EXHIBIT 99.1
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT is made as of the 6th day of April, 1998, by and
among Patriot American Hospitality, Inc. (the "REIT"), a Delaware corporation,
Wyndham International, Inc., a Delaware Corporation (the "OPCO") (the REIT and
the OPCO, each a "Company" and together the "Companies"), PaineWebber
Incorporated ("PaineWebber"), and PaineWebber Financial Products Inc., as agent
acting for the account of PaineWebber ("PaineWebber Agent" and, collectively
with PaineWebber, the "PaineWebber Parties").
IN CONSIDERATION of the mutual covenants contained in this Purchase
Agreement, the Companies and the PaineWebber Parties hereby agree as follows:
SECTION 1. Authorization of Sale of the Shares. Subject to the terms and
conditions of this Purchase Agreement, the REIT has authorized the sale to
PaineWebber of 5,150,000 shares of common stock, $.01 par value per share, of
the REIT (the "REIT Shares") and the OPCO has authorized the sale to PaineWebber
of 5,150,000 shares of common stock, $.01 par value per share, of the OPCO (the
"OPCO Shares"), which REIT Shares and OPCO Shares are paired and traded as a
unit consisting of one (1) REIT Share and one (1) OPCO Share (hereinafter each
such paired unit is referred to as a "Paired Share" and the Paired Shares
referred to in this sentence are herein called the "Purchase Shares")). In
addition, the REIT and the OPCO may issue to PaineWebber additional Paired
Shares in settlement of certain of their obligations under that certain Purchase
Price Adjustment Mechanism Agreement (the "Adjustment Agreement"), dated as of
April 6, 1998, between the REIT, the OPCO and PaineWebber (the "Additional
Shares"). The Companies and the PaineWebber Parties agree, to the extent
relevant to their respective business and commercial activities and in the
absence of an administrative determination or judicial ruling to the contrary,
to treat for United States federal income tax and financial accounting purposes
payments and deliveries made under the Adjustment Agreement as adjustments to
the purchase price paid for the Purchase Shares pursuant to Section 2 hereof.
The Purchase Shares and the Additional Shares are hereinafter collectively
called the "Shares."
SECTION 2. Agreement to Sell and Purchase the Purchase Shares. Subject
to the terms and conditions of this Purchase Agreement, on the Closing Date (as
defined in Section 3 hereof), the Companies will sell to PaineWebber the
Purchase Shares for a per Paired Share purchase price equal to 98.00% of the
Closing Price. The "Closing Price" shall equal the closing price reported on
the New York Stock Exchange for a Paired Share on April 3, 1998.
SECTION 3. Delivery of the Purchase Shares at the Closing.
3.1 Closing. The completion of the purchase and sale of the
Purchase Shares (the "Closing") shall occur as soon as practicable on or after
the date hereof on a business day to be agreed upon by the Companies and the
PaineWebber Parties, but in no event later than five business days after the
execution of this Purchase Agreement (hereinafter, the "Closing Date").
3.2 Conditions. At Closing, the Companies shall deliver to the
PaineWebber Parties one or more stock certificates registered in the name of
PaineWebber representing the number of Purchase Shares set forth in Section 1
above.
The obligation of the Companies to complete the purchase and sale of the
Purchase Shares and deliver such stock certificate(s) to the PaineWebber Parties
at the Closing shall be subject to the following conditions, any one or more of
which may be waived by both of the Companies acting together: (i) receipt by
the Companies of immediately available funds (or other mutually agreed upon form
of payment) in the full amount of the purchase price specified in Section 2 for
the Purchase Shares being purchased hereunder, (ii) the accuracy in all material
respects as of the Closing Date, of the representations and warranties made by
the PaineWebber Parties herein and the fulfillment, in all material respects, of
those undertakings of the PaineWebber Parties to be fulfilled prior to the
Closing, (iii) execution and delivery of the Adjustment Agreement, (iv) receipt
by the Companies of a cross-receipt with respect to the Purchase Shares executed
by PaineWebber Agent on behalf of PaineWebber and (v) receipt by the Companies
of a certificate by an officer or authorized representative of PaineWebber Agent
to the effect that the representations and warranties of the PaineWebber Parties
set forth in Section 5 hereof are true and correct as of the date of this
Agreement and as of the Closing Date.
The obligation of PaineWebber to accept delivery of such stock
certificate(s) and to pay for the Purchase Shares evidenced thereby shall be
subject to the following conditions, any one or more of which may be waived by
the PaineWebber Parties: (i) the accuracy in all material respects, as of the
Closing Date, of the representations and warranties made by the Companies herein
and the fulfillment, in all material respects, of those undertakings of the
Companies to be fulfilled prior to the Closing, (ii) receipt by the PaineWebber
Parties of all opinions, letters and certificates to be delivered by the
Companies pursuant to this Purchase Agreement, (iii) execution and delivery of
the Adjustment Agreement, and (iv) receipt by the PaineWebber Parties of a
cross-receipt with respect to the purchase price for the Purchase Shares
executed by the Companies.
SECTION 4. Representations, Warranties and Covenants of the Companies.
Except as disclosed in the Companies' SEC Filings (as defined below), the REIT
and the OPCO, jointly and severally, hereby represent and warrant to the
PaineWebber Parties, and covenant with the PaineWebber Parties, as follows:
4.1 Organization and Qualification of the Companies. The REIT has
been duly organized and is validly existing as a corporation in good standing
under the laws of Delaware with power and authority to own and lease its
properties and to conduct its business as currently conducted. The REIT is duly
qualified as a corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing or managing of property or the conduct of business, except
where the failure to so qualify would not have a material adverse effect on the
condition, financial or
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otherwise, or the earnings, assets, business affairs or business prospects of
the Companies and the Subsidiaries (as defined below) of the Companies
considered as one enterprise. The REIT's existence has not been suspended or
terminated nor have any dissolution, revocation or forfeiture proceedings
regarding the REIT been commenced. The OPCO has been duly organized and is
validly existing as a corporation in good standing under the laws of Delaware
with corporate power and authority to own and lease its properties and to
conduct its business as currently conducted. The OPCO is duly qualified as a
foreign corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing or managing of property or the conduct of business, except
where the failure to so qualify would not have a material adverse effect on the
condition, financial or otherwise, or the earnings, assets, business affairs or
business prospects of the Companies and the Subsidiaries considered as one
enterprise. The OPCO's existence has not been suspended or terminated nor have
any dissolution, revocation or forfeiture proceedings regarding the OPCO been
commenced. Entities in which the Companies directly or indirectly have at least
a 50% ownership interest are herein referred to as the "Subsidiaries," and each
individually, as a "Subsidiary."
4.2 Organization and Qualification of Subsidiaries. Each of the
Subsidiaries has been duly organized and is validly existing as a corporation,
limited partnership, or limited liability company, as the case may be, in good
standing under the laws of its respective jurisdiction of organization, with
full power and authority to own, lease and operate its properties and to conduct
the business in which it currently is engaged. Each of the Subsidiaries is duly
qualified as a foreign corporation, limited partnership, or limited liability
company, as the case may be, to transact business and is in good standing in
each jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except where
the failure to so qualify would not have a material adverse effect on the
condition, financial or otherwise, or the earnings, assets, business affairs or
business prospects of the Companies and the Subsidiaries considered as one
enterprise. All of the issued and outstanding shares of capital stock of each
of the corporate Subsidiaries have been duly authorized and validly issued and
are fully paid and non-assessable. The ownership by the Companies or the
Subsidiaries of the shares of capital stock or limited partnership or equity
interests, as the case may be, of each of the Subsidiaries is as described in
the Companies' SEC Filings.
