EXECUTION COPY
Exhibit 10.74
AGREEMENT AND PLAN OF MERGER
between
XXXX CAPITAL CORPORATION
and
THE XXXXXX CORPORATION
Dated as of March 25, 2005
TABLE OF CONTENTS
ARTICLE I DEFINITIONS............................................................................6
1.1 Defined
Terms.............................................................................6
ARTICLE II MERGER; CLOSING......................................................................13
2.1 The Merger.......................................................................13
2.2 Tax Matters......................................................................14
2.3 Effective Time...................................................................14
2.4 Effect of Merger on the Corporation..............................................14
2.5 Consideration....................................................................14
2.6 Adjustment in Amount of Consideration............................................15
2.7 Preparation of Estimated Closing Balance Sheet and Closing Balance Sheet.........16
2.8 Deposit..........................................................................17
2.8.1 Delivery of Deposit......................................................17
2.8.2 Disposition of Deposit...................................................17
2.9 Closing Date.....................................................................17
2.10 Actions at Closing...............................................................18
2.11 Expenses.........................................................................19
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE CORPORATION...................................19
3.1 Representations and Warranties Regarding the Xxxxxx Corporations.................19
3.2 Representations and Warranties regarding the Real Property.......................24
3.3 Representations and Warranties Regarding Leases, Contracts, Insurance and Other
Documents........................................................................26
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER..........................................29
4.1 General..........................................................................29
ARTICLE V COVENANTS.............................................................................30
5.1 Operating Covenants..............................................................30
5.2 Access to Documents..............................................................31
5.3 Indemnification for Physical Damage, Injury or Death.............................32
5.4 Distribution.....................................................................32
5.5 Possession of Offices............................................................32
5.6 Building Name....................................................................32
ARTICLE VI OTHER COVENANTS......................................................................33
6.1 Cooperation......................................................................33
6.2 Confidentiality; Press Release...................................................33
6.3 Operating Records................................................................34
6.4 Tax Matters......................................................................35
6.5 Transfer Tax Returns.............................................................36
6.6 Defeasance of Senior Mortgage....................................................36
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6.7 Tax Appeals......................................................................36
6.8 Casualty and Condemnation........................................................37
6.9 Directors, Officers and Employees................................................37
6.10 Mutual Releases..................................................................37
6.11 Termination of Parking Contract..................................................37
6.12 UCC Termination Statements.......................................................38
6.13 Reciprocal Easement Agreement Estoppel...........................................38
6.14 Corporation Trust Account........................................................38
ARTICLE VII CONDITIONS PRECEDENT TO THE CORPORATION'S OBLIGATIONS...............................38
7.1 Purchaser's Representations and Warranties.......................................38
7.2 Purchaser's Performance..........................................................38
7.3 Consents.........................................................................39
7.4 No Injunctions or Restraints.....................................................39
7.5 Limitation on Delinquent Rents and Vacated Delinquent Rents......................39
7.6 Purchaser Releases...............................................................39
7.7 Merger Sub Representations and Authority.........................................39
ARTICLE VIII CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS....................................39
8.1 Corporation's Representations and Warranties.....................................40
8.2 Corporation's Performance........................................................40
8.3 Tenant Estoppel Certificates.....................................................40
8.4 Consents.........................................................................40
8.5 No Material Adverse Effect.......................................................41
8.6 Resignation of Directors and Officers............................................41
8.7 No Injunctions or Restraints.....................................................41
8.8 Xxxxxx Closing Certificate.......................................................41
8.9 Casualty and Condemnation........................................................41
8.10 Title............................................................................41
8.11 Employees........................................................................42
8.12 Mutual Releases..................................................................42
8.13 Termination of Parking Contract..................................................42
8.14 No Right to Fair Value of Stock..................................................42
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER....................................................42
9.1 Reasons for Termination..........................................................42
9.2 Effect of Termination............................................................43
9.3 Exclusivity of Remedies..........................................................44
ARTICLE X BROKERS...............................................................................44
10.1 Brokers..........................................................................44
ARTICLE XI SURVIVAL.............................................................................45
11.1 Survival.........................................................................45
ARTICLE XII MISCELLANEOUS PROVISIONS............................................................45
12.1 Entire Agreement; Third Party Beneficiaries......................................45
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12.2 Benefit and Burden...............................................................45
12.3 Governing Law....................................................................46
12.4 Notices..........................................................................46
12.5 Partial Invalidity...............................................................47
12.6 Waiver of Jury Trial.............................................................48
12.7 Interpretation...................................................................48
12.8 Amendment; Waiver................................................................48
12.9 Counterparts; Facsimile Execution................................................48
12.10 Assignment.......................................................................48
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Exhibits
A Form of Articles of Merger
B Escrow Agreement
C Description of Real Property
D Title Insurance Commitment
E [INTENTIONALLY OMMITTED]
F Form of Tenant Estoppel Certificate
G Xxxxxx Certificate
H Accounting Principles
I Form of Mutual Release
Schedules
1 Contract Schedule
2 Environmental Report
3 Insurance Schedule
4 Lease Schedule, Tenant Improvements, Leasing Commissions and Loans
to Tenants
5 License Schedule
6 Litigation Schedule
7 Real Estate Tax Schedule
8 Consideration and Stockholder Schedule
9 Capitalization
10 Liabilities
11 Prior Activities
12 Employees
13 Pension Benefit Plans; Welfare Benefit Plans
14 Title Exceptions
15 Management Agreements
16 Tax Matters
17 Personal Property to be Removed
18 Underground Storage Tank Removal
19 Releasing Stockholders
20 Other Stockholders
21 Legal Requirements
22 UCC Termination Statements
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THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into this 25th day of March, 2005 by and between XXXX CAPITAL
CORPORATION, a District of Columbia corporation ("Purchaser"), and THE XXXXXX
CORPORATION, a Maryland corporation (the "Corporation").
RECITALS
A. The Corporation owns all of the outstanding capital stock of 5454
Wisconsin, Inc., a Maryland corporation (the "Operating Sub"), and all of the
outstanding capital stock of Xxxxxx Enterprises, Inc., a Maryland corporation
(the "Finance Sub", and collectively with the Corporation and the Operating Sub,
the "Xxxxxx Corporations"). The Operating Sub owns a certain parcel of land
containing approximately 49,071 square feet, and the improvements thereon
consisting of an eighteen (18)-story office building known as the Xxxxxx
Building, located at 0000 Xxxxxxxxx Xxxxxx, Xxxxx Xxxxx, Xxxxxxxx 00000.
B. Purchaser desires to purchase the Stock (as defined below) from the
Stockholders, and the Stockholders desire to sell the Stock to the Purchaser, by
effecting the merger of an assignee or designee of Purchaser or a wholly-owned
subsidiary of an assignee or designee of Purchaser ("Merger Sub") with and into
the Corporation, with the Corporation surviving as a Maryland corporation (the
"Merger"), upon the terms and subject to the conditions set forth herein.
C. The Board of Directors of Purchaser and the Corporation each deem it
advisable and in the best interests of their respective shareholders and
respective companies to consummate the Merger.
D. Upon the terms and subject to the conditions set forth herein,
Purchaser shall cause Merger Sub to, and Merger Sub and the Corporation shall,
execute articles of merger in substantially the form attached hereto as Exhibit
A (the "Articles of Merger") and shall file such Articles of Merger in
accordance with Maryland law to effectuate the Merger.
E. Purchaser and the Corporation desire to make certain
representations, warranties, covenants and agreements as provided in this
Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements set forth herein, and of
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereby agree as follows:
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ARTICLE I
DEFINITIONS
1.1 Defined Terms. For all purposes of this Agreement, the following
terms shall have the respective meanings set forth below:
"Accounting Principles" shall mean the accounting principles,
methodologies, policies and practices set forth on Exhibit H hereto.
"Affiliate" shall mean, with respect to any specified Person (i) that
is an individual, its family members, representatives and executors, and (ii)
that is not an individual, a Person that directly, or indirectly through one or
more intermediaries, controls or is controlled by, or is under common control
with, the specified Person. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of management or policies (whether through ownership of voting
securities, by agreement or otherwise).
"Agreement" shall mean this Agreement in its present form or as it may
be amended from time to time in accordance with the terms hereof.
"Articles of Merger" has the meaning set forth in the recitals.
"Balance Sheets" shall mean the balance sheet of the Corporation and
the balance sheet of the Operating Sub dated as of December 31, 2004 and
previously provided to Purchaser.
"Bankruptcy Law" shall mean Title 11, U.S. Code, and any similar state
law for the relief of debtors.
"Xxxxxx Corporations" has the meaning set forth in the recitals.
"Broker" shall mean Xxxxxxx & Xxxxxxx, Inc.
"Building" shall mean the building(s) and all other real property
improvements known as 0000 Xxxxxxxxx Xxxxxx, Xxxxx Xxxxx, Xxxxxxxx and situated
on the Land (containing approximately 271,588 rentable square feet of space).
"Business Day" shall mean any day of the week other than Saturday,
Sunday or a day on which banking institutions in Washington, D.C. or New York,
New York are obligated or authorized by law to close.
"Certificate" shall have the meaning set forth in Section 2.5.
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"Closing" shall have the meaning set forth in Section 2.9.
"Closing Balance Sheet" shall mean the combined balance sheet of the
Corporation and the Operating Sub dated as of the Closing Date and prepared
using the Accounting Principles.
"Closing Date" shall have the meaning set forth in Section 2.9.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Combined Total Assets" shall mean the combined total assets (as
defined in the Accounting Principles) of the Corporation and the Operating Sub
on the Closing Date calculated in accordance with the Accounting Principles and
set forth on the Closing Balance Sheet.
"Combined Total Liabilities" shall mean the combined total liabilities
(as defined in the Accounting Principles) of the Corporation and the Operating
Sub on the Closing Date calculated in accordance with the Accounting Principles
and set forth on the Closing Balance Sheet.
"Consideration" shall have the meaning set forth in Section 2.5.
"Contracts" shall mean all contracts and agreements to which any of the
Corporations is a party or to which it is bound (or which otherwise relate to
the Real Property) including, without limitation, contracts and agreements
providing for the management, operation, supply, maintenance, repair,
advertising or promotion of the Real Property, including service agreements,
maintenance contracts, cleaning contracts, contracts for the purchase or
delivery of labor, services, materials or supplies and equipment rental
agreements or leases, and landscaping and lawn maintenance agreements.
"Contract Schedule" shall mean the Contracts contained in Schedule 1.
"Corporation" shall have the meaning set forth in the preamble hereof.
"Corporation Transaction Expenses" has the meaning set forth in Section
9.2(b).
"Deed of Trust" shall have the meaning set forth in the definition of
"Senior Mortgage".
"Delinquent Rents" shall mean all uncollected Rent due in the month in
which the Closing occurs from Tenants still occupying their space that are more
than thirty (30) days in arrears in payment of their Rent as of the Closing
Date.
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Xxxxxxx Xxxx shall not be considered a Tenant for purposes of the definition of
Delinquent Rents and no Rent or other amounts owed by Xxxxxxx Xxxx shall be
considered Delinquent Rents.
"Deposit" shall have the meaning set forth in Section 2.8.
"Easement Agreements" shall mean any and all easement agreements,
reciprocal easement agreements, declarations of covenants, conditions,
restrictions and easements, party wall agreements, "tie-back" agreements, common
area agreements, shared maintenance agreements, common use agreements or vault
agreements which burden or benefit the Real Property and under which any Xxxxxx
Corporation has any obligations or under which it derives any benefits, and all
supplements, amendments and modifications thereof, relating to the development,
use, operation, management, maintenance or occupancy of the Real Property, and
listed on Exhibit D or Schedule 14 hereto.
