to the extent prevented by law, redeliver to
the Providing Party or destroy all tangible Confidential Material and will not
retain any copies, extracts or other reproductions thereof in whole or in part.
Any such destruction shall be certified in writing to the Providing Party by an
authorized officer of the Receiving Party supervising the same.
Notwithstanding the foregoing, each Receiving Party and one Representative
designated by each Receiving Party shall be permitted to retain one permanent
file copy of each document constituting Confidential Material.
(e) Each party hereto further agrees that if this Agreement is
terminated in accordance with its terms, for a period of one year from the date
of termination (i) it will not offer to hire or hire any person currently or
formerly employed by the other party with whom such party has had contact prior
hereto other than persons whose employment shall have been terminated by such
other party prior to the date of such offer to hire or hiring and (ii) neither
it nor its Affiliates shall directly or indirectly, (A) (1) solicit, seek or
offer to effect or effect, (2) negotiate with or provide any information to the
Board of Directors or Trust Managers of the other party, any director or
officer of the other party or any stockholder of the other party with respect
to, (3) make any statement or proposal, whether written or oral, either alone
or in concert with others, to the Board of Directors
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or Trust Managers of the other party, any trust manager, director or officer of
the other party or any stockholder of the other party or any other person with
respect to, or (4) make any public announcement (except as required by law in
respect of actions permitted hereby) or proposal or offer whatsoever
(including, but not limited to, any "solicitation" of "proxies" as such terms
are defined or used in Regulation 14A of the Exchange Act) with respect to, (u)
any form of business combination or similar or other extraordinary transaction
involving the other party or any Affiliate thereof, including, without
limitation, a merger, tender or exchange offer or liquidation of the other
party's assets, (v) any form of restructuring, recapitalization or similar
transaction with respect to the other party or any Affiliate thereto, (w) any
purchase of any securities or assets, or rights or options to acquire any
securities or assets (through purchase, exchange, conversion or otherwise), of
the other party or any Affiliate thereof, (x) any proposal to seek
representation on the Board of Directors or Trust Managers of the other party
or otherwise to seek to control or influence the management, Board of Directors
or Trust Managers or policies of the other party or any Affiliate thereof, (y)
any request or proposal to waive, terminate or amend the provisions of this
Section 11.6 or (z) any proposal or other statement inconsistent with the terms
of this Section 11.6 or (B) instigate, encourage, join, act in concert with or
assist (including, but not limited to, providing or assisting in any way in the
obtaining of financing for, or acting as a joint or co-bidder for the other
party with) any third party to do any of the foregoing, unless and until such
party has received the prior written invitation or approval of a majority of
the Board of Directors or Trust Managers of the other party to do any of the
foregoing; provided that without such invitation or approval, either party may
at any time, on a confidential non-public basis, submit to the Chief Executive
Officer or, if none, the President of the other party a proposal to (a) amend
any of the provisions of this Section 11.6(e) or (b) effect a business
combination or other extraordinary transaction with the other party providing
for the acquisition of all or substantially all of the assets or the securities
of the other party, including, without limitation, a merger, tender offer or
exchange offer. Each party hereto agrees that it will not agree with any third
party to waive its rights under this Section 11.6.
11.7 Amendment. This Agreement may be amended by the parties
hereto, by action taken by their respective Boards of Directors or Trust
Managers, at any time before or after approval of this Agreement or any other
matter presented in connection with the Merger by the shareholders of STH and
PMCT, but after any such shareholder approval, no amendment shall be made which
by law requires the further approval of shareholders without obtaining such
further approval. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
11.8 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas without regard to
its rules of conflict of laws.
11.9 Counterparts. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument. Each counterpart may consist of a number of copies
hereof each signed by less than all, but together signed by all of the parties
hereto.
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11.10 Headings. Heading of the Articles and Sections of this
Agreement are for the convenience of the parties only and shall be given no
substantive or interpretive effect whatsoever.
11.11 Interpretation. In this Agreement, unless the context
otherwise requires, words describing the singular number shall include the
plural and vice versa, and words denoting any gender shall include all genders
and words denoting natural persons shall include corporations and partnerships
and vice versa.
11.12 Waivers. Except as provided in this Agreement, no action
taken pursuant to this Agreement, including, without limitation, any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representations,
warranties, covenants or agreements contained in this Agreement. The waiver by
any party hereto of a breach of any provision hereunder shall not operate or be
construed as a waiver of any prior or subsequent breach of the same or any
other provision hereunder.
11.13 Incorporation. The Schedules and all Exhibits attached hereto
and thereto and referred to herein and therein are hereby incorporated herein
and made a part hereof for all purposes as if fully set forth herein.
11.14 Severability. Any term or provision of this Agreement which
is 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.
11.15 Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed the parties shall be entitled to
an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any Texas Court, this
being in addition to any other remedy to which they are entitled at law or in
equity.
