Exhibit 2.1
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AGREEMENT AND PLAN OF MERGER
by and among
THE XXXXX COMPANY,
GENERAL GROWTH PROPERTIES, INC.
and
RED ACQUISITION, LLC
Dated as of August 19, 2004
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TABLE OF CONTENTS
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ARTICLE I THE MERGER.....................................................1
SECTION 1.1 The Merger.....................................................1
SECTION 1.2 Closing; Effective Time........................................1
SECTION 1.3 Effects of the Merger..........................................2
SECTION 1.4 Charter; Bylaws................................................2
SECTION 1.5 Directors and Officers.........................................2
ARTICLE II EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS.......................................2
SECTION 2.1 Conversion of Securities.......................................2
SECTION 2.2 Exchange of Certificates.......................................3
SECTION 2.3 Treatment of Company Options and Phantom Stock Rights..........5
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................5
SECTION 3.1 Organization and Qualification; Subsidiaries...................6
SECTION 3.2 Charter and Bylaws.............................................6
SECTION 3.3 Capitalization.................................................6
SECTION 3.4 Authority Relative to This Agreement...........................8
SECTION 3.5 No Conflict; Required Filings and Consents.....................8
SECTION 3.6 Compliance.....................................................9
SECTION 3.7 SEC Filings; Financial Statements..............................9
SECTION 3.8 Absence of Certain Changes or Events..........................10
SECTION 3.9 Absence of Litigation.........................................11
SECTION 3.10 Employee Benefit Plans; Labor.................................11
SECTION 3.11 Tax Matters...................................................12
SECTION 3.12 Proxy Statement...............................................14
SECTION 3.13 Opinion of Financial Advisor..................................14
SECTION 3.14 Brokers.......................................................14
SECTION 3.15 Takeover Statutes; Rights Plans...............................14
SECTION 3.16 Intellectual Property.........................................14
SECTION 3.17 Environmental Matters.........................................15
SECTION 3.18 Investment Company Act of 1940................................15
SECTION 3.19 Affiliate Transactions........................................16
SECTION 3.20 Contracts.....................................................16
SECTION 3.21 Properties....................................................16
SECTION 3.22 Non-Competition Agreements....................................17
SECTION 3.23 Insurance.....................................................17
SECTION 3.24 No Other Representations or Warranties........................17
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.......18
SECTION 4.1 Organization and Qualification................................18
SECTION 4.2 Authority Relative to This Agreement..........................18
SECTION 4.3 No Conflict; Required Filings and Consents....................19
SECTION 4.4 Compliance....................................................19
SECTION 4.5 SEC Filings; Financial Statements.............................19
SECTION 4.6 Absence of Certain Changes or Events..........................21
SECTION 4.7 Absence of Litigation.........................................21
SECTION 4.8 Brokers.......................................................21
SECTION 4.9 Operations of Merger Sub......................................21
SECTION 4.10 Ownership of Shares of Company Common Stock...................21
SECTION 4.11 Financing.....................................................22
SECTION 4.12 No Other Representations or Warranties........................22
ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER........................22
SECTION 5.1 Conduct of Business of the Company Pending the Merger.........22
SECTION 5.2 Conduct of Business of Parent Pending the Merger..............25
SECTION 5.3 Assistance....................................................26
SECTION 5.4 No Control of Other Party's Business..........................26
SECTION 5.5 Tax Submissions...............................................26
ARTICLE VI ADDITIONAL AGREEMENTS.........................................26
SECTION 6.1 Stockholders Meetings.........................................26
SECTION 6.2 Proxy Statement...............................................27
SECTION 6.3 [INTENTIONALLY OMITTED].......................................27
SECTION 6.4 Access to Information; Confidentiality........................27
SECTION 6.5 Company Acquisition Proposals.................................28
SECTION 6.6 Employment and Employee Benefits Matters......................30
SECTION 6.7 Directors' and Officers' Indemnification and Insurance........32
SECTION 6.8 Tax Matters...................................................33
SECTION 6.9 Further Action; Best Efforts..................................34
SECTION 6.10 Public Announcements..........................................35
SECTION 6.11 Dividends.....................................................36
SECTION 6.12 Contingent Stock Agreement....................................36
ARTICLE VII CONDITIONS OF MERGER..........................................37
SECTION 7.1 Conditions to Obligation of Each Party to Effect the
Merger........................................................37
SECTION 7.2 Conditions to Obligations of Parent and Merger Sub............37
SECTION 7.3 Conditions to Obligations of the Company......................38
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER.............................39
SECTION 8.1 Termination...................................................39
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SECTION 8.2 Effect of Termination.........................................40
SECTION 8.3 Expenses......................................................42
SECTION 8.4 Amendment.....................................................43
SECTION 8.5 Waiver........................................................43
ARTICLE IX GENERAL PROVISIONS............................................43
SECTION 9.1 Non-Survival of Representations, Warranties and
Agreements....................................................43
SECTION 9.2 Notices.......................................................43
SECTION 9.3 Certain Definitions...........................................44
SECTION 9.4 Severability..................................................46
SECTION 9.5 Entire Agreement; Assignment..................................46
SECTION 9.6 Parties in Interest...........................................46
SECTION 9.7 Governing Law.................................................46
SECTION 9.8 Headings......................................................47
SECTION 9.9 Counterparts..................................................47
SECTION 9.10 Specific Performance; Jurisdiction............................47
SECTION 9.11 Parent Guarantee..............................................47
SECTION 9.12 Interpretation................................................48
SECTION 9.13 Obligations of Parent and Company.............................48
SECTION 9.14 Survival; No Amendment........................................48
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INDEX OF PRINCIPAL TERMS
2004 Bonus Plans..............................................................31
affiliate.....................................................................44
Agreement......................................................................1
Antitrust Law.................................................................34
Articles of Merger.............................................................1
beneficial owner..............................................................44
beneficially owned............................................................45
business day..................................................................45
Bylaws.........................................................................6
Cause.........................................................................31
Certificate....................................................................3
Charter........................................................................6
Closing........................................................................1
Closing Date...................................................................1
Closing Dividend..............................................................36
Code..........................................................................11
Commitment Letters............................................................22