4.3 Authorized Capital Stock. The REIT has 1.5 billion authorized
shares as of February 9, 1998, consisting of 650 million REIT Shares, par value
$0.01 per share, 750 million shares of excess stock, par value $0.01 per share,
and 100 million shares of preferred stock, par value $0.01 per share ("Patriot
Preferred Stock"). The OPCO has authorized capital stock as of February 9, 1998
of 1.5 billion shares, consisting of 650 million OPCO Shares, par value $0.01
per share, 750 million shares of excess stock, par value $0.01 per share and 100
million shares of preferred stock, par value $0.01 per share. As of February 9,
1998, there were 99,878,341 Paired Shares outstanding, 7,190,091 Paired Shares
were reserved for issuance pursuant to equity plans filed pursuant to the
Companies' SEC Filings (as defined below), and 12,701,170 Paired Shares were
reserved for issuance upon the election by the Companies to
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acquire, in exchange for Paired Shares, units of limited partnership interest in
Patriot American Hospitality Partnership, L.P. and Patriot American Hospitality
Operating Partnership, L.P. tendered by redeeming unit holders. As of February
9, 1998, there were 4,860,876 shares of Patriot Preferred Stock outstanding and
no preferred shares of the OPCO were currently outstanding. The issued and
outstanding Paired Shares of the Companies have been duly authorized and validly
issued, are fully paid and nonassessable, have been issued in compliance with
all federal and state securities laws, were not issued in violation of or
subject to any preemptive rights or other rights to subscribe for or purchase
securities, and conform to the description thereof in the Companies' SEC
Filings. Other than as described in the Companies' SEC Filings, the REIT does
not have outstanding any options to purchase, or other rights to subscribe for
or purchase, any securities or obligations convertible into, or any contracts or
commitments to issue or sell, shares of its capital stock or any such options,
rights, convertible securities or obligations. The description of the REIT's
stock, stock bonus and other stock plans or arrangements and the options or
other rights granted and exercised thereunder in the Companies' SEC Filings
accurately and fairly presents the information required to be shown with respect
to such plans, arrangements, options and rights.
4.4 Issuance, Sale and Delivery of the Shares. The Purchase
Shares to be sold by the Companies have been duly authorized for issuance and,
when issued, delivered and paid for in the manner set forth in this Purchase
Agreement, will be validly issued, fully paid and non-assessable. The
Additional Shares have been duly authorized and, if and when issued pursuant to
the Adjustment Agreement, will be validly issued, fully paid and non-assessable,
Upon payment of the purchase price and delivery of the Shares in accordance with
this Agreement, PaineWebber will receive good, valid and marketable title to the
Shares, free and clear of all security interests, mortgages, pledges, liens,
encumbrances and claims. No approval of or authorization by the respective
shareholders or boards of directors of the Companies will be required for the
issuance and/or sale of the Shares to be sold by the Companies as contemplated
herein or in the Adjustment Agreement, except such as shall have been obtained
on or before the Closing Date. The issuance and/or sale of the Shares to the
PaineWebber Parties by the Companies pursuant to this Purchase Agreement or the
Adjustment Agreement (as the case may be), the compliance by the Companies with
the other provisions of this Purchase Agreement or the Adjustment Agreement and
the consummation of the other transactions contemplated hereby or thereby do not
require the consent, approval, authorization, registration or qualification of
or with any court, governmental authority or agency, except such as shall have
been obtained on or before the Closing Date or in connection with any Resale
Registration Statement filed with respect to any of the Shares. The Companies
meet and will continue to meet the requirements for use of Form S-3 under the
Securities Act, and the rules and regulations of the U.S. Securities and
Exchange Commission (the "Commission") under the Securities Act (the "1933 Act
Regulations"). The Companies have filed and will file all documents which they
are required to file under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and the rules and regulations promulgated thereunder (the "1934
Act Regulations") within the time periods prescribed by the Exchange Act and the
1934 Act Regulations and all such documents (collectively, together with the
Companies' registration statements filed under the Securities Act which have
been declared
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effective since January 1, 1997 and have not been withdrawn, the "Companies' SEC
Filings") comply and will comply in all material respects with the requirements
of the Exchange Act and the 1934 Act Regulations, as applicable, and none of
such documents, when so filed, contained or will contain any untrue statement of
a material fact or omitted or will omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. No Resale
Registration Statement filed in respect of any of the Shares, when so filed,
contained or will contain any untrue statement of a material fact or omitted or
will omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
4.5 Due Execution, Delivery and Performance by the Company. Each
of the Companies has full right, power and authority to enter into this Purchase
Agreement and the Adjustment Agreement and perform the transactions contemplated
hereby and thereby. This Purchase Agreement and the Adjustment Agreement have
been duly authorized, executed and delivered by the Companies and, upon the
execution and delivery hereof, each of this Agreement and the Adjustment
Agreement will constitute the valid and binding obligation of each Company,
enforceable in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' and contracting parties' rights generally and
except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceedings in
equity or at law) and except as the enforceability of the indemnification
agreements of the Companies in Section 7.5 hereof may be limited by public
policy. The execution and delivery of this Purchase Agreement and the
Adjustment Agreement by the Companies and the consummation of the transactions
and the performance of the obligations herein and therein contemplated will not
violate any provision of the certificate of incorporation, bylaws, or other
organizational documents of the Companies, and will not conflict with, result in
the breach or violation of, or constitute, either by itself or upon notice or
the passage of time or both, a default under any material agreement, mortgage,
deed of trust, credit agreement, lease, franchise, license, indenture, note,
permit or other instrument to which either Company is a party or by which either
Company or its respective properties may be bound or affected, any statute or
any authorization, judgment, decree, order, rule or regulation of any court or
any regulatory body, administrative agency or other governmental body applicable
to either Company or any of its respective properties other than violations,
conflicts, breaches or defaults that individually or in the aggregate would not
have a material adverse effect on the condition, financial or otherwise, or on
the earnings, assets, business affairs or business prospects of the Companies
and the Subsidiaries considered as one enterprise. No consent, approval,
authorization or other order of any court, regulatory body, administrative
agency or other governmental body is required for the execution and delivery of
this Purchase Agreement, the Adjustment Agreement or the consummation of the
transactions contemplated hereby or thereby, except in connection with the
filing of any Resale Registration Statements pursuant to Section 7 below or for
compliance with the blue sky laws applicable to the offering of the Shares.
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4.6 Accountants. The Companies' independent certified public
accountants, who have expressed their opinion with respect to the Most Recent
Financial Statements (as defined below) are independent accountants as required
by the Securities Act and the 1933 Act Regulations.
4.7 No Defaults. Except as to defaults, violations and breaches
which individually or in the aggregate would not have a material adverse effect
on the condition, financial or otherwise, on the earnings, assets, business
affairs or business prospects of the Companies and the Subsidiaries considered
as one enterprise, none of the Companies or any Subsidiary is in violation or
default of any provision of its declaration of trust, charter or bylaws, or
other organizational documents, and none of the aforementioned parties is in
breach of or default with respect to any provision of any agreement, judgment,
decree, order, mortgage, deed of trust, credit agreement, lease, franchise,
license, indenture, permit or other instrument to which it is a party or by
which it or any of its properties are bound.
4.8 No Actions. There is no action, suit or proceeding before or
by any court or governmental agency or body, domestic or foreign, now pending,
or, to the knowledge of the Companies, threatened against or affecting either
Company or any Subsidiary, any real property or improvements thereon owned or
leased by any of either Company or the Subsidiaries, including any property
underlying indebtedness held by the Companies (each, individually, a "Property"
and collectively, the "Properties"), or any officer of either Company or any of
the Subsidiaries that, if determined adversely to either Company or any
Subsidiary, any Property, including any property underlying indebtedness held by
either Company and any of the Subsidiaries, or any such officer or trust
manager, would reasonably be expected to (A) result in any material adverse
change in the condition, financial or otherwise, or in the earnings, assets,
business affairs or business prospects of the Companies and the Subsidiaries
considered as one enterprise or (B) materially and adversely affect the
consummation of the transactions contemplated by this Agreement or the
Adjustment Agreement. There is no pending legal or governmental proceeding to
which either Company or any Subsidiary is a party or of which any of their
respective properties or assets or any property, including any property
underlying indebtedness held by either Company or any of the Subsidiaries, is
the subject, including ordinary routine litigation incidental to the business,
that is, considered in the aggregate, material to the condition, financial or
otherwise, or the earnings, assets, business affairs or business prospects of
the Companies and the Subsidiaries considered as one enterprise.