"Effective Time" shall have the meaning set forth in Section 2.3.
"Environmental Law" shall mean any applicable federal, state or local
law, ordinance, rule, regulation, requirement, guideline, code, resolution,
order or decree (including consent decrees and administrative orders) in effect
on or prior to the date of this Agreement which regulates the use, generation,
handling, storage, treatment, transportation, decontamination, clean-up,
removal, encapsulation, enclosure, abatement or disposal of any Hazardous
Material, including the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. Sections 9601, et seq., the Resource Conservation and
Recovery Act, 42 U.S.C. Sections 6901, et seq., the Toxic Substance Control Act,
15 U.S.C. Sections 2601, et seq., the Clean Water Act, 33 U.S.C. Sections 1251
et seq., the Hazardous Materials Transportation Act, 49 U.S.C., Section 5101,
the Clean Air Act, 42 U.S.C. Sections 7401 et seq., the Atomic Energy Act, 42
U.S.C. Sections 2014, et seq., their state analogues, and any other federal,
state or local statute, law, ordinance, resolution, code, rule, regulation,
order or decree regulating, relating to, or imposing liability or standards of
conduct concerning any Hazardous Material.
"Environmental Report" shall mean that certain environmental report
identified in Section 3.2(h), a copy of which has been delivered to Purchaser by
the Corporation prior to the date of this Agreement.
"ERISA" shall have the meaning set forth in Section 3.1(k).
"Escrow Agent" shall mean Commercial Settlements, Inc.
"Escrow Agreement" shall have the meaning set forth in Section 2.8(a).
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"Estimated Closing Balance Sheet" shall have the meaning set forth in
Section 2.7(a).
"Finance Sub" shall have the meaning set forth in the recitals.
"Financial Statements" shall mean the balance sheets of the Corporation
and the Operating Sub as of December 31, 2004 and the statement of operations of
the Operating Sub for the year ended December 31, 2004 and the general and
administrative detail statement of profit and loss of the Corporation for the
year ended December 31, 2004, each as provided or made available to the
Purchaser by the Corporation.
"Governmental Authorities" shall mean any board, bureau, commission,
department or body of any municipal, county, state or federal governmental unit,
or any subdivision thereof, having or acquiring jurisdiction over the Xxxxxx
Corporations or their activities, including the Real Property or the management,
operation, use or improvement thereof.
"Hazardous Material" shall mean any flammable, explosive, radioactive
or reactive materials, asbestos, pollutants, contaminants or other hazardous,
dangerous or toxic chemicals, materials or substances, petroleum products or
substances or compounds containing petroleum products, including gasoline,
diesel fuel and oil, polychlorinated biphenyls or substances or compounds
containing polychlorinated biphenyls, and any other material or substance
defined as a "hazardous substance", "hazardous material", "hazardous waste",
"toxic material", "contamination" or "pollution" within the meaning of any
Environmental Law.
"Insurance Schedule" shall mean the list of insurance policies listed
on Schedule 3.
"Intangibles" shall mean all intangible personal property that is owned
by any of the Xxxxxx Corporations.
"knowledge" of the Xxxxxx Corporations or of any Xxxxxx Corporation, or
similar words or phrases, shall mean the actual knowledge of Xxxxxx X. Xxxxxx,
the managing member of Xxxxxx Management, and Xxxxx X. Xxxxx, a vice president
of the Corporation.
"knowledge" of the Purchaser, or similar words or phrases, shall mean
the actual knowledge of Xxxxxx X. Xxxx, III, Xxxx Xxxxxxxx, Xxxxx Xxxxxxxx and
Xx Xxxxxxx.
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"Land" shall mean the parcel of land more particularly described in
Exhibit C.
"Lease Schedule" shall mean the information concerning Tenants
contained in Schedule 4.
"Leases" shall mean all leases, licenses or other written agreements
(other than subleases or license/occupancy agreements entered into by Tenants),
including all amendments, extensions and modifications thereto or thereof,
pursuant to which any Person uses or occupies any part of the Real Property.
"Legal Requirements" shall mean all laws, ordinances, rules,
regulations, orders and requirements of all Governmental Authorities relating
to, or regulating, the activities of the Xxxxxx Corporations.
"Liabilities" shall mean debts, liabilities, or obligations of, or
claims against, any of the Xxxxxx Corporations or the Real Property of any kind
or character, whether accrued, absolute or contingent, except for any Taxes.
"License Schedule" shall mean the information concerning Licenses
contained in Schedule 5.
"Licenses" shall mean the licenses listed in Schedule 5.
"Liens" shall mean liens, encumbrances, security interests and adverse
claims of any kind or character.
"Litigation" shall have the meaning set forth in Section 3.2(g).
"Litigation Schedule" shall mean the information concerning pending and
threatened Litigation contained in Schedule 6.
"Material Adverse Effect" means any circumstance, event, occurrence,
change or effect that is materially adverse to the Property or to the assets,
condition (financial or otherwise) or results of operations of the Xxxxxx
Corporations, taken as a whole, except, in each case, as a result of (i) changes
in general economic conditions nationally, regionally or locally or (ii) changes
affecting the real estate industry generally nationally, regionally or locally,
or the office industry in particular, which do not affect the Xxxxxx
Corporations, taken as a whole, materially disproportionately relative to other
participants similarly situated in the real estate industry in general or the
office industry in particular.
"Merger" shall have the meaning set forth in the recitals.
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"Merger Sub" shall have the meaning set forth in Recital B.
"MGCL" shall have the meaning set forth in Section 2.1.
"Mortgage" shall mean a mortgage, deed of trust or other security
instrument of the type commonly given to secure loans or advances on, or the
unpaid purchase price of, real property in the State of Maryland.
"MSDAT" shall have the meaning set forth in Section 2.3.
"Operating Sub" shall have the meaning set forth in the recitals.
"Outside Closing Date" shall mean June 30, 2005.
"Permitted Exceptions" shall have the meaning set forth in Section
3.2(a).
"Person" shall mean an individual, estate, trust, partnership, limited
liability company, corporation, Governmental Authority or other legal entity.
"Personal Property" shall mean all of the Xxxxxx Corporations' right,
title and interest in all furniture, furnishings, fixtures, equipment, vehicles,
tools and other tangible personal property owned by the Xxxxxx Corporations,
including all tangible personal property owned by the Xxxxxx Corporations and
located on, attached to or used in connection with the management, leasing,
operation and maintenance of the Real Property, including the Xxxxxx
Corporations' inventory of spare and replacement parts, and the Xxxxxx
Corporations' inventory of consumable supplies, expressly excluding any personal
property, including trade fixtures, owned or leased by Xxxxxx Management or any
Tenant, subtenant or occupant.
"Promissory Note" shall have the meaning set forth in the definition of
"Senior Mortgage".
"Property" shall mean the Real Property, the Personal Property, the
Leases, the Contracts, the Licenses, the Intangibles and the Warranties.
"Purchaser" has the meaning set forth in the recitals.
"Real Estate Tax Schedule" shall mean the information concerning Real
Estate Taxes contained in Schedule 7.
"Real Estate Taxes" shall mean all taxes, fees, charges and
assessments, general and special, ordinary and extraordinary, foreseen or
unforeseen, assessed, levied or imposed upon the Real Property by any
Governmental Authority having
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jurisdiction over the Real Property. Such term shall also include interest and
penalties assessed in connection with such Real Estate Taxes.
"Real Property" shall mean the Land, the Building and all rights
appurtenant thereto.
"Required Tenants" shall have the meaning set forth in Section 8.3.
"Rent" shall mean all amounts payable by Tenants under their Leases.
"Security Deposits" shall mean all security deposits, access card or
key deposits, and other deposits (including any interest accrued thereon in
accordance with the terms of the Tenants' Leases) relating to Leases paid by
Tenants to the Xxxxxx Corporations, the managing agent of the Corporation or any
other Person.
"Senior Mortgage" shall mean the Promissory Note dated July 9, 1999
made by the Finance Sub in favor of the Senior Mortgagee in the original
principal amount of $37,000,000 (the "Promissory Note") and the related
Indemnity Deed of Trust, Security Agreement and Fixture Filing dated as of July
9, 1999 (the "Deed of Trust") securing the obligation under the Promissory Note
from the Operating Sub as Grantor to Xxxxxx X. Xxxxx, Trustee, for the benefit
of the Senior Mortgagee, together with all related loan documents executed by
the Operating Sub and the Finance Sub in connection with the Senior Mortgage.
"Senior Mortgagee" shall mean Prudential Mortgage Capital Company, LLC,
its successors and assigns.
"Senior Mortgagee Approval" shall mean the consent of the Senior
Mortgagee to the Merger or the approval of Purchaser as "Buyer" in accordance
with Section 1.13 of the Deed of Trust.
"Stock" shall mean all of the issued and outstanding shares of Class A
voting common stock and Class B non-voting common stock of the Corporation.
"Stockholders" shall mean the holders of the Stock, as set forth on
Schedule 8.
"Stockholder Approvals" shall have the meaning set forth in Section
3.1(b).
"Subsidiaries" shall mean, collectively, the Operating Sub and the
Finance Sub.
"Tax" or "Taxes" shall mean any federal, state, local or foreign
income, gross receipts, license, payroll, employment, excise, severance, stamp,
occupation,
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premium, windfall profits, environmental (including taxes under Code Section
59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, Real Estate
Taxes, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated or other tax of any kind whatsoever,
including any interest, penalty or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Tenants" shall mean all Persons leasing or occupying space within the
Real Property (other than subtenants or those occupying under license/occupancy
agreements entered into by Tenants or their subtenants) pursuant to agreements
with any Xxxxxx Corporation or a prior owner of the Real Property.
"Vacated Delinquent Rents" shall mean all uncollected Rent due in the
month in which the Closing occurs plus the three and one-half (3 1/2) months
following the month in which the Closing occurs from Tenants no longer occupying
their space that are more than thirty (30) days in arrears in payment of their
Rent as of the Closing Date. Xxxxxxx Xxxx shall not be considered a Tenant for
purposes of the definition of Vacated Delinquent Rents and no Rent or other
amounts owed by Xxxxxxx Xxxx shall be considered Vacated Delinquent Rents.
"Xxxxxx Management" shall mean Xxxxxx Management Group, LLC, the
manager of the Real Property.
"Warranties" shall mean all assignable warranties or guaranties
presently in effect from contractors, suppliers or manufacturers of Personal
Property installed in or used in connection with the activities of the Xxxxxx
Corporations, including the Real Property or any work performed or improvements
included as a part of the Real Property.
ARTICLE II
MERGER; CLOSING
2.1 The Merger. On the terms and subject to the conditions set forth in
this Agreement and in accordance with Title 3 of the Corporations and
Associations Article of the Annotated Code of Maryland, as amended (the "MGCL"),
at the Effective Time, Purchaser shall cause Merger Sub to, and Merger Sub
shall, be merged with and into the Corporation, with the Stockholders receiving
the Consideration in accordance with Section 2.5 and with the separate corporate
existence of Merger Sub thereupon ceasing. The Corporation shall be the
surviving
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corporation in the Merger, with the separate corporate existence of the
Corporation, with all its rights, privileges, immunities, powers and franchises
continuing unaffected by the Merger except as provided herein.
2.2 Tax Matters. It is the intent of the parties hereto that the Merger
shall be treated for federal income tax purposes as the purchase of the Stock
from the Stockholders by Purchaser for the Consideration set forth in Section
2.5.