11.16 Subsidiaries. As used in this Agreement, the word
"Subsidiary" when used with respect to any party means any corporation,
partnership, joint venture, business trust or other entity, of which such party
directly or indirectly owns or controls at least a majority of the securities
or other interests having by their terms ordinary voting power to elect a
majority of the board of directors or others performing similar functions with
respect to such corporation or other organization.
11.17 Non-Recourse. Neither the officers, trust managers nor
shareholders of PMCT shall be personally bound or have any personal liability
hereunder. STH shall look solely to the assets of PMCT for satisfaction of any
liability of PMCT with respect to this Agreement and the Ancillary Agreements
to which it is a party. STH will not seek recourse or commence any action
against any
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of the shareholders of PMCT or any of their personal assets, and will not
commence any action for money judgments against any of the directors or
officers of PMCT or seek recourse against any of their personal assets, for the
performance or payment of any obligation of PMCT hereunder or thereunder.
Neither the directors, officers nor shareholders of STH shall be personally
bound or have any personal liability hereunder. PMCT shall look solely to the
assets of STH for satisfaction of any liability of STH with respect to this
Agreement and the Ancillary Agreements to which it is a party. PMCT will not
seek recourse or commence any action against any of the stockholders of STH or
any of their personal assets, and will not commence any action for money
judgments against any of the directors or officers of STH or seek recourse
against any of their personal assets, for the performance or payment of any
obligation of STH hereunder or thereunder.
IN WITNESS WHEREOF, the parties have executed this Agreement and
caused the same to be duly delivered on their behalf on the day and year first
written above.
ATTEST: PMC COMMERCIAL TRUST
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------- --------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Executive Vice President and President and Chief Executive
Chief Operating Officer Officer
ATTEST: SUPERTEL HOSPITALITY, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------- --------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Executive Vice President and President and Chief Executive
Chief Operating Officer Officer
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APPENDIX A
"Applicable Laws" means any applicable federal, state county or
municipal law, statute, ordinance, rule, regulation, order or determination of
any governmental authority or any board of fire underwriters (or other body
exercising similar functions), or any restrictive covenant or deed restriction
or zoning ordinance or classification affecting any of the Hotels, including
without limitation, all applicable codes, flood disaster laws and health and
Environmental Laws, rules and regulations.
"Architectural Barriers Legislation" means the Americans With
Disabilities Act of 1990, P.L. 101-336, as amended.
"Code" means the Internal Revenue Code of 1986, as amended.
"Consumables" means all engineering, maintenance and housekeeping
supplies, including soap, cleaning materials and matches; laundering and toilet
supplies provided to guests as part of hotel services; stationery and printing;
and other supplies of all kinds, whether used, unused, or held in reserve
storage for future use in connection with the maintenance or operation of, or
the services provided by each Hotel, which are on hand on the Closing Date,
subject to such depletion and including such resupplies as shall occur and be
made in the normal course of business, excluding Food and Beverage, Operating
Equipment and all items of personal property owned by Lessees, guests,
employees, or other persons furnishing food or services to each Hotel.
"Earnings and Profits Amount" shall mean the aggregate amount of STH's
accumulated and current earnings and profits, calculated as of the end of the
calendar month preceding the month in which the Closing Date occurs, subject to
certain adjustments thereto, as set forth on Exhibit A hereto, and shall be
set forth in certificate of the chief financial officer of STH, certifying as
to the Earnings and Profits Amount and the method of its calculation. The
Earnings and Profits Amount shall be calculated on a tax basis consistent with
the earnings and profits calculations given to PMCT by STH prior to the
execution of the Agreement.
"Earnings and Profits Dividend" shall mean the dividend of the
Earnings and Profits Amount, reduced on a dollar-for-dollar basis by the amount
of Indebtedness of STH in excess of $70 million, made from STH to the holders
of the STH Common Stock pursuant to Section 8.2 of this Agreement.
"Environmental Conditions" means conditions of the environment,
including the ocean, natural resources (including flora and fauna), soil,
surface water, ground water, any actual or potential drinking or water supply,
subsurface strata, or air, including ambient air, relating to or arising out of
the use, handling, storage, treatment, recycling, generation, transportation,
release, spilling, leaking, pumping, pouring, emptying, discharging, injecting,
escaping, leaching, disposal, dumping or threatened release of Hazardous
Materials from, in, on, or onto any of the parcels of Land.
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"Environmental Laws" means without limitation (i) the Resource
Conservation and Recovery Act, as amended by the Hazardous and Solid Waste
Amendments of 1984, as now or hereafter amended ("RCRA") (42 U.S.C. Section
6901 et seq.), (ii) the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, as now or hereafter amended ("CERCLA") (42 U.S.C.