4.9 Properties. (A) Each Company and the Subsidiaries, as the
case may be, has good and marketable title to all the properties and assets
reflected as owned by such entities in the Most Recent Financial Statements, and
good and marketable title to the improvements, if any, thereon and all other
assets that are required for the effective operation of such real property in
the manner in which they currently are operated; subject to no lien, mortgage,
pledge, charge or encumbrance of any kind except (i) those, if any, reflected in
the Most Recent Financial Statement, or (ii) those which would not have a
material adverse effect on the condition, financial or otherwise, or on the
earnings, assets, business affairs or
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business prospects of or with respect to the Companies and the Subsidiaries
considered as one enterprise, (B) the leases of any real property and buildings
held under lease by either Company or any Subsidiary are in full force and
effect, and such entity is not in default in respect of any of the terms or
provisions of such leases and such entity has not received notice of the
assertion of any claim by anyone adverse to such entity's rights as lessee under
such leases, or affecting or questioning such entity's right to the continued
possession or use of the real property and buildings held under such leases or
of a default under such leases, in each case with such exceptions as would not
have a material adverse impact on the condition, financial or otherwise, or on
the earnings, assets, business affairs or business prospects of or with respect
to the Companies and the Subsidiaries considered as one enterprise; (C) none of
the Companies or any of the Subsidiaries or any tenant of any of the Properties
is in default under any of the leases pursuant to which any of the Companies or
the Subsidiaries, as lessor, leases its Property (and neither of the Companies
knows of any event which, but for the passage of time or the giving of notice,
or both, would constitute a default under any of such leases) other than such
defaults that would not have a material adverse effect on the condition,
financial or otherwise, or on the earnings, assets, business affairs or business
prospects of or with respect to the Companies and the Subsidiaries considered as
one enterprise; (D) no person has an option or right of first refusal to
purchase all or part of any Property or any interest therein, other than such
options or rights of first refusal which would not have a material adverse
effect on the condition, financial or otherwise, or on the earnings, assets,
business affairs or business prospects of or with respect to the Companies and
the Subsidiaries, considered as one enterprise; (E) each of the Properties
complies with all applicable codes, laws and regulations (including, without
limitation, building and zoning codes, laws and regulations and laws relating to
access to the Properties), except for such failures to comply that would not
individually or in the, aggregate have a material adverse impact on the
condition, financial or otherwise, or on the earnings, assets, business affairs
or business prospects of the Companies and the Subsidiaries considered as one
enterprise; and (F) none of the Companies has knowledge of any pending or
threatened condemnation proceedings, zoning change, or other proceeding or
action that will in any manner affect the size of, use of, improvements on,
construction on or access to the Properties, including any property underlying
indebtedness held by either Company or any of the Subsidiaries, except such
proceedings or actions that would not have a material adverse effect on the
condition, financial or otherwise, or on the earnings, assets, business affairs
or business prospects of the Companies and the Subsidiaries considered as one
enterprise.
4.10 REIT Qualification. The REIT qualified as a real estate
investment trust under the Internal Revenue Code of 1986, as amended (the
Code"), with respect to its taxable years ended December 31, 1995, December 31,
1996 and December 31, 1997, and is organized in conformity with the requirements
for qualification as a real estate investment trust, and its manner of operation
has enabled it to meet the requirements for qualification as a real estate
investment trust as of the date hereof, and its proposed manner of operation
will enable it to meet the requirements for qualification as a real estate
investment trust in the future.
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4.11 No Material Change. Since the date of the Most Recent
Financial Statements, and except as otherwise disclosed in the Companies' SEC
Filings as of the Closing Date, (i) neither Company has incurred any liabilities
or obligations, indirect or contingent, which will have a Material Adverse
Effect or entered into any material verbal or written agreement or other
material transaction which is not in the ordinary course of business (it being
agreed that for purposes of this sentence the REIT's ordinary course of business
shall include the acquisition or disposition, directly or indirectly, of real
estate properties or businesses of a type that may be owned by a "real estate
investment trust" (as defined under the Internal Revenue Code) and the OPCO's
ordinary course of business shall include the acquisition or disposition,
directly or indirectly, of assets or businesses related to or engaged in the
hospitality industry) or which could reasonably be expected to result in a
material reduction in the future earnings of the Companies; (ii) no material
casualty loss or material condemnation or other material adverse event with
respect to any Property or any of the Subsidiaries, has occurred that is
material to the Companies and the Subsidiaries considered as one enterprise;
(iii) none of the Companies, or the Subsidiaries is in default in the payment of
principal or interest on any outstanding debt obligations; (iv) there has not
been any change in the capital stock of either Company or the Subsidiaries
(other than the sale of the Purchase Shares hereunder or those reserved for
issuance pursuant to the Adjustment Agreement, issuances pursuant to the
incentive compensation plans of the Companies), or any increase in the
indebtedness of either Company or the Subsidiaries that is material to such
entities, considered as one enterprise; (v) and except for regular quarterly
dividends or distributions on the REIT Shares or the OPCO Shares, there has been
no dividend or distribution of any kind declared, paid or made by either
Company; and (vi) there has not been any material adverse change in the
condition, financial or otherwise, or in the earnings, assets, business affairs
or business prospects of the Companies and the Subsidiaries, considered as one
enterprise, whether or not arising in the ordinary course of business.
4.12 Intellectual Property. None of the Companies or the
Subsidiaries is required to own or possess trademarks, trade names, patent
rights, copyrights, licenses, approvals and governmental authorizations, which
it does not already own or possess to conduct its businesses as now conducted;
and neither Company has knowledge of any material infringement by it of
trademark, trade name rights, patent rights, copyrights, licenses, trade secrets
or other similar rights of others, and has not received any notice that any
claim has been made against the Companies regarding trademark, trade name,
patent, copyright, license, trade secrets or other infringement.
4.13 Compliance. Neither Company has been advised, or has reason
to believe, that either Company or any Subsidiary is not conducting business in
compliance with all applicable laws, rules and regulations of the jurisdictions
in which it is conducting business, including, without limitation, all
applicable local, state and Federal environmental laws and regulations, except
where failure to be so in compliance would not materially adversely affect the
condition, financial or otherwise, or in the earnings, assets, business affairs
or business prospects of the Companies and the Subsidiaries, considered as one
enterprise.
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4.14 Taxes. The Companies and the Subsidiaries have filed all
material federal, state and foreign income and franchise tax returns which have
been required to be filed and have paid or accrued all taxes shown as due
thereon (except for those taxes which are being contested in good faith through
appropriate proceeding, for which adequate reserves have been established and as
to which the PaineWebber Parties have been notified in writing by the
Companies), and the Companies have no knowledge of any tax deficiency which has
been or might be asserted or threatened against the Companies or the
Subsidiaries which could materially adversely affect the business condition,
financial or otherwise, or in the earnings, assets, business affairs or business
prospects of the Companies and the Subsidiaries, considered as one enterprise.
4.15 Transfer Taxes. On the Closing Date, all stock transfer or
other taxes, if any (other than income taxes) which are required to be paid in
connection with the sale and transfer of the Purchase Shares to be sold to
PaineWebber hereunder will be, or will have been, fully paid or provided for by
the Companies and all laws imposing such taxes will be or will have been fully
complied with.
4.16 Investment Company. None of the Companies or any Subsidiary
is required to register as an "investment company" as such term is defined in
the Investment Company Act of 1940, as amended.
4.17 Additional Information. The Companies represent and warrant
that the information contained in the following documents, which the Companies
have furnished to the PaineWebber Parties, or will furnish or make available
upon request prior to the Closing, is true and correct in all material respects
as of their respective filing dates:
(a) Joint Annual Report on Form 10-K for the year ended
December 31, 1997, which Joint Annual Report includes the Companies' most
recently available audited financial statements together with the report
thereon of the independent certified public accountants (the "Most Recent
Financial Statements"),
(b) Joint Quarterly Reports on Form 10-Q, as amended if
applicable, for the quarters ended Much 31, 1997, June 30, 1997 and
September 30, 1997;
(c) the Companies' proxy statements on Form 14A relating to
(i) the most recent Annual Meetings of the REIT's Shareholders and the
OPCO's Shareholders and (ii) any Special Meetings of the REIT's
Shareholders and the OPCO's Shareholders which occurred during the 12 month
period prior to the date hereof or for which a meeting date has been fixed
and a proxy statement distributed;
(d) all other documents, if any, filed by or with respect to
the REIT and the OPCO with the Commission since January 1, 1997 pursuant to
Section 13, 15(d) or 16(a) of the Exchange Act; and
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(e) a covenant compliance certification stating that none of
the REIT, the OPCO or the Subsidiaries are in default under any of their
respective credit agreements or other financing arrangements.