2.3 Effective Time. As soon as practicable on the Closing Date,
Purchaser shall cause Merger Sub to, and Merger Sub and the Corporation shall,
execute and file the Articles of Merger, in accordance with Title 3 of the MGCL,
with the State Department of Assessments and Taxation of Maryland (the "MSDAT"),
and shall make all other filings and recordings required with respect to the
Merger under Title 3 of the MGCL, including the filing of the property
certificate for assessment of records required by Section 3-112 of the MGCL with
the MSDAT. The Articles of Merger shall specify the date and time that the
Merger shall become effective (the "Effective Time"), which shall be at such
time as Purchaser and the Corporation shall agree (not to exceed five (5) days
after the Articles of Merger are accepted for record by the MSDAT). Unless
otherwise agreed by the parties in writing, the parties shall cause the
Effective Time to occur on the Closing Date.
2.4 Effect of Merger on the Corporation. The Articles of Incorporation
of the Corporation and the bylaws of the Corporation, each as in effect
immediately prior to the Effective Time of the Merger, shall continue in full
force and effect after the Merger until further amended in accordance with
applicable Maryland law and the terms thereof. The members of the Board of
Directors and the officers of the Corporation following the Merger shall be the
individuals appointed as such in the Articles of Merger. The outstanding shares
of common stock or other equity interests in Merger Sub shall automatically
convert at the effective time into shares of Class A voting stock of the
Corporation as set forth in the Articles of Merger.
2.5 Consideration. The aggregate consideration to be paid at the
Closing to the Stockholders shall be cash in an amount equal to EIGHTY-ONE
MILLION DOLLARS ($81,000,000), subject to adjustment as set forth in Section 2.6
(the "Consideration"). Each share of Stock issued and outstanding immediately
prior to the Effective Time of the Merger shall be automatically converted into
the right to receive a pro rata portion of the Consideration in accordance with
Schedule 8. Upon such conversion, all shares of Stock shall automatically be
cancelled, retired and shall cease to exist, and each Stockholder of a
certificate (a "Certificate") theretofore representing any such shares of Stock
shall cease to have any rights with respect thereto, except the right to receive
the amount of cash into which such shares of Stock are converted pursuant to
this Section 2.5.
2.6 Adjustment in Amount of Consideration. The amount of the
Consideration set forth in Section 2.5 shall be adjusted at Closing as set forth
in
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this Section 2.6.
(a) The Consideration shall be reduced by the aggregate amount
of all principal and accrued but unpaid interest due and owing at the Closing
under the Senior Mortgage.
(b) The Consideration shall be (i) increased by the amount, if
any, by which the Combined Total Assets exceed the Combined Total Liabilities,
or (ii) decreased by the amount, if any, by which the Combined Total Liabilities
exceed the Combined Total Assets.
(c) The Consideration shall be reduced by the aggregate amount
of the Delinquent Rents and the Vacated Delinquent Rents if (i) the aggregate
rentable square feet in the Building for which there is, on the Closing Date,
Delinquent Rent or Vacated Delinquent Rent exceeds 5,000 rentable square feet or
(ii) the aggregate amount of the Delinquent Rents and the Vacated Delinquent
Rents on the Closing Date exceeds $50,000. Notwithstanding anything herein to
the contrary, if Purchaser unreasonably withholds its consent to a proposed
lease with respect to space for which there would be Vacated Delinquent Rents,
then at the Closing the Consideration shall not be reduced by the amount of any
Vacated Delinquent Rents associated with such space.
(d) Purchaser shall use its commercially reasonable efforts to
collect all Delinquent Rents and Vacated Delinquent Rents and to re-let all
vacated space on which there is owed Vacated Delinquent Rent. Purchaser's
obligations with respect to collecting Delinquent Rents shall not be required to
exceed billing the applicable Tenant therefor more than four (4) times. The
Stockholders shall have the right to collect any Delinquent Rents and Vacated
Delinquent Rents through Xxxxxx Management or any other reasonable means to
collect the Delinquent Rents and Vacated Delinquent Rents; provided, however,
that in no event shall the Stockholders or Xxxxxx Management be entitled to
institute any litigation or other judicial proceedings after the Closing against
any Tenant that is in occupancy at the Property as of the Closing with respect
to any obligations or liabilities of such Tenant relating to the Property or
arising out of such Tenant's occupancy thereof. Purchaser shall pay to the
Stockholders, promptly upon receipt of any rents collected by it or on its
behalf during the one hundred thirty-five (135) day period following the Closing
Date from any Tenant for which there was a reduction to the Consideration for
Delinquent Rents, cash in an amount up to the amount of such reduction.
(e) Purchaser shall also pay to the Stockholders, promptly
upon receipt of any rent during the one hundred thirty-five (135) day period
following the Closing Date from the re-letting of any space vacated by a Tenant
on or before the Closing Date, cash in an amount up to the amount of the
reduction Purchaser received pursuant to Section 2.6(c) with respect Vacated
Delinquent Rent relating to such space; provided, however, that any such payment
to the Stockholders shall
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be net of (i) the total of any leasing commissions incurred by the Purchaser in
re-letting such space and (ii) an amount equal to the product of (y) the number
of months during the one hundred thirty-five (135) day period following the
Closing Date for which the Purchaser has collected rents relating to such re-let
space, times (z) an amount equal to the quotient obtained by dividing the total
tenant improvement costs incurred by Purchaser in re-letting such space by the
number of months in the term of the new lease relating to such re-let space.
(f) All payments required to be made to the Stockholders
hereunder shall be paid in immediately available funds to an account designated
by Mr. Xxxxx Xxxxxx or, in the event of Xx. Xxxxxx'x death or incapacity, such
other Person as a majority of the members of the Board of Directors of the
Corporation immediately prior to closing may designate by written notice to the
Purchaser.
2.7 Preparation of Estimated Closing Balance Sheet and Closing Balance
Sheet.
(a) Not later than the five (5) business days prior to the
Closing Date, the Corporation shall deliver to the Purchaser the Estimated
Closing Balance Sheet setting forth the Corporation's estimate of Combined Total
Assets and Combined Total Liabilities as of a recent date (the "Estimated
Closing Balance Sheet"), calculated in reasonable collaboration with the
Purchaser.
(b) On the Closing Date, the Corporation shall deliver to the
Purchaser the Closing Balance Sheet setting forth the Combined Total Assets and
the Combined Total Liabilities, calculated in reasonable collaboration with the
Purchaser. If Purchaser in good faith disagrees with any amount, or the
calculation of any line item, set forth on the Closing Balance Sheet delivered
by the Corporation on the Closing Date, the Combined Total Assets and Combined
Total Liabilities shall be agreed to in writing by Xxxxxx X. Xxxx, III and Xxxxx
Xxxxxx. Such agreement between Xx. Xxxx and Xx. Xxxxxx shall be final and
binding upon the Corporation and the Purchaser. In the event of the death or
incapacity of Xx. Xxxx, the designee of the Purchaser for purposes of agreement
regarding the Closing Balance Sheet as set forth in this Section 2.7(b) shall be
such other Person (which Person may be Xx. Xxxxxxxxx Xxxx) as a majority of the
members of the Board of Directors of the Purchaser may designate by written
notice to the Corporation. In the event of the death or incapacity of Xx.
Xxxxxx, the designee of the Corporation for purposes of agreement regarding the
Closing Balance Sheet as set forth in this Section 2.7(b) shall be such other
Person as a majority of the members of the Board of Directors of the Corporation
may designate by written notice to the Purchaser.
2.8 Deposit.
2.8.1 Delivery of DepositPrior to 11:59 a.m. on the next
Business Day following the execution and delivery of this Agreement by all
parties hereto, the
16
Purchaser shall deliver to the Escrow Agent the sum of TWO MILLION DOLLARS
($2,000,000) by wire transfer of immediately available funds. The Escrow Agent
shall hold such amount (together with all interest and other income earned
thereon, the "Deposit") pursuant to the terms of this Agreement and the Escrow
Agreement, substantially in the form attached hereto as Exhibit B.
2.8.2 Disposition of Deposit. If the Closing occurs, the
Deposit shall be applied against the Consideration payable by Purchaser pursuant
to Sections 2.5 and 2.10(b)(i) and shall be paid by the Escrow Agent to the
Stockholders in accordance with the terms of the Escrow Agreement. If this
Agreement is terminated pursuant to Section 9.1, the Deposit shall be disposed
of by the Escrow Agent in accordance with Section 9.2 and the Escrow Agreement.
2.9 Closing Date. The closing of the Merger (the "Closing") shall be
held at the offices of Xxxxx & Xxxxxxx L.L.P., 000 Xxxxxxxxxx Xxxxxx, X.X.,
Xxxxxxxxxx, XX 00000-0000, commencing at 9:00 a.m., local time, on June 1, 2005
or such other date specified by the parties, which (subject to satisfaction or
waiver of the conditions set forth in Articles VII and VIII) shall be no later
than the earlier of (i) the Outside Closing Date and (ii) the second Business
Day after satisfaction or waiver of the conditions set forth in Articles VII and
VIII (the "Closing Date"). Notwithstanding the foregoing, each of the Purchaser
and the Corporation shall have the right on one occasion, in its sole and
absolute discretion, to adjourn the Closing Date for a period not to exceed
thirty (30) days by notice to the other party on or prior to the date then set
for Closing; provided, however, that no such adjournment shall postpone the
Closing beyond the Outside Closing Date.
2.10 Actions at Closing. On the terms and subject to the conditions set
forth in this Agreement, at the Closing:
(a) The Corporation shall deliver, or cause the Stockholders
to deliver, to Purchaser the following:
(i) all keys to the Real Property and the Personal
Property, if any, which are in the Xxxxxx Corporations' possession, any space
plans relating to Leases of space in the Building prepared by any Xxxxxx
Corporation or on its behalf, and any "as built" computer aided design files
(both hard copies and computer disk or CD Rom) relating to the Real Property or
tenant spaces within the Building prepared by the Corporation or on its behalf;
(ii) all books, records, operating reports, corporate
minute books, corporate seals and Tax Returns and tax records of the Xxxxxx
Corporations, provided that the Stockholders shall be entitled to keep copies
thereof;
(iii) the certificate(s) referred to in Section 8.1,
Section 8.2 and 8.5;
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(iv) a schedule updating and recertifying the
information set forth in the Lease Schedule as of the Closing Date and setting
forth all past due and uncollected Rent owed by Tenants, all prepayments of Rent
and all Security Deposits, if any, held by any of the Xxxxxx Corporations, their
respective managing agent or any other Person under all Leases;
(v) the letters of resignation referred to in Section
8.6; and
(vi) evidence reasonably satisfactory to Purchaser
that the management agreement with Xxxxxx Management has been terminated; and
(vii) such other documents as Purchaser may reasonably
request.
(b) Purchaser shall deliver, or cause to be delivered, the
following:
(i) to the Stockholders, the Consideration, minus the
amount of the Deposit as of the Closing, by wire transfer of immediately
available funds in accordance with Schedule 8;
(ii) the certificates referred to in Section 7.1,
Section 7.2 and Section 7.7; and
(iii) such other documents as the Corporation may
reasonably request.