Section 9601 et seq.), (iii) the Clean Water Act, as now or hereafter amended
("CWA") (33 U.S.C. Section 1251 et seq.), (iv) the Toxic Substances Control
Act, as now or hereafter amended ("TSCA") (15 U.S.C. Section 2601 et seq.),
(v) the Clean Air Act, as now or hereafter amended ("CAA") (42 U.S.C. Section
7401 et seq.), (vi) all regulations promulgated under any of the foregoing,
(vii) any local, state or foreign law, statute, regulation or ordinance
analogous to any of the foregoing, and (viii) any other federal, state, local,
or foreign law (including any common law), statute, regulation, or ordinance
regulating, prohibiting, or otherwise restricting the placement, discharge,
release, threatened release, generation, treatment, or disposal upon or into
any environmental media of any substance, pollutant, or waste which is now or
hereafter classified or considered to be hazardous or toxic to human health or
the environment.
"Environmental Noncompliance" means, but is not limited to: (i) the
Release of any Hazardous Material into the environment, any storm drain, sewer,
septic system or publicly owned treatment works, in violation of any effluent
or emission limitations, standards or other criteria or guidelines established
by any Environmental Law; (ii) any noncompliance of physical structure,
equipment, process or premises with the requirements of building or fire codes,
zoning or land use regulations or ordinances, conditional use permits and the
like; (iii) any noncompliance with federal, state or local requirements
governing occupational safety and health; (iv) any operations, procedures,
designs, and the like at or on any of the parcels of Land that do not conform
to the statutory or regulatory requirements of any Environmental Law (including
land use regulations and ordinances) intended to protect public health, welfare
and the environment; (v) the failure to have obtained permits, licenses,
variances or other governmental authorizations necessary for the legal use
and/or operation of any equipment, process, or any activity at any parcel of
Land; and (vi) the operation and/or use of any process or equipment in
violation of any permit condition, schedule of compliance, administrative or
court order and the like, as any of the foregoing may be applicable to any
parcel of Land.
"Equipment Leases" shall mean all material leases, rental or other
agreements for the use of the FF&E, together with all amendments thereto.
"FF&E" shall mean as to each parcel of Land all fixtures, furniture,
furnishings, equipment, machinery, apparatus, appliances, and other articles of
depreciable personal property now owned or leased by STH or any STH Subsidiary
and located on such Land and used or usable in connection with the business or
Improvements located thereon, subject to such depletions, and replacements as
shall occur and be made in the normal course of business excluding, however:
(i) Consumables, (ii) Operating Equipment, (iii) Liquor Inventory and Liquor
Personalty, (iv) Food and Beverage, (v) Improvements, (vi) Vehicles, and (vii)
property owned by Lessees, guests, employees or other persons furnishing goods
or services to the business or Improvements located thereon.
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"Governmental Authority" means any and all applicable courts, boards,
agencies, commissions, offices, or authorities of any nature whatsoever for any
governmental ▇▇▇▇ (▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ or
otherwise) whether now or hereafter in existence.
"Hazardous Materials" means any substance, product matter, material,
waste, solid, liquid, gas, or pollutant, the generation, storage, disposal,
handling, recycling, release (or threatened release), treatment, discharge, or
emission of which is regulated, prohibited, or limited under any Environmental
Law and shall also include, without limitation, (i) gasoline, diesel fuel, fuel
oil, motor oil, waste oil, and any other petroleum hydrocarbons, including any
additives or other by-products associated therewith, (ii) asbestos and
asbestos-containing materials in any form, (iii) polychlorinated biphenyls,
(iv) any substance the presence of which on the Property (A) requires reporting
or remediation under any Environmental Law; (B) causes or threatens to cause a
nuisance at any Hotel or poses or threatens to pose a hazard to the health or
safety of persons at any Hotel; or (C) which, if it emanated or migrated from
at any Hotel, could constitute a trespass, nuisance or health or safety hazard
to persons on adjacent property, (v) radon, (vi) urea formaldehyde foam
insulation, and (vii) underground storage tanks, whether empty, filled or
partially filled with any substance.
"Hotel" means each parcel of Land together with the Improvements and
Personal Property located on, at or used in connection with each parcel of
Land.
"Improvements" means all buildings, structures, and other
improvements, including such fixtures as shall constitute real property,
located on each parcel of Land including, but not limited to, the hotel
buildings containing guest rooms, meeting rooms, dining and beverage
facilities, office space, parking lots, swimming pools, sheds, and all other
hotel amenities (but specifically excluding FF&E).
"Indebtedness" means the aggregate liabilities of STH as of the end of
the calendar month preceding the month in which the Closing Date occurs, as
accrued on the balance sheet of STH as of such date prepared in accordance with
GAAP, subject, however, to those adjustments set forth on Exhibit B attached
hereto.