4.18 Legal Opinion. At or prior to the Closing, counsel to the
Companies will deliver their legal opinions dated the Closing Date to the
PaineWebber Parties in substantially the form of Exhibit A hereto.
4.19 ERISA. The Companies and the Subsidiaries are in compliance
with all applicable provisions of the Employee Retirement Income Security Act of
1974, as amended and the rules and regulations promulgated thereunder ("ERISA"),
except for such failures to comply as would not singly or in the aggregate have
a material adverse effect on the condition, financial or otherwise, or on the
earnings, assets, business affairs or business prospects of or with respect to
the Companies and the Subsidiaries, considered as one enterprise. Neither a
Reportable Event (as defined under ERISA) nor a Prohibited Transaction (as
defined under ERISA) has occurred with respect to any Plan (as defined below) of
the Companies and/or their respective affiliates; no notice of intent to
terminate a Plan has been filed nor has any Plan been terminated within the past
five years; to the Companies' knowledge, no circumstance exists which
constitutes grounds under Section 402 of ERISA entitling the Pension Benefit
Guaranty Corporation ("PBGC") to institute proceedings to terminate, or appoint
a trustee to administer, a Plan, nor has the PBGC instituted any such
proceedings; the Companies and their affiliates have not completely or partially
withdrawn under Section 4201 or 4202 of ERISA from any Multiemployer Plan (as
defined therein); the Companies and their affiliates have met the minimum
funding requirements of Section 412 of the Code and Section 302 of ERISA with
respect to each Plan and there is no unfunded current liability (as defined
below) with respect to any Plan; the Companies and their affiliates have not
incurred any liability to the PBGC under ERISA (other than for the payment of
premiums under Section 4007 of ERISA); no part of the funds to be used by the
Companies in satisfaction of their obligations under this Purchase Agreement or
the Adjustment Agreement constitute "plan assets" of any "employee benefit plan"
within the meaning of ERISA or of any "plan" within the meaning of Section
4957(e)(I) of the Code, as interpreted by the Internal Revenue Service and the
U.S. Department of Labor in rules, regulations, releases and bulletins or as
interpreted under applicable case law. As used below, "Plan" means an "employee
benefit plan" or "plan" as described in Section 3(3) of ERISA; and "unfunded
current liability" has the meaning provided in Section 302(d)(8)(A) of ERISA.
4.20 Environmental Protection. To the knowledge of the Companies,
except as disclosed in the Companies' SEC Filings, none of the Companies or
their affiliates' properties contain any Hazardous Materials that, under any
Environmental Law, (i) would impose liability on the Companies or any affiliate
that is likely to have a material adverse effect on the condition (financial or
other), business, results of operations, or prospects, of the Companies or (ii)
is likely to result in the imposition of a lien on any material asset owned,
directly or indirectly, by the Companies. To the knowledge of the Companies,
neither of the Companies nor any of their affiliates is subject to any existing,
pending or threatened
10
investigation or proceeding by any governmental agency or authority with respect
or pursuant to any Environmental Law, except any which, if adversely determined,
would not have a Material Adverse Effect. As used herein, "Environmental Laws"
mean all federal, state, local and foreign environmental, health and safety
laws, codes and ordinances and all rules and regulations promulgated thereunder,
including, without limitation laws relating to emissions, discharges, releases
or threatened releases of pollutants, contaminants, chemicals, or industrial,
toxic or hazardous substances or wastes into the environment (including, without
limitation, air, surface water, ground water, land surface or subsurface strata)
or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollutants, contaminants,
chemicals, or industrial, solid, toxic or hazardous substances or wastes; and
"Hazardous Material" includes, without limitation, (i) all substances which are
designated pursuant to Section 311(b)(2)(A) of the Federal Water Pollution
Control Act ("FWPCA"), 33 U.S.C. Section 1251 et seq.; (ii) any element,
compound, mixture, solution, or substance which is designated pursuant to
Section 102 of the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), 42 U.S.C. Section 9601 et seq.; (iii) any hazardous
waste having the characteristics which are identified under or listed pursuant
to Section 3001 of the Resource Conservation and Recovery Act ("RCRA"),
42 U.S.C. Section 6901 et seq.; (iv) any toxic pollutant listed under
Section 307(a) of the FWPCA; (v) any hazardous air pollutant which is listed
under Section 112 of the Clean Air Act, 42 U.S.C. Section 7401 et seq.; (vi) any
imminently hazardous chemical substance or mixture with respect to which action
has been taken pursuant to Section 7 of the Toxic Substances Control Act,
15 U.S.C. Section 2601 et seq.; and (vii) petroleum, petroleum products,
petroleum by-products, petroleum decomposition by-products, and waste oil.
4.21 Solvency. Immediately following (i) the execution of this
Purchase Agreement and the Adjustment Agreement, (ii) the purchase of the
Purchase Shares pursuant hereto and (iii) the completion of any other
transaction contemplated by this Purchase Agreement and the Adjustment
Agreement, each of the Companies will be solvent and able to pay its debts as
they mature, will have capital sufficient to carry on its business and all
businesses in which it is to engage, and will have assets which will have a
present fair market valuation greater than the amount of all of its liabilities.
This Purchase Agreement and the Adjustment Agreement have been executed and
delivered by the Companies in good faith and in exchange for reasonably
equivalent value. Neither of the Companies intends to incur debts beyond its
ability to pay them as they become due. Each of the Companies' assets and
capital are now, and are expected in the future to be, sufficient to pay the
Companies' ongoing expenses as they are incurred and to discharge all of the
Companies' liabilities in the event that the business of the Companies is
required to be liquidated. The Companies have not entered into this Purchase
Agreement or the Adjustment Agreement or any transaction contemplated hereby or
thereby with an intent to hinder, delay or defraud creditors of any persons or
entity.
4.22 Certificate. A certificate of each Company executed by an
executive officer of such Company, to be dated the Closing Date in form and
substance satisfactory to the PaineWebber Parties to the effect that the
representations and warranties of the Companies set forth in this Section 4 are
true and correct as of the date of this Agreement and as of the
11
Closing Date, and such Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied on or
prior to such Closing Date.
4.23 Financial Statements. The Most Recent Financial Statements
(including the notes thereto) present fairly in all material respects the
financial position of the respective entity or entities presented therein at the
respective dates indicated and the results of their operations for the
respective periods specified, and except as otherwise stated in the Most Recent
Financial Statements, said financial statements have been prepared in conformity
with generally accepted accounting principles applied on a consistent basis.
The supporting schedules included in the Companies' SEC Filings fairly present
in all material respects the information required to be stated therein. The
financial information and data included in the Companies' SEC Filings present
fairly in all material respects the information included therein and have been
prepared on a basis consistent with that of the financial statements included in
the Companies' SEC Filings and the books and records of the respective entities
presented therein. The pro forma financial information included in the
Companies' SEC Filings has been prepared in accordance with the applicable
requirements of Rules 11-01 and 11-02 of Regulation S-X under the Securities Act
and other 1933 Act Regulations and American Institute of Certified Public
Accountants ("AICPA") guidelines with respect to pro forma financial information
and includes all adjustments necessary to present fairly in all material
respects the pro forma financial position of the respective entity or entities
presented therein at the respective dates indicated and the results of their
operations for the respective periods specified. Other than the historical and
pro forma financial statements (and schedule) included therein, no other
historical or pro forma financial statements (or schedules) are required to be
included in the Companies' SEC Filings. Except as reflected or disclosed in the
financial statements included in the Companies' SEC Filings, none of the
Companies or any of the Subsidiaries is subject to any material indebtedness,
obligation, or liability, contingent or otherwise.
4.24 Labor Disputes. No labor dispute with the employees of the
Companies or any Subsidiary exists or, to the knowledge of the Companies is
imminent.