2.11 Expenses. Each of the Corporation and the Purchaser shall pay all
costs and expenses incurred by it or any of its subsidiaries in connection with
the due diligence, negotiation, execution and performance of this Agreement and
the transactions and agreements, documents and instruments contemplated hereby,
including the fees and expenses of its legal counsel, financial advisors,
accountants and consultants. Purchaser shall pay all costs and expenses related
to obtaining the Senior Mortgagee Approval, if any, including any costs payable
under the Promissory Note or Deed of Trust associated therewith (including any
consent or approval fees payable to the Senior Mortgagee and any fees and
expenses of legal counsel to the Senior Mortgagee or any rating agencies),
examination of title, title insurance abstract and premium charges for any title
insurance owner's policy, survey, and any other amounts payable by Purchaser
hereunder. In addition, Purchaser shall pay all costs and expenses, if any,
associated with the defeasance of the Senior Mortgage in accordance with Section
6.6. Purchaser and the Corporation shall each pay one-half of all transfer tax
and recording fees, if any, in connection with the transactions contemplated
hereby and the expenses of any filings required in connection therewith. The
Corporation shall pay the Broker immediately prior to Closing, or cause to be
paid to the Broker immediately prior to Closing, any fee or commission that may
be due to the Broker pursuant to an agreement between the Corporation and the
Broker and any other amounts payable by the Corporation
18
under this Section 2.11. All costs, expenses and fees payable by the Corporation
under this Section 2.11 shall be paid immediately prior to Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE CORPORATION
As an inducement to Purchaser to enter into this Agreement and to
consummate the transactions contemplated hereby, the Corporation represents and
warrants to Purchaser as follows:
3.1 Representations and Warranties Regarding the Xxxxxx Corporations.
(a) Organization. Each of the Xxxxxx Corporations is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Maryland. Each of the Xxxxxx Corporations has the corporate
power and authority to conduct its business as it is currently being conducted
and to own and lease the property and assets that it now owns and leases. Each
of the Xxxxxx Corporations are qualified to do business as a foreign corporation
in each jurisdiction where such qualification is required except where the
failure to be so qualified would not reasonably be expected to have a Material
Adverse Effect.
(b) Authority. The Corporation has the requisite power and
authority to enter into this Agreement and, subject only to the requisite
Stockholder approval of the Merger (the "Stockholder Approval"), to consummate
the transactions contemplated by this Agreement to which the Corporation is a
party. The execution and delivery of this Agreement by the Corporation and the
consummation by the Corporation of the transactions contemplated by this
Agreement to which the Corporation is a party have been duly authorized by all
necessary action on the part of the Corporation, except for and subject to the
Stockholder Approval. This Agreement has been duly executed and delivered by the
Corporation and constitutes a valid and binding obligation of the Corporation,
enforceable against the Corporation in accordance with and subject to its terms,
except as such enforceability may be limited by Bankruptcy Law and similar laws
affecting the enforcement of creditors' rights generally or equitable
considerations that may affect a court's exercise of its equitable powers.
(c) No Conflicting Agreements. Subject to the receipt of the
Stockholder Approval, the execution and delivery by the Corporation of, and the
performance by the Corporation of its obligations under this Agreement do not
violate or constitute a default (or an event or condition that, with notice or
lapse of time or both, would constitute a default) or results in the termination
of, or accelerate the performance required by, or cause the acceleration of the
maturity of any liability or obligation pursuant to, or results in the creation
or imposition of any
19
security interest, lien, charge or other encumbrance upon any of the property or
assets of any of the Xxxxxx Corporations under (i) the articles of incorporation
or bylaws of the Xxxxxx Corporations, (ii) any judgment, order, injunction,
decree, regulation or ruling of any court or other Governmental Authority to
which the Xxxxxx Corporations is subject, or (iii) except for the Senior
Mortgage, any Contract, except, in the case of (ii) and (iii) above, for such
violations, defaults, terminations, accelerations, security interests, liens,
charges or other encumbrances as would not reasonably be expected to have a
Material Adverse Effect or a material adverse effect on the Corporation's
ability to perform its obligations under this Agreement.
(d) Approvals. No authorization, consent, order, approval or
license from, filing with, or other act by any Governmental Authority or other
Person is or will be necessary to permit the valid execution and delivery by the
Corporation of this Agreement or the performance by the Corporation of the
obligations to be performed by it under this Agreement, except for (i) the
Stockholder Approvals, (ii) the filing of the Articles of Merger with the MSDAT,
and (iii) those which, if not obtained or made, would not have a material
adverse effect on its ability to perform its obligations provided herein.
(e) Absence of Bankruptcy. None of the Xxxxxx Corporations has
commenced (within the meaning of any Bankruptcy Law) a voluntary case, consented
to the entry of an order for relief against it in an involuntary case, or
consented to the appointment of a custodian of it or for all or any substantial
part of its property, nor has a court of competent jurisdiction entered an order
or decree under any Bankruptcy Law that is for relief against any of the Xxxxxx
Corporations in an involuntary case or appointed a custodian for all or any
substantial part of its property, except for the prior bankruptcy of the
Corporation in Case No. 94-1-3430-DK in the United States Bankruptcy Court for
the District of Maryland.
(f) Financial Statements. The Financial Statements have been
prepared on a basis consistent with the past practices of the Corporation and
fairly reflect in all material respects the assets, liabilities, financial
condition and results of operations of the Corporation and the Operating Sub, as
applicable, as of the dates and for the periods indicated.
(g) Capitalization. The authorized capital stock of the Xxxxxx
Corporations, together with the respective number of shares issued and
outstanding and the names of the respective holders thereof, as of the date
hereof, is as set forth on Schedule 9. All of the issued and outstanding shares
of capital stock of the Xxxxxx Corporations are validly issued, fully paid and
nonassessable. There are no other shares of capital stock or other equity
security of the Xxxxxx Corporations outstanding nor are there any outstanding
options, warrants or other rights to convert any obligation into or otherwise
acquire any capital stock of the Xxxxxx Corporations.
20
(h) No Other Investments. Except for all of the outstanding
shares of capital stock of the Subsidiaries, the Corporation does not own
directly or indirectly any interest or investment (whether equity or debt) in
any corporation, partnership, joint venture, business, trust, limited liability
company or other entity (other than investments in short-term investment
securities). Neither of the Subsidiaries owns directly or indirectly any
interest or investment (whether equity or debt) in any corporation, partnership,
joint venture, business, trust, limited liability company or other entity (other
than investments in short-term investment securities).
(i) Compliance with Legal Requirements. Except as set forth on
Schedule 21, to the knowledge of the Corporation, each of the Xxxxxx
Corporations is in material compliance with all applicable Legal Requirements.
(j) Liabilities. Except as set forth on Schedule 10, none of
the Xxxxxx Corporations has any Liabilities other than (i) Liabilities reflected
on the Balance Sheets, (ii) Liabilities incurred in the ordinary course of
business after the date of the Balance Sheets, (iii) Liabilities for counsel and
other advisors and consultants and other costs incurred in connection with the
transaction contemplated by this Agreement, and (iv) Liabilities that would not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect.
(k) Pension Benefit Plans; Welfare Benefit Plans. Except as
set forth on Schedule 13, none of the Xxxxxx Corporations maintains any (i)
employee pension benefit plans, as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or (ii) employee
welfare benefit plans, as defined in Section 3(1) of ERISA (including life
insurance, medical, hospitalization, holiday, vacation, dental and vision
plans).
(l) Tax Matters. Except as set forth on Schedule 16 hereto:
(1) Each of the Xxxxxx Corporations has filed all Tax
Returns that it was required to file or has filed a currently effective
extension with respect to such Tax Return and has paid all Taxes shown on any
filed Tax Returns as owing. All such filed Tax Returns were correct and complete
in all material respects. Each of the Xxxxxx Corporations has complied in all
material respects with all applicable laws, rules and regulations relating to
the payment and withholding of Taxes (including, without limitation, withholding
of Taxes pursuant to Sections 1441, 1442, 1445, 1446, 3102, 3402 and 3406 of the
Code) and has, within the time period prescribed by law, withheld and paid over
to the proper governmental entities all material amounts required to be so
withheld and paid over under applicable laws and regulations. The most recent
Financial Statements reflect an adequate reserve for all material Taxes payable
by the Xxxxxx Corporations for all taxable periods and portions thereof through
the date of such Financial Statements. Since the date of such Financial
Statements, none of the Xxxxxx Corporations has incurred any
21
material liability for Taxes other than in the ordinary course of business. To
the knowledge of the Corporation, no event has occurred, and no condition or
circumstance exists, which presents a material risk that any material Tax
described in the preceding sentences will be imposed upon any Xxxxxx
Corporation;
(2) None of the Xxxxxx Corporations is the subject of
any audit, examination, or other proceeding in respect of Taxes, and to the
knowledge of the Corporation, no audit, examination or other proceeding in
respect of Taxes involving any Xxxxxx Corporation is being considered by any Tax
authority. None of the Xxxxxx Corporations currently is the beneficiary of any
extension of time within which to file any Tax Return. To the knowledge of the
Corporation, no deficiencies for any Taxes have been proposed, asserted or
assessed against any Xxxxxx Corporation. None of the Xxxxxx Corporations has
given any currently effective waiver of any statute of limitations in respect of
Taxes or agreed to any currently effective extension of time with respect to a
Tax assessment or deficiency. To the knowledge of the Corporation, there are no
Liens (other than for Taxes not yet due and payable) on any of the assets of any
Xxxxxx Corporation that arose in connection with any failure (or alleged
failure) to pay any Tax;
(3) To the knowledge of the Corporation, there are no
facts or circumstances that could give rise to a reasonable expectation that any
Governmental Authority will assess any additional Taxes for any period for which
any Xxxxxx Corporation has filed or should have filed Tax Returns. There is no
dispute or claim concerning any Tax liability of any Xxxxxx Corporation either
(A) claimed or raised by any Governmental Authority in writing or (B) to the
knowledge of the Corporation, based upon personal contact with any agent of such
authority, which remains unsettled as of the date hereof;
(4) To the knowledge of the Corporation, none of the
Xxxxxx Corporations is liable for any Taxes attributable to any other Person
(other than a member of an affiliated group of which the Corporation is the
common parent), whether by reason of being a member of an affiliated group,
being a party to a tax sharing agreement, as a transferee or successor, or
otherwise. As of January 1, 2000 and at all times thereafter, the Corporation
has been and continues to be an "S Corporation," within the meaning of Section
1361 of the Code, for federal income tax purposes and also for state and local
income tax purposes in every state and locality in which the Corporation is or
has been subject to income tax (however denominated). Since January 1, 2000, the
Operating Sub and the Finance Sub have at all times been qualified subchapter S
subsidiaries within the meaning of Section 1361(b)(3)(B) of the Code. As of the
effective date of its S election, the Corporation reported to the IRS a "net
unrealized built-in gain" of $ 39,894,685, and the "net unrealized built-in
gain" of the Corporation at the Closing Date will not exceed such amount. To the
knowledge of the Corporation, the Corporation will not at the Closing Date have
any accumulated earnings and profits for federal income tax purposes. The
Corporation has not made or entered into, and does not hold any
22
asset subject to, a consent filed pursuant to former Section 341(f) of the Code
and the regulations thereunder. The Corporation is not required to include in
income any amount from an adjustment pursuant to Section 481 of the Code or the
regulations thereunder or any similar provision of state law. Neither the
Corporation nor any Person to whose liabilities the Corporation has succeeded
distributed to its stockholders or security holders stock or securities of a
controlled corporation in a transaction to which Section 355(a) of the Code
applies;
(5) No powers of attorney or other authorizations are
in effect that grant to any Person the authority to represent any Xxxxxx
Corporation in connection with any Tax matter or proceeding;
(6) No Stockholder is a "foreign person" within the
meaning of Section 1445 of the Code; and
(7) The Corporation has delivered to Purchaser correct
and complete copies of all Tax Returns and reports of each of the Xxxxxx
Corporations filed for all periods not barred by the applicable statute of
limitations. With respect to periods not barred by the applicable statute of
limitations, Schedule 16: (i) describes all material Tax elections, consents and
agreements made by or affecting the Xxxxxx Corporations or any Person to whose
liabilities any of the Xxxxxx Corporations has succeeded that, to the knowledge
of the Corporation, will be in effect after the Closing Date, (ii) lists all
material types of Taxes paid and Tax Returns filed by or on behalf of the Xxxxxx
Corporations or any such Person, (iii) expressly indicates each Tax with respect
to which the Xxxxxx Corporations or any such Person is or has been included in a
consolidated, unitary or combined Tax Return, and (iv) describes the status of
all examinations, administrative or judicial proceedings, and litigation with
respect to any Taxes of any of the Xxxxxx Corporations or for which it may be
liable.