"Land" means each parcel of land being described more fully on Exhibit
C attached hereto together with all interest, if any, of STH in and to strips
and gores, if any, between the Land and abutting properties and any land lying
in or under the bed of any street, alley, road or right-of-way, open or
proposed, abutting or adjacent to the Land.
"Leases" means all of STH's interest in material leases, subleases and
rental agreements (written or verbal, now or hereafter in effect) that grant a
possessory interest in and to space situated on each parcel of Land or in the
Improvements or that otherwise grant rights with regard to use of all or any
portion of such Land or such Improvements, and all prepaid rentals (to the
extent applicable to a period beyond the Closing Date) and security deposits
under the Leases.
"Lessees" means the tenants under Leases.
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"Miscellaneous Hotel Assets" shall mean all contract rights, as-built
plans, specifications and architectural drawings and floor plans relating to
the construction of each Hotel, construction contracts, all written reports
relating to the condition of each Property, leases, concessions, assignable
warranties covering any portion of each Hotel or the FF&E located thereat, and
other items of intangible personal property owned by STH and relating to the
ownership or operation of the Hotel, including, but not limited to, (i) Service
Contracts, (ii) Equipment Leases, (iii) Permits, (iv) Hotel Names, (v) cash or
other funds, in ▇▇▇▇▇ cash or house banks, (vi) assignable utility and similar
deposits, (vii) Bookings, and (viii) prepaid amounts under any Service
Contracts, Equipment Leases, Leases, or Permits.
"Notification" means any written summons, citation, directive, order,
claim, litigation, pleading, investigation, proceeding, judgment, letter, or
any other written communication from any governmental instrumentality, any
entity or any individual, concerning any intentional or unintentional act or
omission which has resulted in or which may result in any Environmental
Noncompliance or Environmental Claim.
"Operating Agreements" means all material contracts of employment,
management, maintenance, service, supply or rental, franchise or license
agreements or other contracts outstanding relating to the operations of the
Hotels.
"Operating Equipment" shall mean all material china, glassware,
linens, and silverware owned by seller, whether in use or held in reserve
storage for future use, in connection with the operations of each Hotel, which
are on hand and located at each Hotel on the Closing Date, subject to such
depletion and including such resupplies as shall be made in the normal course
of business.
"Other Rights" means all rights, titles and interests of STH and any
STH subsidiary in and to any easements, reciprocal easements, rights-of-way,
rights of ingress or egress or other interests in, on, or to, any land,
highway, street, road or avenue, open or proposed, in, on, across, in front of,
abutting or adjoining the Land; all goodwill relating to the Land and
Improvements; all telephone exchanges, if any, related to the operation and
management of any Hotel; all keys to locks at each of the Improvements; and all
office furniture, furnishings, equipment and machinery, if any, in STH's
management office in the Improvements; any and all rights of STH in and to any
contracts or agreements with any city or municipality relating in any manner to
the Land, all rights, titles and interests of STH in and to any condemnation
award made or to be made, after the Effective Time, in respect of the Hotels
and in and to any unpaid award for damage to the Hotels by reason of casualty
to the Hotels or change of grade of any street.
"Permits" means all permits, consents, licenses, certificates,
approvals, registrations, and authorizations which are required by any
Applicable Law or Environmental Law for operation of each Property.
"Personal Property" means the FF&E, the Operating Equipment, the
Miscellaneous Hotel Assets, and all other machinery, equipment, fixtures, the
trade name, and personal property of every
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kind and character, and all accessories and additions thereto, owned by STH and
located in or on or used in connection with each parcel of Land or the
Improvements or the operations thereon.
"Property" means, collectively, the Land, Leases, Improvements,
Personal Property and Other Rights.
"Release" means releasing, spilling, leaking, pumping, pouring,
emitting, emptying, discharging, ejecting, escaping, leaching, disposing,
seeping, infiltrating, draining, or dumping of any Hazardous Material. This
term shall be interpreted to include both the present and past tense, as
appropriate.
"STH Property Reports" shall mean the (a) Title Policies, (b) the
Title Updates, (c) the instruments referred to in the Title Policies and Title
Updates, (d) the Surveys, (e) the Architectural Reviews, (f) the Phase 1
Assessments, and (g) the Phase 2 Assessments, if any.
"Survey" means the survey of each parcel of Land and Improvements
located thereon prepared by the Surveyor in accordance with the terms and
provisions of Section 6.3.
"Surveyor" means a Registered Public Surveyor or a Registered
Professional Engineer duly and currently licensed by the state in which each
parcel of Land is located.
"Title Policy" means as to each Hotel the Owner's Policy of Title
Insurance held by STH.
"Title Update" means as to each Title Policy (other than those dated
after the date hereof) the written confirmation of the title company that
issued such Title Policy of all matters of a public record affecting all or any
portion of the property covered by such Title Policy that have been filed in
the public record since the effective date of the coverage of such Title
Policy.
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