4.25 Regulation M. None of the Companies, the Subsidiaries or, to
the Companies' knowledge, any of their trust managers, directors, officers or
controlling persons, has taken or will take, directly or indirectly, any action
resulting in a material violation of Regulation M under the Exchange Act, or
designed to cause or result under the Exchange Act or otherwise in, or which has
constituted or which reasonably might be expected to constitute, the unlawful
stabilization or manipulation of the price of any security of either Company or
facilitation of the sale or resale of the Shares.
4.26 Regulation U. The Companies represent that the proceeds of
the Purchase Shares will not be used by the Companies, whether immediate,
incidental or ultimate, to buy or carry margin stock as such terms are defined
in Regulation U by the Board of Governors of the Federal Reserve System.
12
SECTION 5. Representations, Warranties and Covenants of PaineWebber Agent
or PaineWebber.
5.1 Investment. The PaineWebber Parties represent and warrant to,
and covenant with, the Companies that: (i) the PaineWebber Parties, taking into
account the personnel and resources it can practically bring to bear on the
purchase of the Purchase Shares contemplated hereby, are knowledgeable,
sophisticated and experienced in making, and are qualified to make, decisions
with respect to investments in shares presenting an investment decision like
that involved in the purchase of the Purchase Shares, including investments in
securities issued by the Companies; (ii) PaineWebber is acquiring the number of
Purchase Shares set forth in Section 2 above in the ordinary course of its
business and for its own account for investment (as defined for purposes of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976 and the regulations
thereunder) only and with no present intention of distributing any of such
Purchase Shares or any arrangement or understanding with any other persons
regarding the distribution of such Purchase Shares except pursuant to a
registration statement effective under, or an exemption from the registration
requirements of, the Securities Act (this representation and warranty does not
limit the right of the PaineWebber Parties to sell Shares pursuant to the terms
of the Adjustment Agreement); (iii) neither PaineWebber Party will directly or
indirectly, sell or otherwise dispose of (or solicit any offers to purchase or
otherwise acquire) any of the Purchase Shares except in compliance with the
Securities Act and any applicable state securities or blue sky laws; (iv) each
PaineWebber Party has completed or caused to be completed the Registration
Statement Questionnaire and the Stock Certificate Questionnaire, both attached
hereto as Appendix I, for use in preparation of the Registration Statement and
the answers thereto are true and correct to the best knowledge of PaineWebber as
of the date hereof and will be true and correct to the best knowledge of
PaineWebber as of the effective date of the Resale Registration Statement; (v)
PaineWebber has, in connection with its decision to purchase the number of
Purchase Shares set forth in Section 2 above, relied solely upon the documents
identified in Section 4.17, the information referred to in Section 7.6 and the
representations, warranties and agreements of the Companies contained herein;
(vi) PaineWebber has had access to such additional information, if any,
concerning the Companies as it has considered necessary in connection with their
investment decision to acquire the Purchase Shares; (vii) each of the
PaineWebber Parties is an "accredited investor" within the meaning of Rule
501(a)(1), (2), (3) or (7) of Regulation D promulgated under the Securities Act;
and (viii) the PaineWebber Parties understand that until the appropriate Resale
Registration Statement has been declared effective by the Commission, the Shares
will contain a legend to the following effect:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933. THE SHARES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT FOR THESE SHARES UNDER THE
SECURITIES ACT OF 1933 OR AN OPINION OF THE COMPANIES'
13
COUNSEL THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT.
5.2 Resale. The PaineWebber Parties acknowledge and agree that in
connection with any transfer of any Shares they will provide to the transfer
agent prompt notice of any Shares sold Pursuant to a Resale Registration
Statement or otherwise transferred in compliance with applicable federal and
state securities laws.
5.3 Due Execution, Delivery and Performance of this Agreement.
The PaineWebber Parties further represent and warrant to, and covenant with, the
Companies that (i) each PaineWebber Party has full right, power, authority and
capacity to enter into this Agreement and to perform its obligations hereunder
and consummate the transactions contemplated hereby and has taken all necessary
action to authorize the execution, delivery and performance of this Agreement,
and (ii) upon the execution and delivery of this Agreement, this Agreement shall
constitute a valid and binding obligation of the PaineWebber Parties enforceable
in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' and contracting parties' rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law)
and except that the enforcement of the indemnification agreements in Section 7.5
hereof may be limited by public policy.
5.4 Residence of PaineWebber Agent. PaineWebber Agent is
organized in the State of Delaware and has its principal place of business in
the State of New York.
SECTION 6. Survival of Representations, Warranties and Agreements.
Notwithstanding any investigation made by any party to this Purchase Agreement,
all covenants, agreements, representations and warranties made by the Companies
and the PaineWebber Parties herein and the certificates for the Shares delivered
pursuant hereto shall survive the execution of this Purchase Agreement, the
Adjustment Agreement, the delivery to PaineWebber Agent of the Purchased Shares
being purchased and the payment therefor and the consummation of any other
transactions contemplated hereby or thereby.
SECTION 7. Registration of the Shares; Compliance with the Securities
Act.
7.1 Registration Procedures and Expenses. The Companies shall:
(a) within 60 days after a written request from the
PaineWebber Parties, which request shall not be made within 30 days of the
Closing Date, prepare and file with the Commission a Resale Registration
Statement (as defined below) covering the resale by the PaineWebber
Parties, from time to time, of the Shares (not to exceed a number of Paired
Shares equal to 130% of the number of Purchase Shares) in any of the
manners specified in the Adjustment Agreement (the "Initial Resale
Registration Statement"), use all best efforts to obtain effectiveness of
the Initial Resale
14
Registration Statement and use all reasonable best efforts to obtain
effectiveness of the Initial Registration Statement within 60 days of
filing. If the total number of Shares exceeds the number of Shares covered
by the Initial Resale Registration Statement, then the Companies shall
promptly prepare and file with the Commission such additional Resale
Registration Statement or Statements as shall be necessary to cover the
resale by the PaineWebber Parties of such excess Shares in the same manner
as contemplated by the Initial Registration Statement for the Shares
covered thereby (each, an "Additional Resale Registration Statement");
provided that prior to issuing any such excess Shares to the PaineWebber
Parties, the Companies shall cause such Resale Registration Statement to
have become effective. For purposes of this Purchase Agreement, "Resale
Registration Statement" means the Initial Resale Registration Statement,
any Additional Resale Registration Statement or any other registration
statement under the Securities Act on Form S-3 covering the resale by the
PaineWebber Parties of up to a specified number of Shares, filed and
maintained continuously effective by the Companies pursuant to the
provisions of this Section 7, including the prospectus contained therein
(the "Resale Prospectus"), any amendments and supplements to such
registration statement, including all post-effective amendments thereto,
and all exhibits and all material incorporated by reference into such
registration statement;
(b) use all reasonable best efforts to prevent the issuance
of any order suspending the effectiveness of such Resale Registration
Statement or Resale Prospectus or suspending the qualification (or
exemption from qualification) of any of the Shares in any jurisdiction;
(c) prepare and file with the Commission such amendments and
supplements to each Resale Registration Statement and the Resale Prospectus
as may be reasonably requested by the PaineWebber Parties in order to
accomplish the public resale or other disposition of any Shares in
accordance with the terms of the Adjustment Agreement, or as may be
necessary to keep such Resale Registration Statement effective until the
date on which either (i) the Shares covered thereby have been sold by or on
behalf of the PaineWebber Parties or (ii) the PaineWebber Parties have
advised the Companies that they no longer require that such Resale
Registration Statement remain effective;
(d) furnish to the PaineWebber Parties with respect to the
Shares registered under any Resale Registration Statement such reasonable
number of copies of Resale Prospectuses, including any supplements and
amendments thereto, in order to facilitate the public sale or other
disposition of all or any of the Shares by the PaineWebber Parties;
(e) in order to facilitate the public sale or other
disposition of all or any of the Shares by the PaineWebber Parties, furnish
to the PaineWebber Parties with respect to the Shares registered under any
Resale Registration Statement, in connection with any such public sale or
other disposition, an opinion of counsel to the Companies
15
covering the matters set forth on Exhibit B hereto and such other documents
as the PaineWebber Parties may reasonably request (including a comfort
letter from the Companies' independent certified public accountants and a
certificate of bring down of representations and warranties in connection
with sale of Shares under the Resale Registration Statement) (collectively,
the "Resale Closing Documents") (i) upon the effectiveness of the Initial