(m) Organizational Documents. The Xxxxxx Corporations have
delivered to the Purchaser true and complete copies of their articles of
incorporation and bylaws which, to the knowledge of the Corporation, are in full
force and effect and have not been modified or supplemented since the date
delivered to the Purchaser.
(n) Prior Activities of the Corporations. To the knowledge of
the Corporation, none of the Xxxxxx Corporations has, directly or indirectly,
engaged since January 1, 1995 in any business or activity other than owning the
Subsidiaries and the Property and those businesses and activities set forth on
Schedule 11 hereto.
3.2 Representations and Warranties regarding the Real Property.
(a) Title. To the knowledge of the Corporation, except (i) as
set
23
forth in the title insurance commitment attached hereto as Exhibit D, or (ii) as
set forth on Schedule 14, (the matters referred to in (i) and (ii), the
"Permitted Exceptions"), the Operating Subsidiary owns fee simple title to the
Real Property free and clear of all Liens.
(b) Real Estate Taxes. Except as otherwise set forth in the
Real Estate Tax Schedule, to the knowledge of the Corporation, (i) there are no
Real Estate Taxes due with respect to the Real Property, (ii) there are no tax
abatements or exemptions affecting the Real Property, and (iii) none of the
Xxxxxx Corporations has received written notice of any (x) proposed increase in
the assessed valuation of the Real Property, (y) pending or threatened special
assessments affecting the Real Property or (z) contemplated public improvements
affecting the Real Property that may result in special assessments affecting the
Real Property.
(c) [INTENTIONALLY OMMITTED]
(d) Title to Personal Property. To the knowledge of the
Corporation, the Operating Sub owns the Personal Property free and clear of all
Liens, except for (x) the Senior Mortgage, and (y) those items subject to leases
or Liens described on Schedule 4.
(e) Licenses. Except as set forth on Schedule 5 hereto, each
of the Xxxxxx Corporations holds all licenses and permits necessary to conduct
its operations as presently conducted except where the failure to have any such
license or permit would not reasonably be expected to have a Material Adverse
Effect.
(f) Employees and Labor Unions. Neither the Corporation nor
either of the Subsidiaries has any employees other than those that are listed in
Schedule 12 or is a party to any agreement with any labor union.
(g) Litigation. Other than as set forth on the Litigation
Schedule there are no investigations, actions, suits, proceedings or claims
pending or, to the knowledge of the Corporation, threatened in writing against
or affecting the Corporation, either of the Subsidiaries or the Real Property,
at law or in equity or before or by any federal, state, municipal or other
governmental department, commission, board, agency or instrumentality, domestic
or foreign (collectively, "Litigation") that, individually or in the aggregate,
would (i) result in a Material Adverse Effect or (ii) prevent the Corporation
from performing its obligations under this Agreement.
(h) Environmental Matters. Except as disclosed in the Phase I
environmental report attached as part of Schedule 2 (the "Environmental
Report"), and except as would not reasonably be expected to result in a Material
Adverse Effect, to the knowledge of the Corporation: (A) any asbestos-containing
material located on the Real Property is not friable or has been properly
managed; (B)
24
neither the Corporation nor either of the Subsidiaries has received any written
complaint, summons, citation, notice of violation, notice of potential
liability, or from any Person or an information request from any Governmental
Authority with regard to air emissions, water discharges, noise emissions or
Hazardous Materials, or any other environmental matters affecting the Real
Property, or any portion thereof; (C) there are no claims pending or threatened
in writing against the Corporation, either Subsidiary or the Real Property, or
any portion thereof, by any Governmental Authority or other Person relating to
any Hazardous Material or pursuant to any Environmental Law; and (D) each of the
Xxxxxx Corporations has complied with all Environmental Laws applicable to the
Real Property.
(i) Underground Storage Tanks. To the knowledge of the
Corporation, (i) there are no underground storage tanks located on the Real
Property or located on any adjacent property and as of the Closing Date
connected to the Real Property and (ii) except as set forth on Schedule 18, the
Corporation has not removed, or caused to be removed, any underground storage
tanks from the Real Property.
(j) Senior Mortgage. The Corporation has provided the
Purchaser with copies or access to copies of all documents in the Corporation's
possession evidencing the Promissory Note and Deed of Trust. To the knowledge of
the Corporation, such copies are true and complete in all material respects. To
the knowledge of the Corporation, the Senior Mortgage is in full force and
effect. All payments required to be made by the obligor(s) under the Senior
Mortgage have been made. To the knowledge of the Corporation, all material
non-monetary obligations required to be performed by the obligor(s) under the
Senior Mortgage have been timely performed, and, to the knowledge of the
Corporation, there is no default or event or condition that (after notice or
lapse of time or both) would constitute a default by the obligor(s) under the
Senior Mortgage.
3.3 Representations and Warranties Regarding Leases, Contracts,
Insurance and Other Documents.
(a) Leases. The Lease Schedule contains as of the date hereof
a correct and complete list of all Leases with respect to the Property, Rent
delinquencies (including aging of any such delinquent Rent), and the amount of
any Security Deposit paid by the Tenant under each Lease (including interest
accrued thereon). The Corporation has provided the Purchaser with copies or
access to copies of all Leases with respect to the Real Property. To the
knowledge of the Corporation, such copies are true and complete in all material
respects. Except as otherwise disclosed on the Lease Schedule or elsewhere in
this Agreement, to the knowledge of the Corporation, as of the date hereof:
(1) each of the Leases is in full force and effect
and constitutes a valid and binding obligation of the Tenant thereunder,
enforceable in
25
accordance with its terms, except as such enforceability may be limited by
Bankruptcy Law and similar laws affecting the enforcement of creditors' rights
generally or equitable considerations which may affect a court's exercise of its
equitable powers;
(2) none of the Tenants is in default in the payment
of any of the Rent or other charges payable under its Lease (other than as
disclosed on the Lease Schedule) and none of the Tenants has been placed in
default by any Xxxxxx Corporation for failure to perform or observe any of the
covenants or conditions to be kept, observed or performed by it under its Lease;
(3) no Tenant is entitled to any rebate, concession,
deduction or offset, except as set forth in such Tenant's Lease;
(4) no Tenant has paid any Rent for a period of more
than thirty (30) days in advance;
(5) no Tenant is entitled to receive from the
Operating Sub, as landlord, any contribution, either in money or in kind, on
account of the construction of its improvements, except as set forth in such
Tenant's Lease;
(6) there are no agreements between the Corporation
or an Affiliate thereof, and any Tenant, or an Affiliate of such Tenant, except
as set forth on the Lease Schedule or in the Tenant files made available for
Purchaser's review;
(7) the Corporation has not received from any Tenant
under a Lease a written notice of default by the Corporation in performing any
of its obligations as landlord under such Lease or a written notice of violation
of any Legal Requirements, and the Operating Sub is not in default in performing
any of its material obligations as landlord under any of the Leases;
(8) the Operating Sub has the sole right to collect
Rent under each Lease and such right has not been assigned, pledged,
hypothecated or otherwise encumbered other than pursuant to the Senior Mortgage;
(9) all material alterations, installations,
decorations and other work required to be performed by the Operating Sub, as
landlord, under the provisions of each Lease have been completed and fully paid
for, or will be completed and fully paid for on or before the Closing Date,
except as set forth in the Leases, on Schedule 4 or as would not (individually
or in the aggregate) result in a Material Adverse Effect;
26
(10) except as set forth on Schedule 4, none of the
Xxxxxx Corporations has made a loan or other advance to, or has any ownership
interest in, any Tenant or any known Affiliate of a Tenant; and
(11) except as set forth in the Leases or as set
forth on the Lease Schedule, the Operating Sub does not provide, and is not
obligated to provide, any additional services to any Tenants under any Leases,
and there are no agreements between the Corporation or either of the
Subsidiaries and any Tenants with respect to provision of services by any of the
Xxxxxx Corporations to any Tenants.
(b) Contracts. The Corporation has provided the Purchaser with
copies or access to copies of all Contracts in the Corporation's possession. To
the knowledge of the Corporation, such copies are true and complete in all
material respects. Schedule 1 contains a correct and complete list of all
material Contracts binding on the Company or either Subsidiary after Closing. To
the knowledge of the Corporation, each of such Contracts is in full force and
effect and has not been modified or amended, except as indicated on the Contract
Schedule. Neither the Company nor the Subsidiaries is in default of any of its
obligations under any of the Contracts identified in the Contract Schedule to
which it is a party, except for such defaults that would not reasonably be
expected to have a Material Adverse Effect.
(c) Easement Agreements. Except as set forth on Exhibit D or
Schedule 14:
(1) to the knowledge of the Corporation, no payment
is required to be made by the Corporation or either of the Subsidiaries, nor is
the Corporation or either of the Subsidiaries entitled to receive any income,
under any recorded or unrecorded Easement Agreement and there are no unrecorded
Easement Agreements; and
(2) to the knowledge of the Corporation, neither the
Corporation nor any of the other parties to the Easement Agreements is in
default (beyond any grace period provided by such Easement Agreement) in the
performance or observance of any of the other covenants or conditions to be
kept, observed or performed by it under the Easement Agreement.
(d) Management Agreement. Except as set forth on Schedule 15,
there will be no agreement in effect for the management of the Real Property on
the Closing Date.
(e) Leasing Commissions. To the knowledge of the Corporation,
except as set forth on Schedule 4, no commission, fee or other compensation is
payable (or will, with the passage of time or occurrence of any event or both,
be payable), with respect to any Lease, and there are no leasing commissions,
fees or
27
other compensation payable in respect of renewals and extensions of the Leases
or the expansion of the leased premises the subject thereof.
(f) Insurance. The Insurance Schedule contains a correct and
complete list of all policies of fire, liability, burglary, theft, fidelity and
other forms of insurance presently maintained by the Xxxxxx Corporations with
respect to their respective activities, including the Property. No Xxxxxx
Corporation has received from any insurance company which carries insurance on
the Property, or any board of fire underwriters, any written notice of any
defect or inadequacy in connection with the Property or its operation, any
written notice of default or any written notice threatening to terminate any of
the insurance policies.
(g) Warranties. To the knowledge of the Corporation, there are
no Warranties.
(h) Compliance With Laws. To the knowledge of the Corporation,
the Corporation has not received written notice from any governmental authority
of any existing or threatened violation of any provision of any applicable
building, zoning, subdivision, environmental or other governmental ordinance,
resolution, statute, rule, order or regulation, including but not limited to
those of environmental agencies or insurance boards of underwriters, with
respect to the ownership, operation, use, maintenance or condition of the Real
Property or any part thereof, or requiring any material repairs or alterations
other than those that have been made prior to the date hereof, except such
violations as have been cured to the satisfaction of the relevant authority or
would not reasonably be expected to have a Material Adverse Effect.
(i) Condemnation Proceedings; Roadways. To the knowledge of
the Corporation, there are no condemnation or eminent domain proceedings pending
with respect to the Real Property nor, to the knowledge of the Corporation, has
the Corporation received any written notice from a governmental authority of any
such proceedings threatened against the Real Property or any material part
thereof. To the knowledge of the Corporation, there is no proposed material
change in the route, grade or width of any street or road adjacent to or
directly serving the Real Property.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
4.1 General. As an inducement to Corporation to enter into this
Agreement and to consummate the transactions contemplated hereby, Purchaser
represents and warrants as follows:
(a) Organization. Purchaser is a corporation duly
incorporated,
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validly existing and in good standing under the laws of the District of
Columbia.
(b) Authority. Purchaser has the requisite power and authority
to enter into this Agreement and to consummate the transactions contemplated by
this Agreement to which they are a party. The execution and delivery of this
Agreement by Purchaser and the consummation by it of the transactions
contemplated by this Agreement to which it is a party have been duly authorized
by all necessary action on the part of Purchaser. This Agreement has been duly
executed and delivered by Purchaser and constitutes a valid and binding
obligation of Purchaser, enforceable against it in accordance with and subject
to its terms, except as such enforceability may be limited by Bankruptcy Law and
similar laws affecting the enforcement of creditors' rights generally or
equitable considerations that may affect a court's exercise of equitable powers.
(c) Authorization. The Board of Directors of Purchaser has
duly authorized the execution and delivery by Purchaser of this Agreement and
the consummation of the transactions contemplated hereby.
(d) Approvals. No authorization, consent, order, approval or
license from, filing with, or other act by any Governmental Authority or other
Person is or will be necessary to permit the valid execution and delivery by
Purchaser of this Agreement or the performance by Purchaser of the obligations
to be performed by it under this Agreement.
(e) No Conflicting Agreements. The execution and delivery by
Purchaser of, and the performance and compliance by Purchaser with the terms and
provisions of, this Agreement do not violate (i) Purchaser's organizational
documents, (ii) any judgment, order, injunction, decree, regulation or ruling of
any court or other Governmental Authority to which Purchaser is subject, or
(iii) any material agreement or contract to which Purchaser is a party or to
which it is subject.
ARTICLE V
COVENANTS
5.1 Operating Covenants(a) During the period from the date of this
Agreement to the Effective Time, except either (i) as consented to by written
notice delivered by Purchaser in accordance with Section 12.5 in response to a
written or oral request from the Corporation, which response shall not be
unreasonably delayed, or (ii) as otherwise permitted by or required to meet its
obligations under this Article V or any other provision of this Agreement, the
Corporation shall, and shall cause the Subsidiaries to:
(1) conduct its business and operate the Real
Property only in the
29
ordinary course and in substantially the same
manner as heretofore conducted;
(2) use commercially reasonable efforts to preserve
intact its business organizations and goodwill;
(3) not offer any capital stock of the Xxxxxx
Corporations or the Real Property for sale to
any Person, consider unsolicited offers from
any Person for the purchase of any capital
stock of the Xxxxxx Corporations or the Real
Property or enter into a contract for the sale
of any capital stock of the Xxxxxx Corporations
or the Real Property to any Person, whether or
not such contract is contingent on the
termination of this Agreement;
(4) not enter into discussions with any other
Person regarding the merger of the Corporation
or the sale of any capital stock of the Xxxxxx
Corporations or the sale of the Real Property
directly or indirectly;
(5) duly and timely file all reports, Tax Returns
and other documents related to Taxes that are
required to be filed with federal, state, local
and Tax other authorities, subject to
extensions permitted by law, provided the
Corporation notifies Purchaser that it is
availing itself of such extensions and provided
such extensions do not adversely affect the
Corporation's status as an S corporation under
the Code, and timely pay all material Taxes;
(6) not (i) make or rescind any express or deemed
election relative to Taxes (unless such
election or rescission is required by law or
necessary (1) to preserve the Corporation's
status as an S corporation, or (2) to qualify
or preserve the status of the Operating Sub and
the Finance Sub as qualified subchapter S
subsidiaries for federal income tax purposes
(in which event the Xxxxxx Corporation shall
not fail to make such election in a timely
manner)) and (ii) fail to take any and all
actions for the period from the date hereof to
the Effective Time necessary for the
Corporation to satisfy the requirements to
qualify as an S corporation; and
(7) not settle or compromise any material federal,
state, local or foreign Tax liability.
(b) None of the Xxxxxx Corporations shall modify or amend any
30
existing Lease or enter into any new lease, contract or other agreement
affecting all or any portion of the Property without the prior written consent
of Purchaser, which consent shall not be unreasonably withheld or delayed. The
Corporation shall provide to Purchaser each proposed lease, contract,
modification, amendment or agreement, and Purchaser shall have five (5) days
from receipt of notice thereof in which to withhold its consent to the terms
thereof by written notice to the Corporation, which notice must be received by
the Corporation not later than the expiration of such five (5) day period, or
else Purchaser shall have been deemed to have consented to such proposed lease,
contract, modification, amendment or agreement.
5.2 Access to Documents. The Purchaser acknowledges that the
Corporation has provided it and its counsel, accountants and other advisors and
consultants with reasonable access to the Real Property and all of the Xxxxxx
Corporations' books, records, leases, tax returns and other documents located at
the Xxxxxx Corporations' offices. At any time prior to Closing, promptly upon
receipt of notice (written or oral) from the Purchaser to that regard, the
Corporation shall make available during normal business hours for Purchaser's
review and inspection such agreements, documents or data, including financial
information, Tax Returns and tax records of the Xxxxxx Corporations, as
Purchaser may reasonably request to the extent they exist and are in the
Corporation's possession or control or are obtainable by the Corporation with
reasonable efforts but without cost or expense to it. The parties acknowledge
that Purchaser may be required to perform a historical audit of the Corporation
in order to comply with Item 3-14 of Regulation S-X promulgated under the
Securities Act of 1933 and the Securities Exchange Act of 1934, and the
Corporation shall reasonably cooperate and provide access in accordance with the
first sentence of this Section 5.2 in order to help facilitate such audit.
5.3 Indemnification for Physical Damage, Injury or Death. Purchaser
shall indemnify, defend and hold harmless the Stockholders, the Xxxxxx
Corporations, and their respective officers, directors, trustees and other
Affiliates, from and against (i) all physical damage to the Real Property caused
by the tests, studies, investigations or evaluations conducted by, or at the
direction of, Purchaser and (ii) all loss, liability or damage suffered or
incurred by the Xxxxxx Corporations, or their respective officers, directors,
trustees and other Affiliates, arising out of or resulting from injury or death
to individuals or damage to property sustained on the Real Property and caused
by the tests, studies, investigations or evaluations conducted by, or at the
direction of, Purchaser.
5.4 Distribution. At any time prior to Closing, the Corporation shall
be entitled to make distributions to the Stockholders of any cash and cash
equivalents held by it (including cash in any trust account and marketable
securities).
5.5 Possession of Offices. Xxxxxx Management and members of the
31
Xxxxxx family shall have the right to continue occupying the offices that they
currently occupy in the Building for an additional thirty (30) days following
the Closing Date without charge, cost or expense to Xxxxxx Management or the
Xxxxxx family. Schedule 17 hereto sets forth all personal property to be removed
by Xxxxxx Management and members of the Xxxxxx family prior to the expiration of
such thirty (30) day period, and the Purchaser shall provide reasonable access
to Xxxxxx Management and the Xxxxxx family for such purpose.
5.6 Building Name. So long as Purchaser or Merger Sub or any of their
Affiliates directly or indirectly owns the Building or a controlling interest in
the Building, Purchaser agrees, and agrees to cause its Affiliates and Merger
Sub and its Affiliates, to maintain the name of the Building as "The Xxxxxx
Building."
ARTICLE VI
OTHER COVENANTS
6.1 Cooperation. The parties shall (i) use commercially reasonable
efforts to cooperate with one another in (A) 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 Authorities and any third parties in
connection with the execution and delivery of this Agreement, and the
consummation of the transactions contemplated hereby, and (B) timely making all
such filings and timely seeking all such consents, approvals, permits and
authorizations; (ii) use commercially reasonable efforts (other than the payment
of money which is not contractually required to be paid) to obtain in writing
any consents required from third parties to effectuate the Merger, such consents
to be in form reasonably satisfactory to each of the parties; and (iii) use
commercially 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
reasonably necessary or desirable to carry out the purpose of this Agreement,
each party shall take all such reasonably necessary action.
6.2 Confidentiality; Press Release. Subject to applicable law,
Purchaser agrees to use commercially reasonable efforts to (i) maintain the
confidentiality of all materials delivered by or on behalf of the Corporation;
(ii) disclose such materials only to its directors, officers, employees and
advisors who need to review such materials in connection with the transactions
contemplated hereby; and (iii) return all materials to the Corporation as soon
as practicable if the Closing is not consummated. The Corporation and Purchaser
agree that before the Closing Date, they will not issue any press release,
advertisement or other public communication with respect to this Agreement or
the transactions contemplated hereby without the prior written consent of the
other party hereto, except to the extent required by law
32
or requested by the other party. If the Corporation or Purchaser is required by
law to issue such a press release or other public communication before the
Closing Date (including disclosure by Purchaser or its Affiliates required to be
provided, as determined by the Purchaser in its sole discretion, in a
registration statement filed with the Securities and Exchange Commission), at
least one (1) Business Day before the issuance of the same such party shall
deliver a copy of the proposed press release or other public communication to
the other party hereto for its review and approval, which approval shall not be
unreasonably withheld, conditioned or delayed.
6.3 Operating Records. After the Closing Date, upon prior reasonable
advance notice from any Stockholder, Purchaser shall permit the Stockholders to
have access to the books, records, operating reports, files, papers, agreements,
corporate minute books, Tax Returns and other such records and files of the
Xxxxxx Corporations referring to pre-Closing periods for a period of three (3)
years following the Closing Date.
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6.4 Tax Matters.
(a) Tax Periods Ending on or before Effective Time. The
Stockholders shall prepare or cause to be prepared and file or cause to be filed
all Tax Returns for the Xxxxxx Corporations for all periods ending on or prior
to the Effective Date that are filed after the Effective Date. The Stockholders
shall permit Purchaser to review each such Tax Return described in the preceding
sentence prior to filing and shall make such revisions to such Tax Returns as
are reasonably requested by the Purchaser. The Stockholders shall pay all Taxes,
if any, at the time that any related Tax Return is filed and, in any event, on
or prior to the date such Taxes are due, including extensions.
(b) Tax Periods Beginning Before and Ending After the
Effective Date. Purchaser shall prepare or cause to be prepared and file or
cause to be filed all Tax Returns for the Xxxxxx Corporations for Tax periods
which begin before the Effective Date and end after the Effective Date. The
Purchaser shall permit the representative of the Stockholders to review and
comment on each such Tax Return described in the preceding sentence prior to
filing and shall make such revisions to such Tax Returns as are reasonably
requested by the representative of the Stockholders. The Purchaser shall pay all
Taxes, if any, at the time that any related Tax Return is filed. For purposes of
this Section 6.4, the representative of the Stockholders shall be Mr. Xxxxx
Xxxxxx or such other Person as a majority of the members of the Board of
Directors of the Corporation immediately prior to closing may designate by
written notice to the Purchaser.
(c) Cooperation on Tax Matters. Purchaser, the Corporation and
the Stockholders shall cooperate fully, as and to the extent reasonably
requested by the other party, in connection with the filing of Tax Returns
pursuant to this Section and any audit, litigation or other proceeding with
respect to Taxes.
(d) Closing of the Books; Election to Terminate Tax Year.
(1) In the event that the sale of more than 50 percent of
the Corporation's stock pursuant to the Merger causes
a termination of the Corporation's S election
pursuant to Section 1362(d)(2), the parties agree
that the pro rata allocation method described in
Section 1362(e)(2) of the Code shall not apply to the
"S termination year" of the Corporation pursuant to
Section 1362(e)(6)(D), and shall act consistently
with this understanding.