Resale Registration Statement, (ii) quarterly beginning promptly after the
Companies' filing of the Joint Annual Report on Form 10-K for the fiscal
year ended December 31, 1997 in the case of any continuous offering of
Shares under any Resale Registration Statement, and (iii) in the event the
public sale or other disposition of the Shares is effected through an
underwritten offering or a block trade, as of the date of the closing of
any sale of such Shares or date of pricing with respect to the sale of such
Shares, as applicable upon prior notice from the PaineWebber Parties to the
Companies as to which date applies; provided, however, that the Companies
shall not be required to deliver any Resale Closing Documents in the event
that the aggregate offering price of any Shares offered in an underwritten
offering or a block trade is less than $10,000,000, unless as of the date
of any such underwritten offering or block sale, the Companies have not
made any previous delivery of Resale Closing Documents to the PaineWebber
Parties in connection with any other public sale or other disposition of
the Shares;
(f) use all reasonable best efforts to prevent the happening
of any event that would cause any such Resale Registration Statement to
contain a material misstatement or omission or to be not effective and
continuously useable for resale of the Shares during the period that such
Resale Registration Statement is required to be effective and useable;
provided that this paragraph (f) shall in no way limit the Companies' right
to suspend the right of the PaineWebber Parties to effect sales under the
Resale Registration Statement during any Black-out Period as specified at
Section 7.2(g) below;
(g) file documents required of the Companies for normal blue
sky clearance in states specified in writing by the PaineWebber Parties,
provided, however, that the Companies shall not be required to qualify to
do business or consent to service of process in any jurisdiction in which
it is not now so qualified or has not so consented;
(h) bear all expenses in connection with the procedures in
paragraphs (a) through (h) of this Section 7.1 and Section 7.2(a) and the
registration of the Shares pursuant to each Resale Registration Statement,
which expenses shall not include brokerage or underwriting commissions and
taxes of any kind (including without limitations, transfer bonuses) with
respect to any disposition, sale or transfer of Shares sold by the
PaineWebber Parties and for any legal, accounting and other expenses
incurred by the PaineWebber Parties which expenses shall be borne by the
PaineWebber Parties; and
16
(i) promptly file any necessary listing applications or
amendments to existing listing applications to cause any Shares registered
under any Resale Registration Statement to be listed or admitted to
trading, on or prior to the effectiveness of any Resale Registration
Statement, on the New York Stock Exchange or any national stock exchange or
automated quotation system on which the Paired Shares are then listed or
traded.
7.2 Covenants in Connection With Registration.
(a) The Companies hereby covenant with the PaineWebber
Parties that (i) the Companies shall not file any Resale Registration Statement
or Resale Prospectus or any amendment or supplement thereto, unless a copy
thereof shall have been first submitted to the PaineWebber Parties and their
counsel and the PaineWebber Parties and their counsel did not object thereto in
good faith (provided that if there is no objection by either the PaineWebber
Parties or their counsel within two business days of receiving any such
material, there shall be deemed to have been no objection thereto); (ii) the
Companies shall immediately notify the PaineWebber Parties of the issuance by
the Commission of any stop order suspending the effectiveness of such Resale
Registration Statement or the initiation of any proceedings for such purpose;
(iii) the Companies shall make all reasonable best efforts to promptly obtain
the withdrawal of any order suspending the effectiveness of such Resale
Registration Statement at the earliest possible moment; (iv) the Companies shall
immediately notify the PaineWebber Parties of the receipt of any notification
with respect to the suspension of the qualification of the Shares for sale under
the securities or blue sky laws of any jurisdiction or the initiation of any
proceeding for such purpose; and (v) the Companies shall immediately notify the
PaineWebber Parties in writing of the happening of any event or the failure of
any event to occur or the existence of any fact or otherwise which results in
any Resale Registration Statement, any amendment or post-effective amendment
thereto, the Resale Prospectus, any prospectus supplement, or any document
incorporated therein by reference containing an untrue statement of a material
fact or omitting to state a material fact required to be, stated therein or
necessary to make the statements therein not misleading and promptly shall
prepare, file with the Commission and promptly furnish to the PaineWebber
Parties a reasonable number of copies of a supplement or post-effective
amendment to such Resale Registration Statement or the Resale Prospectus or any
document incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of the Shares, the Resale
Prospectus will not contain an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein not misleading.
(b) The PaineWebber Parties shall cooperate with the
Companies in connection with the preparation of the Resale Registration
Statement and shall furnish to the Companies, in a timely manner, all
information in their possession or reasonably obtainable by them, but otherwise
not reasonably obtainable by the Companies, and necessary for inclusion in the
Resale Registration Statement (including, without limitation, information
relating to the ownership by each of them of Paired Shares and the plan of
distribution).
17
(c) The PaineWebber Parties shall notify the Companies at
least two business days prior to the earlier of the date on which they intend to
commence effecting any resales of Shares under a Resale Registration Statement
or the date of pricing with respect to the public sale or other disposition of
any Shares under a Resale Registration Statement effected through an
underwritten offering or block trade and if the Companies do not, within such
two day period, advise the PaineWebber Parties of the existence of any facts of
the type referred to in Section 7.2(a) above, then the Companies shall be deemed
to have certified and represented to the PaineWebber Parties that no such facts
then exist and the PaineWebber Parties may rely on such certificate and
representations in making such sales. The preceding sentence shall in no way
limit the Companies' obligations under Section 7.2(a) above.
(d) the Companies shall cooperate with the PaineWebber
Parties to facilitate the timely preparation and delivery of certificates
representing the Shares to be sold under the Resale Registration Statements and
not bearing any restrictive legends and in such denominations and registered in
such names as the PaineWebber Parties may reasonably request at least one
Business Day prior to the closing of any sale of the Shares.
(e) If the method of settlement pursuant to the Adjustment
Agreement is an underwritten offering or block trade of Shares, (i) the
PaineWebber Parties shall have the right to select the managing underwriters or
the executing dealer, as the case may be, who shall be subject to the approval
of the Companies, which approval shall not be unreasonably withheld (it being
understood that PaineWebber Agent is, in any event, reasonably acceptable to the
Companies for this purpose) and (ii) the Companies shall (A) enter into written
agreements (including underwriting agreements) as are customary in underwritten
offerings or block trades, as the case may be; (B) obtain an opinion of counsel
to the Companies and other entities reasonably requested by the underwriters or
the executing dealer, as the case may be, and updates thereof (which may be in
the form of a reliance letter) in form and substance reasonably satisfactory to
the managing underwriters or the executing dealer, as the case may be, and the
PaineWebber Parties addressed to the underwriters or the executing dealer, as
the case may be, and the PaineWebber Parties covering the matters customarily
covered in opinions requested in underwritten offerings or block trades, as the
case may be, and such other matters as may be reasonably requested by such
underwriters or the executing dealer, as the case may be, and the PaineWebber
Parties (it being agreed that the matters to be covered by such opinion may be
subject to customary qualifications and exceptions); (C) obtain "cold comfort"
letters and updates thereof in form and substance reasonably satisfactory to the
managing underwriters or the executing dealer, as the case may be, and the
PaineWebber Parties from the independent certified public accountants of the
Companies (and, if necessary, other independent certified public accountants of
any affiliate or Subsidiary of either of the Companies or of any business
acquired by the Companies for which financial statements and financial data are,
or are required to be, included in the Resale Registration Statement) addressed
to each of the underwriters or the executing dealer, as the case may be, and, if
permitted by applicable accounting rules and statements, the PaineWebber
Parties, such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with underwritten
offerings or block trades, as the case may be, and such other matters as may be
reasonably requested by such underwriters or the executing dealer, as the case
may be, in accordance with
18
Statement on Auditing Standards No. 72; (D) ensure that any underwriting
agreement contains indemnification provisions and procedures not less favorable
than that included herein (or such other provisions and procedures acceptable to
the PaineWebber Parties and the underwriters) with respect to all parties to be
indemnified pursuant to said section (including, without limitation, the
underwriters and the PaineWebber Parties); and (E) deliver such other documents
as are customarily delivered in connection with closing of underwritten
offerings or block trades, as the case may be.
(f) The Companies will make reasonably available for
inspection by the PaineWebber Parties, any underwriter, agent or broker-dealer
participating in any disposition of Shares such information and corporate
documents as shall be reasonably necessary to enable them to exercise any
applicable due diligence responsibilities for the purposes of applicable law,
and cause the officers of the Companies and their "significant subsidiaries" (as
that term is defined in Regulation S-X) to be available, upon request at least
two business days in advance, to respond to questions relevant to such due
diligence inquiries.
(g) The parties hereby acknowledge and agree that the
Companies may suspend the right of the PaineWebber Parties to effect sales of
the Paired Shares through use of the prospectus forming a part of a Resale
Registration Statement (except as may further be limited in the Adjustment
Agreement) for a period of no more than 90 days (or fewer if the PaineWebber
Parties are notified to that effect by the Companies) in connection with a
public offering or a sale pursuant to Rule 144A under the Securities Act (an
"Offering") of Paired Shares (or shares of capital stock convertible into Paired
Shares) by the Companies (a "Blackout Period"); provided that (i) there shall be
no more than three Blackout Periods during any 12-month period, and (ii) the
total number of days of all Blackout Periods during any 12-month period shall
not exceed 120. The PaineWebber Parties hereby covenant that they will not sell
any Paired Shares pursuant to said prospectus during a Blackout Period which
shall commence at the time the Companies give the PaineWebber Parties written
notice of such Blackout Period; provided further, that no Blackout Period shall
be applicable or in any way restrict the PaineWebber Parties after the Maturity
Date, or after the occurrence of a Cross Default or a Price Decline Termination
Event (as defined in the Adjustment Agreement).
7.3 Extension of Required Effectiveness. In the event that the
Companies shall give any notice required by Section 7.2(a)(v) hereof, the period
during which the Companies are required to keep such Resale Registration
Statement effective and useable shall be extended by the number of days during
the period from and including the date of the giving of such notice to and
including the date when the PaineWebber Parties are advised in writing by the
Companies that the use of the Resale Prospectus may be resumed.
7.4 Transfer of Shares After Registration. The PaineWebber
Parties agree that they will not effect any disposition of the Shares and
PaineWebber agrees that it will not effect any disposition of its right to
purchase the Shares that would constitute a sale within the meaning of the
Securities Act or pursuant to any applicable state securities or blue sky laws
expect as contemplated in each Resale Registration Statement referred to in
Section 7.1 or
19
except pursuant to any exemption from the registration requirements of the
Securities Act (including, without limitation, Rule 144 promulgated thereunder
and any successor thereto) and that it will promptly notify the Companies of any
changes in the information set forth in any such Resale Registration Statement
regarding the PaineWebber Parties or its plan of distribution.
7.5 Indemnification. For the purpose of this Section 7.5 only,
the term "Resale Registration Statement" shall include any final prospectus,
exhibit, supplement or amendment included in or relating to any Resale
Registration Statement referred to in Section 7.1.
(a) Indemnification by the Companies. Each of the Companies
agrees, jointly and severally, to indemnify and hold harmless the PaineWebber
Parties and each person, if any, who controls the PaineWebber Parties within the
meaning of Section 15 of the Securities Act, and any director, officer, employee
or affiliate thereof, as follows:
(i) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in any Resale
Registration Statement (or any amendment thereto), including the
information deemed to be part of any Resale Registration Statement pursuant
to Rule 430A(b) of the 1933 Act Regulations, if applicable, or the omission
or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading or
arising out of any untrue statement or alleged untrue statement of a
material fact contained in any related Resale Prospectus or the omission or
alleged omission therefrom of a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that the Companies shall not
be required under this subsection (i) to indemnify the PaineWebber Parties
with respect to any loss, liability, claim, damage or expense to the extent
such loss, liability, claim, damage or expense arises out of any untrue
statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information furnished to the
Companies by the PaineWebber Parties specifically for inclusion in any
Resale Registration Statement or any related Resale Prospectus;
(ii) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation or of any investigation or proceeding
by any governmental agency or body, commenced or threatened, or of any
claim whatsoever for which indemnification is provided under subsection (i)
above, if such settlement is effective with the written consent of the
Companies; and
(iii) against any and all expense whatsoever (including,
without limitation, the fees and other charges of counsel chosen by
PaineWebber) reasonably incurred in investigating, preparing or defending
against any litigation, or any investigation or proceedings by any
governmental agency or body, commenced or
20
threatened, or any claim whatsoever for which indemnification is provided
under subsection (i) above, to the extent that any such expense is not paid
under subsection (i) or (ii) above.
(b) Indemnification by the PaineWebber Parties. The
PaineWebber Parties agree to indemnify and hold harmless the Companies, and each
person, if any, who controls the Companies within the meaning of Section 15 of
the Securities Act, and any trust manager, director, officer, employee or
affiliate thereof, against any and all loss, liability, claim, damage and
expense described in the indemnity contained in subsection (a) of this Section
7.5, as incurred, but only with respect to untrue statements or omissions, or
alleged untrue statements or omissions, made in any Resale Registration
Statement (or any amendment thereto) or any related Resale Prospectus (or any
amendment or supplement thereto) in reasonable reliance upon and in conformity
with written information furnished to the Companies by the PaineWebber Parties
specifically for inclusion in any Resale Registration Statement or any related
Resale Prospectus.
(c) Proceedings. Each indemnified party shall give notice as
promptly as reasonably practicable to each indemnifying party of any action
commenced against it in respect of which indemnity may be sought hereunder, but
failure to so notify an indemnifying party shall not relieve such indemnifying
party from any liability hereunder to the extent it is not materially prejudiced
as a result thereof and in any event shall not relive it from any liability
which it may have otherwise than on account of this indemnity agreement. An
indemnifying party may participate at its own expense in the defense of such
action. If it so elects within a reasonable time after receipt of such notice,
an indemnifying party, jointly with any other indemnifying parties receiving
such notice, may assume the defense of such action with counsel chosen by it and
approved by the indemnified parties defendant in such action, unless such
indemnified parties reasonably object to such assumption on the ground that the
named parties to any such action (including any impleaded parties) include both
such indemnified parties and an indemnifying party, and such indemnified parties
reasonably believe that there may be legal defenses available to them which are
different from or in addition to those available to such indemnifying party. If
an indemnifying party assumes the defense of such action, the indemnifying
parties shall not be liable for any fees and expenses of counsel for the
indemnified parties incurred thereafter in connection with such action. In no
event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 7.5 (whether
or not the indemnified parties are actual or potential parties thereto), unless
such settlement, compromise or consent (i) includes an unconditional release of
each indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does not
21
include a statement as to or an admission of fault, culpability or a failure to
act by or on behalf of any indemnified party.
If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by Section 7.5(a)(ii) effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
(d) Contribution. If the indemnification provided for in
this Section 7.5 is required by its terms but is for any reason held to be
unavailable to or otherwise insufficient to hold harmless an indemnified party
under paragraph (a), (b) or (c) of this Section 7.5 in respect of any losses,
claims, damages, liabilities or expenses referred to herein, then each
applicable indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of any losses, claims, damages, liabilities
or expenses referred to herein, (i) in such proportion as is appropriate to
reflect the relative benefits received by the Companies and the PaineWebber
Parties from the purchase and sale of the Shares or (ii) if the allocation
provided in clause (i) is not permitted by applicable law, in such proportion or
as is appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the Companies and the
PaineWebber Parties in connection with the statements or omissions or
inaccuracies in the representations and warranties in this Agreement which
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The respective relative benefits
received by the Companies on the one hand and the PaineWebber Parties on the
other shall be deemed to be in the same proportion as the amount paid by the
PaineWebber Parties to the Companies pursuant to this Agreement and the
Adjustment Agreement and the net proceeds retained by the PaineWebber Parties
from the transactions contemplated by this Agreement and the Adjustment
Agreement. The relative fault of the Companies and the PaineWebber Parties
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or the alleged
omission to state a material fact or the inaccurate or the alleged inaccurate
representation and/or warranty relates to information supplied by the Companies
or by the PaineWebber Parties and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed to
include, subject to the limitations set forth in paragraph (c) of this Section
7.5 any reasonable legal or other fees or expenses incurred by such party in
connection with investigating or defending any action or claim. The provisions
set forth in paragraph (c) of this Section 7.5 with respect to notice of
commencement of any action shall apply if a claim for contribution is to be made
under this paragraph (d) provided, however, that no additional notice shall be
required with respect to any action for which notice has been given under
paragraph (c) for purposes of indemnification. The Companies and the
22
PaineWebber Parties agree that it would not be just and equitable if
contribution pursuant to this Section 7.5 were determined solely by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in this paragraph (d). Notwithstanding
the provisions of this Section 7.5, the PaineWebber Parties shall not be
required to contribute any amount in excess of the amount by which the aggregate
net proceeds retained by the PaineWebber Parties from the transactions
contemplated hereby and by the Adjustment Agreement exceeds the amount of any
damages that the PaineWebber Parties has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
(e) Relationship Between the REIT and OPCO. The obligations
set forth in this Section 7.5 shall in no way limit the ability of the Companies
to allocate liability between themselves.