(2) In the event that the parties determine that the
Merger will not result in a termination of the S
election of the Corporation at the
34
Effective Time under Section 1362(d)(2) of the Code,
the parties agree that the Purchaser shall cause the
Corporation, with the Corporation's Form 1120S for
the taxable year in which the Effective Time occurs,
to make an "Election to terminate year" under Section
1377(a)(2) of the Code and Section 1.1377-1(b) of the
Treasury Regulations to treat the taxable year of the
Corporation in which the Effective Time occurs as if
it consisted of two separate taxable years, the first
of which ends at the close of the day on which the
Effective Time occurs. In the event that this Section
6.4(d) applies, the Purchaser hereby consents to such
terminating election and agrees to cause the
Corporation to make the terminating election in
compliance with the requirements set forth in Section
1.1377-1(b) of the Treasury Regulations, and the
Corporation agrees to acquire and provide to the
Purchaser all necessary consents from the
Stockholders to effect such election.
(3) Any Code section or Treasury Regulation referred to
in this agreement shall also be deemed to refer to
any successor Code section or Treasury Regulation.
6.5 Transfer Tax Returns. Purchaser shall file all necessary Tax
Returns and other documentation with respect to all such transfer, recording and
similar Taxes and fees incurred in connection with the transactions contemplated
herein.
6.6 Defeasance of Senior Mortgage. Subject to the following sentence,
at Purchaser's request, the Corporation will arrange for the defeasance of the
Senior Mortgage at Closing. In the event Purchaser requests the Corporation to
defease the Senior Mortgage at Closing, Purchaser shall pay an amount equal to
the Defeasance Deposit (as defined in the Senior Mortgage documents) at the
direction of the Corporation at Closing and Purchaser shall advance to the
Corporation all actual out of pocket costs and expenses to be incurred by the
Corporation associated with the defeasance of the Senior Mortgage, including
reasonable attorneys fees, and any brokerage and breakage fees that may be
incurred by the Corporation in connection with purchasing treasuries or other
securities necessary to satisfy the defeasance requirements set forth in the
Senior Mortgage documents.
6.7 Tax Appeals. Except with respect to the Real Estate Tax assessment
for 2005 through 2007 for which an appeal has previously been noted and filed,
the Corporation shall take no action to prosecute an appeal of the Real Estate
Tax assessment of the Property without the prior written consent of the
Purchaser, which shall not be unreasonably withheld or delayed. The Purchaser
shall have five (5) days from receipt of notice from the Corporation with
respect to an appeal of a Real Estate Tax assessment in which to withhold its
consent to the terms thereof by written notice to the Corporation, which notice
must be received by the
35
Corporation not later than the expiration of such five (5) day period, or else
Purchaser shall have been deemed to have consented to such proposed appeal.
6.8 Casualty and Condemnation. If, prior to Closing, the Property, or
any portion thereof, is damaged by fire, or any other cause of whatsoever nature
or becomes subject to a condemnation proceeding, the Corporation will promptly
give Purchaser written notice of such damage or proceeding and shall not take
any action with respect to prosecuting any claim for insurance or condemnation
award without the prior consent of Purchaser which shall not be unreasonably
with held or delayed. If the Closing occurs, Purchaser shall be entitled to any
claims the Corporation may have under the property insurance policies covering
the Property and any award in condemnation.
6.9 Directors, Officers and Employees. On the Closing Date, the
Corporation shall cause the directors and officers of each of the Xxxxxx
Corporations to submit their resignations from such positions, effective as of
or prior to the Effective Time. Effective immediately before the Closing, the
Corporation shall terminate the employment of all of its employees.
6.10 Mutual Releases. The Purchaser shall, and the Corporation shall
cause each of its directors, officers and employees and each of the Stockholders
listed on Schedule 19 to, execute and deliver to the other party, Xxxxxx X.
Xxxxxx and Xxxxxx Management a mutual release in substantially the form attached
hereto as Exhibit I (the "Mutual Releases"). The Corporation shall request that
the Stockholders listed on Schedule 20 execute and deliver to the Purchaser a
mutual release and waiver substantially in the form attached hereto as Exhibit
I.
6.11 Termination of Parking Contract. The Corporation shall cause the
parking management contract between the Operating Sub and Atlantic Services
Group (d/b/a Atlantic Parking) dated as of November 1, 2000 (the "Parking
Contract") to be terminated effective as of the Effective Time.
6.12 UCC Termination Statements. The Corporation shall use its
commercially reasonable efforts to file prior to the Effective Time, or cause to
be filed prior to the Effective Time, UCC-3 Termination Statements with respect
to the UCC-1 Financing Statements listed on Schedule 22.
6.13 Reciprocal Easement Agreement Estoppel. The Corporation shall use
its commercially reasonable efforts to obtain on or before the Effective Time an
estoppel certificate in form reasonably acceptable to the Purchaser from JBG
Real Estate Associates XVIII, Inc. with respect to the Reciprocal Easement and
Covenant Agreement by and between the Corporation and JBG Real Estate Associates
XVIII, Inc. dated as of June 11, 1998.
36
6.14 Corporation Trust Account. The Corporation shall liquidate, or
otherwise dispose of its investments held in, the account in the name of the
Corporation held with U.S. Trust Company, N.A. and distribute the proceeds from
such liquidation to the Stockholders prior to the Closing.
ARTICLE VII
CONDITIONS PRECEDENT TO THE CORPORATION'S OBLIGATIONS
The obligations of the Corporation to consummate the Merger and to
perform the other covenants and obligations to be performed by it on the Closing
Date shall be subject to the following conditions (all or any of which may be
waived, in whole or in part, by the Corporation):
7.1 Purchaser's Representations and Warranties. The representations and
warranties made by Purchaser in Article IV shall be true and correct on the date
hereof and shall be true and correct in all material respects on and as of the
Closing Date with the same force and effect as if such representations had been
made on and as of such date; and Purchaser shall have executed and delivered to
the Corporation a certificate, dated as of the Closing Date (which certificate
may be qualified by "knowledge" to the same extent as the representations and
warranties of Purchaser contained herein are so qualified), signed on its behalf
by an officer of Purchaser, in such capacity, to such effect.
7.2 Purchaser's Performance. Purchaser shall have performed in all
material respects all obligations required to be performed by it under this
Agreement at or prior to the Effective Time; and the Corporation shall have
received a certificate signed on behalf of Purchaser by an officer of Purchaser,
in such capacity, to such effect.
7.3 Consents. The Stockholder Approvals shall have been obtained and
the Senior Mortgage shall have been defeased as contemplated by Section 6.6 or
Senior Mortgagee Approval shall have been obtained.
7.4 No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger or any of the other transactions contemplated hereby
shall be in effect.
7.5 Limitation on Delinquent Rents and Vacated Delinquent Rents. The
aggregate amount of Delinquent Rents and Vacated Delinquent Rents shall not
exceed $500,000.
7.6 Purchaser Releases. The Purchaser shall have delivered copies the
37
Mutual Releases executed by the Purchaser.
7.7 Merger Sub Representations and Authority. On the Closing Date,
Merger Sub shall deliver to the Corporation a certificate, dated as of the
Closing Date, pursuant to which it shall make representations and warranties in
form and substance substantially similar to those made by Purchaser in Article
IV, each as they relate to Merger Sub. The representations and warranties made
by Merger Sub shall be true and correct in all material respects as of the
Closing Date. Such certificate (which may be qualified as to "knowledge" to the
same extent as the representations and warranties of Purchaser contained in
Article IV hereof are so qualified) shall be signed on behalf of Merger Sub by
an officer of Merger Sub in such capacity, to such effect.
ARTICLE VIII
CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS
The obligations of each of Purchaser and Merger Sub to consummate the
Merger and to perform the other covenants and obligations to be performed by it
on the Closing Date shall be subject to the following conditions (all or any of
which may be waived, in whole or in part, by it):
8.1 Corporation's Representations and Warranties. The representations
and warranties made by the Corporation in Article III, disregarding all
qualifications and exceptions contained therein relating to knowledge and
materiality, shall be true and correct on the date hereof and true and as of the
Closing Date as though made on and as of the Closing Date (except to the extent
that such representations and warranties are expressly limited by their terms to
another date, in which case such representations and warranties shall be true
and correct as of such other date), except where the failure of such
representations and warranties to be true and correct would not, individually or
in the aggregate, have a Material Adverse Effect; and the Corporation shall have
executed and delivered to Purchaser a certificate, dated as of the Closing Date
(which certificate may be qualified by "knowledge" to the same extent as the
representations and warranties of the Corporation contained herein are so
qualified), signed on its behalf by an officer of the Corporation, in such
capacity, to such effect.
8.2 Corporation's Performance. The Corporation shall have performed in
all material respects all obligations required to be performed by it under this
Agreement at or prior to the Effective Time; and Purchaser shall have received a
certificate signed by an officer of the Corporation, in such capacity, to such
effect.
8.3 Tenant Estoppel Certificates. Purchaser shall have received
estoppel
38
certificates from tenants representing not less than eighty-five percent (85%)
of the rentable space in the Building, including estoppel certificates from all
tenants leasing in excess of 10,000 square feet in the Building (the "Required
Tenants"). Such estoppel certificates shall be in the form attached hereto as
Exhibit F or such other form as may be reasonably requested by Purchaser. Such
estoppel certificates shall be dated not more than forty-five (45) days prior to
the Closing Date.
8.4 Consents. The Stockholder Approvals shall have been obtained and
the Senior Mortgage shall have been defeased as contemplated by Section 6.6 or
Senior Mortgagee Approval shall have been obtained.
8.5 No Material Adverse Effect. Since the date of this Agreement, there
shall have been no Material Adverse Effect, and Purchaser shall have received a
certificate of an officer of the Corporation, in such capacity, certifying to
such effect.
8.6 Resignation of Directors and Officers. A letter from each of the
officers and members of the Board of Directors of the Xxxxxx Corporations
pursuant to which each director or officer, as the case may be, resigns all of
his or her positions with the Xxxxxx Corporations, as applicable, effective as
of the Effective Time.
8.7 No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger or any of the other transactions contemplated hereby
shall be in effect.
8.8 Xxxxxx Closing Certificate. The Corporation shall cause Xxxxxx X.
Xxxxxx to deliver to Purchaser a certificate in the form attached hereto as
Exhibit G certifying that, to his knowledge, the representations and warranties
made by the Corporation in Article III, shall be true and correct as of the
Closing Date as though made on and as of the Closing Date (except to the extent
that such representations and warranties are expressly limited by their terms to
another date, in which case such representations and warranties shall be true
and correct as of such other date).
8.9 Casualty and Condemnation.
(a) Casualty. No fire or other casualty shall have occurred
that has caused damage to the Property which is reasonably estimated to cost
more than THREE MILLION DOLLARS ($3,000,000) to repair.
(b) Condemnation. No taking by power of condemnation or
eminent domain, or process or purchase in lieu thereof, shall have occurred that
has or is reasonably likely to deny access to the Building or materially
adversely affect the
39
use and operation of the Building.
8.10 Title. The Operating Sub shall own fee simple title to the Real
Property subject only to the Permitted Exceptions.
8.11 Employees. The Corporation shall have terminated the employment of
all of its employees.
8.12 Mutual Releases. The Corporation shall have delivered to the
Purchaser copies of the Mutual Releases executed by each of its directors,
officers and employees and each of the Stockholders listed on Schedule 19.
8.13 Termination of Parking Contract. The Parking Contract shall have
been terminated.