7.6 Information Available. So long as any Resale Registration
Statement covering the resale of any shares owned by the PaineWebber Parties is
effective, the Companies will furnish to the PaineWebber Parties:
(a) as soon as practicable after available, one copy of (i)
their Joint Annual Report to Shareholders, (ii) their Joint Annual Report
on Form 10-K, (iii) their joint Quarterly Reports to Shareholders, (iv)
their joint quarterly reports on Form 10-Q, (v) a full copy of the
particular Resale Registration Statement covering the Shares (the
foregoing, in each case, excluding exhibits) and (iv) upon request, any or
all other filings made with the Commission by the Companies; and
(b) upon the reasonable request of the PaineWebber Parties, a
reasonable number of copies of the Resale Prospectuses to supply to any
other party requiring such Resale Prospectuses;
and the Companies, upon the reasonable request of the PaineWebber Parties, will
meet with the PaineWebber Parties or a representative thereof at the Companies'
headquarters to discuss all information relevant for disclosure in such Resale
Registration Statement covering the Shares, subject to appropriate
confidentiality limitations.
7.7 Remedies. The Companies and the PaineWebber Parties
acknowledge that there would be no adequate remedy at law if the Companies fail
to perform any of their obligations under this Section 7, and accordingly agree
that the PaineWebber Parties, in addition to any other remedy to which it may be
entitled at law or in equity, shall be entitled to compel specific performance
of the obligations of the Companies under this Section 7, and the Companies
hereby waive the defense that a remedy at law would be adequate.
7.8 Notice Requirement. The REIT and the OPCO each covenants and
agrees that it will notify the PaineWebber Parties at any time it becomes aware
that as a
23
result of a change in the REIT's and the OPCO's capital stock the PaineWebber
Parties beneficially hold more than 4.9% of the REIT's and the OPCO's Paired
Shares.
7.9 Registration Exemptions. For so long as the Companies are
subject to the reporting requirements of Section 13 or 15 of the Exchange Act,
the Companies covenant that they will timely file all reporting required to be
filed by it under the Securities Act and Exchange Act and the rules and
regulations adopted by the Commission thereunder.
SECTION 8. Fees and Expenses.
8.1 Broker's Fees. Other than any fees payable under or in
connection with the Adjustment Agreement, each of the parties hereto represents
that, on the basis of any actions and agreements by it, there are no brokers or
finders entitled to compensation in connection with the sale or issuance of the
Shares to PaineWebber.
8.2 Additional Shares. The Companies will pay to the PaineWebber
Parties an amount equal to $.02 per Additional Share as reimbursement for all
expenses incurred by the PaineWebber Parties in connection with the delivery of
Additional Shares under this Agreement or the Adjustment Agreement.
SECTION 9. Notices. All notices, requests, consents and other
communications hereunder shall be in writing, shall be mailed by first-class
registered or certified mail, by telegram or telecopy or sent by nationally
recognized overnight express courier postage prepaid, and shall be deemed given
when so mailed or for telecopies, when transmitted and receipt confirmed, and
shall be delivered as addressed as follows:
(a) if to the Companies, to:
Patriot American Hospitality, Inc.
0000 Xxxxxxxx Xxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
Wyndham International, Inc.
0000 Xxxxxxxx Xxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
with copies so mailed to:
Xxxxxxx, Procter & Xxxx XXX
Xxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, P.C.
24
or to such other person at such other place as the
Companies shall designate to PaineWebber Parties in
writing; and
(b) if to PaineWebber Agent or PaineWebber, to:
PaineWebber
PaineWebber Financial Products Inc.
0000 Xxxxxx xx xxx Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxxxx
Telecopier: (000) 000-0000
with a copy so mailed to:
Cravath, Swaine & Xxxxx
Worldwide Plaza
000 Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxxx, Esq.
Telecopier: (000) 000-0000
SECTION 10. Changes. This Agreement may not be modified or amended except
pursuant to an instrument in writing signed by the Companies and the PaineWebber
Parties.
SECTION 11. Headings. The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed to be part of this Agreement.
SECTION 12. Severability. In case any provision contained in this
Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
SECTION 13. Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon (i) the successors of the PaineWebber Parties and
(ii) any assignee or transferee of rights and obligations of the PaineWebber
Parties pursuant to the Adjustment Agreement or this Agreement. A transferee of
the PaineWebber Parties pursuant to the Adjustment Agreement or this Agreement,
and any successor, assignee, or transferee, shall be held subject to all of the
terms of this Agreement. Except as set forth in this Section 13, neither the
Companies nor the PaineWebber Parties may assign any of their respective rights,
or delegate any of their respective duties under this Agreement.
SECTION 14. Governing Law; Jurisdiction.
25
14.1 This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard to the
conflicts of law principles thereof.
14.2 Each of the Companies (i) hereby irrevocably submits to the
jurisdiction of, and agrees that any suit shall be brought in, the state and
federal courts located in the City and County of New York for the purposes of
any suit, action or other proceedings arising out of or based upon this
Agreement of the transactions contemplated hereby and (ii) hereby waives to the
extent not prohibited by applicable law, and agrees not to assert, by way or
motions, as a defense or otherwise, in any such proceeding, any claim that it is
not subject personally to the jurisdiction of the above-named courts, that its
property is exempt or immune from attachment or execution, that any such
proceeding brought in one of the above-named courts is brought in an
inconvenient forum, that the venue of any such proceedings brought in one of the
above-named courts is improper, or that this Agreement, or the transactions
contemplated hereby, may not be enforced in or by such court.
SECTION 15. Transfer to Affiliate. Notwithstanding anything herein to the
contrary, PaineWebber may transfer any Paired Shares delivered pursuant to this
Agreement and the Adjustment Agreement to any affiliate of PaineWebber, together
with all of PaineWebber's rights hereunder, provided that (i) such affiliate
shall be an "accredited investor" within the meaning of Rule 501 (a)(1), (2),
(3) or (7) of Regulation D promulgated under the Securities Act, and (ii) such
transfer shall be consistent with the investment representations set forth at
Section 5.1 hereto. In the event of such an assignment such affiliate shall in
all respects be substituted for PaineWebber as a party hereto.
SECTION 16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties.
SECTION 17. Waiver of Trial by Jury. EACH PARTY HEREBY IRREVOCABLY WAIVES
ANY RIGHT IT MAY HAVE TO JURY TRIAL IN CONNECTION WITH ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT.
26
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
PATRIOT AMERICAN HOSPITALITY, INC.
By: /s/ Xxxxxxx X. Xxxxx III
----------------------------------
Name: Xxxxxxx X. Xxxxx III
Title: President and Chief
Operating Officer
WYNDHAM INTERNATIONAL, INC.
By: /s/ Xxxxxxx X. Xxxxx III
----------------------------------
Name: Xxxxxxx X. Xxxxx III
Title: Executive Vice President
PAINEWEBBER INCORPORATED
By: /s/ Xxxxxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxxxxx X. Xxxxxxx
Title: Managing Director
PAINEWEBBER FINANCIAL
PRODUCTS INC.
By: /s/ Xxxxxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxxxxx X. Xxxxxxx
Title: Vice President