8.14 No Right to Fair Value of Stock. No Stockholder has the right to
demand the fair value of its shares of Stock under Section 3-202 of the MGCL or
has properly complied with the procedures set forth in Section 3-203(a) of the
MGCL.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.1 Reasons for Termination. This Agreement may be terminated at any
time prior to the Effective Date only:
(a) by Purchaser (i) upon a material breach of or material
failure to perform any covenant, obligation or agreement on the part of the
Corporation set forth in this Agreement, (ii) if any representation or warranty
of the Corporation is or shall have become untrue, (iii) upon the failure of the
Corporation to obtain the Stockholder Approvals by the time of the Outside
Closing Date, or (iv) if Purchaser reasonably and in good faith determines,
after consultation with the Corporation, that there has been a Material Adverse
Effect, in the case of either clause (i) or (ii) (x) such that the conditions
set forth in Section 8.2 or Section 8.1, as the case may be, would be incapable
of being satisfied by the Outside Closing Date (as it may be extended) and (y)
if such breach cannot be or has not been cured within thirty (30) calendar days
after the giving of written notice to the Corporation of such breach;
(b) by the Corporation (i) upon a material breach of or
material failure to perform any covenant, obligation or agreement on the part of
Purchaser set forth in this Agreement, or (ii) if any representation or warranty
of Purchaser or Merger Sub is or shall have become untrue, in the case of either
clause (i) or (ii) (x) such that the conditions set forth in Section 7.2,
Section 7.1 or Section 7.7, as the case may be, would be incapable of being
satisfied by the Outside Closing Date
40
(as it may be extended) and (y) if such breach cannot be or has not been cured
within thirty (30) calendar days after the giving of written notice to the
Purchaser of such breach; or
(c) By Purchaser or the Corporation, if Closing does not occur
by the Outside Closing Date (as the same may be extended in writing by the
parties), provided, in the case of termination pursuant to this Section 9.1(c),
(i) none of the terminating party's representations and warranties shall be
untrue in any material respect when made (including all qualifications and
exceptions contained in such representations and warranties relating to
knowledge and materiality ), and (ii) the terminating party shall not have
breached in any material respect its obligations under this Agreement, in the
case of either of clause (i) or (ii) of this Section 9.1(c) in any manner that
shall have proximately contributed to the occurrence of the failure referred to
in this Section.
9.2 Effect of Termination
(a) If this Agreement is terminated pursuant to Section 9.1(a)
or Section 9.1(c), the Escrow Agent shall pay to the Purchaser the Deposit in
accordance with the terms of the Escrow Agreement.
(b) In addition to the return of the Deposit as set forth in
Section 9.2(a), if this Agreement is terminated (x) pursuant to Sections
9.1(a)(i) or (iii), or (y) pursuant to Section 9.1(a)(ii) and the
representations and warranties made by the Corporation in Article III, for this
purpose including all qualifications and exceptions contained in such
representations and warranties relating to knowledge and materiality, are not
true and correct on the date hereof, the Corporation shall pay to the Purchaser
TWO MILLION DOLLARS ($2,000,000) (the "Additional Payment"). The Additional
Payment shall be made within ten (10) business days from the date on which the
Corporation receives the notice of such termination from the Purchaser.
(c) If this Agreement is terminated (i) pursuant to Section
9.1(b) , provided that the Purchaser was not entitled to terminate this
Agreement pursuant to Sections 9.1(a)(i) or (ii), the Escrow Agent shall pay to
the Corporation the Deposit in accordance with the terms of the Escrow
Agreement.
(d) Upon termination of this Agreement pursuant to Section
9.1, this Agreement shall forthwith become void and have no effect except for
Sections 5.3, 9.2(a), (b) and (c), this Section 9.2(d), Section 9.3 and Article
XII, without any liability or obligation on the part of Purchaser or the
Corporation, except to the extent set forth in Sections 5.3, 9.2(a), (b) and (c)
and this Section 9.2(d). Each party hereby acknowledges and agrees that the
other party would be irreparably damaged in the event of a breach or failure to
perform by it of any of the obligations, representations or warranties that give
rise to the right of termination by the other
41
side of this Agreement under Section 9.1. Accordingly, each of the parties
agrees that money damages would not be a sufficient remedy for the other party
for any such breach or non-performance, and that such other party shall be
entitled to specific performance and to injunctive or other equitable relief as
a remedy for or to prevent any such breach or non-performance. Each party hereto
agrees not to oppose the granting of such relief if a court determines that such
breach or non-performance has occurred, and to waive any requirement for the
securing or posting of any bond in connection with such remedy.
9.3 Exclusivity of Remedies. The parties acknowledge and agree that the
effect on a party of a breach by the other party may not be susceptible of
precise measurement and agree, therefore, that payment of the amounts set forth
in Sections 9.2 (a), (b) or (c) above are made as liquidated damages and not as
a penalty, and that they constitute all damages to which the non-breaching party
is entitled to in law or equity.
ARTICLE X
BROKERS
10.1 Brokers. The Corporation and Purchaser acknowledge and agree that
the Broker has acted as the broker on behalf of the Corporation in connection
with the transactions contemplated hereby, and that the payment of any fee or
commission that may be due to the Broker shall be made as set forth in Section
2.11. The Corporation represents and warrants to Purchaser that the Corporation
has not engaged any broker, agent or finder to act on its behalf in connection
with this transaction other than the Broker, and that Purchaser shall not be
liable for the payment of any fee or commission to the Broker or any other
broker, agent or finder purporting to act on behalf of the Corporation.
Similarly, Purchaser represents and warrants to the Corporation that Purchaser
has not engaged any broker, agent or finder to act on its behalf in connection
with the transactions contemplated hereby, and that the Corporation shall not be
liable for the payment of any fee or commission to any broker, agent or finder
purporting to act on behalf of Purchaser in connection with the transactions
contemplated hereby.
ARTICLE XI
SURVIVAL
11.1 Survival.. None of the representations, warranties, covenants,
indemnities or other agreements of the parties in this Agreement or any other
instrument delivered pursuant to this Agreement shall survive the Closing other
than (i) Section 2.6 (d), (e) and (f), (ii) Section 5.3, (iii) Section 5.5, (iv)
Section 5.6,
42
(v) subparagraph (iii) and the last sentence of Section 6.1, (vi) Section 6.3,
(vii) Section 6.4, (viii) this Section 11.1 and (ix) Article XII, each of which
shall survive for eighteen (18) months following the Closing except for Section
5.6, which shall survive indefinitely. Following the Closing, none of the
parties hereto shall have any rights or remedies under or with respect to the
subject matter of this Agreement except for claims based on fraud and claims
relating to the subject matter of the Sections surviving the Closing. Purchaser
acknowledges that this provision is a material inducement for the Corporation to
enter into this Agreement and that the Corporation is entering into this
Agreement in reliance on this Section 11.1.
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1 Entire Agreement; Third Party Beneficiaries. This Agreement,
together with the Exhibits and Schedules, (i) contains the entire agreement
between the parties relating to the transactions contemplated herein, all prior
negotiations between the parties are merged by this Agreement and there are no
promises, agreements, conditions, undertakings, warranties or representations,
oral or written, express or implied, between them other than as herein set
forth; and (ii) except with respect to Sections 2.6(d), (e) and (f), 5.3, 5.5,
5.6, and Section 6.4, which are intended for the express irrevocable benefit of,
and to grant third-party rights to, the Stockholders and their successors,
assigns and heirs, are not intended to confer upon any Person other than the
parties hereto any rights or remedies.
12.2 Benefit and Burden. All terms and conditions of this Agreement
shall be binding upon, and inure to the benefit of and be enforceable by, the
parties hereto and their respective successors and assigns. The Stockholders and
their respective Affiliates shall be third-party beneficiaries of this
Agreement.
12.3 Governing Law. This Agreement and the rights and obligations of
the parties hereto shall be governed by the laws of the State of Maryland
(without reference to any conflicts of laws principles).
12.4 Notices. All notices, requests, claims, demands, approvals,
consents and other communications under this Agreement shall, unless otherwise
expressly provided herein, be in writing and shall be delivered personally, sent
by overnight courier (providing proof of delivery) to the applicable parties or
sent by telecopy (providing confirmation of transmission) at the following
addresses or telecopy numbers (or at such other address or telecopy number for a
party as shall be specified by like notice):
All notices shall be addressed to the parties at the following
addresses:
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(1) if to the Corporation:
if prior to Closing:
The Xxxxxx Corporation
0000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Fax: 000-000-0000
with a copy to:
Xxxxx Xxxxxx
GE Commercial Finance
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
Fax: 000-000-0000
and
Xxxxx & Xxxxxxx L.L.P.
000 Xxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
Fax: 000-000-0000
If subsequent to Closing:
Xxxxx Xxxxxx
GE Commercial Finance
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
Fax: 000-000-0000
and
Xxxxx & Xxxxxxx L.L.P.
000 Xxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
Fax: 000-000-0000
(2) if to Purchaser:
44
Xxxx Capital Corporation
0000 X Xxxxxx, X.X.
Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxx, III
Fax: (000) 000-0000
with a copy to:
Hunton & Xxxxxxxx
0000 X Xxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
Either party may, by written notice given pursuant to this
Section, change the person or persons and/or address or addresses, or designate
an additional person or persons or an additional address or addresses, for its
notices.
12.5 Partial Invalidity. If any term or provision of this Agreement or
the application thereof to any Persons or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement or the application of
such term or provision to Persons or circumstances other than those as to which
it is held invalid or unenforceable shall not be affected thereby, and each term
and provision of this Agreement shall be valid and enforceable to the fullest
extent permitted by law.
12.6 Waiver of Jury Trial. The Corporation and Purchaser waive trial by
jury in any action, proceeding or counterclaim brought by either of them against
the other on any matter arising out of or in any way connected with this
Agreement.
12.7 Interpretation. Paragraph headings shall not be used in construing
this Agreement. Each party acknowledges that such party and its counsel, after
negotiation and consultation, have reviewed and revised this Agreement. As such,
the terms of this Agreement shall be fairly construed and the usual rule of
construction, to the effect that any ambiguities herein should be resolved
against the drafting party, shall not be employed in the interpretation of this
Agreement or any amendments, modifications or exhibits hereto or thereto.
12.8 Amendment; Waiver. No change or modification of this Agreement
shall be valid unless the same is in writing and signed by the parties hereto.
No waiver of any of the provisions of this Agreement, or any other agreement
referred to herein, shall be valid unless in writing and signed by the party
against whom it is sought to be enforced.
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12.9 Counterparts; Facsimile Execution. This Agreement may be executed
in any number of and it shall not be necessary that each party to this Agreement
execute each counterpart. Delivery of an executed counterpart of a signature
page to this Agreement by facsimile transmission shall be as effective as
delivery of a manually executed counterpart of this Agreement.
12.10 Assignment. The Purchaser shall have the right to assign its
rights and obligations under this Agreement, in whole or in part, to any Person
or to designate any Person to perform any of its obligations hereunder, upon
delivery of notice to the Corporation prior to such assignment or designation
and no later than five (5) days prior to Closing; provided, however, that the
Purchaser shall remain liable for the satisfaction of its obligations hereunder
following such an assignment or designation. In no event shall the assignment or
designation of the Purchaser's rights or obligations under this Agreement,
whether before, at or after Closing, release the Purchaser from its obligations
hereunder.
(Signatures of the parties appear on the next page)
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on their behalf as of the day and year first above stated.
XXXX CAPITAL CORPORATION
By: /s/ Xxxxxx X. Xxxx, III
----------------------------
Name: Xxxxxx X. Xxxx, III
Title: President & CEO
THE XXXXXX CORPORATION
By: /s/ Xxxxx X. Xxxxx
-----------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President
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