Company........................................................................1
Company Acquisition Proposal..................................................28
Company Board..................................................................8
Company Common Stock...........................................................2
Company Disclosure Schedule....................................................5
Company Employees.............................................................30
Company Financial Advisor.....................................................14
Company Material Adverse Effect................................................6
Company Options................................................................7
Company Plans.................................................................11
Company Properties............................................................16
Company Property Owner........................................................16
Company Requisite Vote.........................................................8
Company SEC Reports............................................................9
Company Securities.............................................................7
Company Stock Plans............................................................6
Company Stockholders Meeting..................................................26
Company Superior Proposal.....................................................29
Confidentiality Agreement.....................................................28
Contract......................................................................45
control.......................................................................45
controlled....................................................................45
controlled by.................................................................45
Controlled Subsidiary.........................................................22
Costs.........................................................................32
CSA............................................................................7
Department.....................................................................1
Discharge.....................................................................31
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Dividend Adjustment............................................................2
DOJ...........................................................................34
Effective Time.................................................................1
employee benefit plan.........................................................11
Encumbrances..................................................................16
Environmental Laws............................................................15
Environmental Permits.........................................................15
ERISA.........................................................................11
Excess Dividend................................................................2
Exchange Act...................................................................9
Exchange Fund..................................................................3
Final Parent Qualifying Amount................................................41
FTC...........................................................................34
generally accepted accounting principles......................................45
Indebtedness..................................................................45
Indemnified Parties...........................................................32
Intellectual Property.........................................................14
IRS...........................................................................12
knowledge.....................................................................45
Leased Properties.............................................................16
Liens..........................................................................7
Materials of Environmental Concern............................................15
Merger.........................................................................1
Merger Consideration...........................................................2
Merger Sub.....................................................................1
MGCL...........................................................................1
MLLCA..........................................................................1
New Plans.....................................................................30
Old Plans.....................................................................30
Operating Partnership..........................................................7
Parent.........................................................................1
Parent Board..................................................................18
Parent Disclosure Schedule....................................................18
Parent Employees..............................................................30
Parent Material Adverse Effect................................................18
Parent OP.....................................................................41
Parent Qualifying Amount......................................................41
Parent SEC Reports............................................................20
Parent Termination Costs......................................................42
Parent Termination Fee........................................................41
Paying Agent...................................................................3
person........................................................................46
Phantom Stock Right............................................................6
Plan Conversion Date..........................................................32
Preferred Stock................................................................6
Proxy Statement...............................................................27
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Quarterly Rate................................................................36
REIT..........................................................................13
REIT Opinion..................................................................33
Release Letter................................................................42
Savings Plans.................................................................31
SEC............................................................................9
Securities Act.................................................................9
Stock Awards...................................................................7
subsidiaries..................................................................46
subsidiary....................................................................46
Surviving Corporation..........................................................1
Tax Protection Agreement......................................................13
Tax Return....................................................................13
Taxes.........................................................................13
Termination Date..............................................................39
under common control with.....................................................45
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of August 19, 2004 (this
"Agreement"), by and among General Growth Properties, Inc., a Delaware
corporation ("Parent"), Red Acquisition, LLC, a Maryland limited liability
company and a subsidiary of Parent ("Merger Sub"), and The Xxxxx Company, a
Maryland corporation (the "Company").
WHEREAS, (i) the board of directors of the Company has approved this
Agreement and declared advisable the merger (the "Merger") of Merger Sub with
and into the Company in accordance with the Maryland General Corporation Law
(the "MGCL") and the Maryland Limited Liability Company Act (the "MLLCA") and
the sole member of Merger Sub has approved this Agreement and declared the
Merger advisable in accordance with the MGCL and the MLLCA, and each desires to
provide herein for the Merger, upon the terms and subject to the conditions set
forth herein, (ii) the board of directors of Parent has approved this Agreement
and declared advisable the Merger, and (iii) the board of directors of the
Company has resolved to recommend the approval of the Merger by the stockholders
of the Company.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Merger Sub and the Company hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1 The Merger. Upon the terms and subject to the conditions
of this Agreement and in accordance with the MGCL and the MLLCA, at the
Effective Time, Merger Sub shall be merged with and into the Company. As a
result of the Merger, the separate legal existence of Merger Sub shall cease and
the Company shall continue as the surviving corporation of the Merger (the
"Surviving Corporation").
SECTION 1.2 Closing; Effective Time. Subject to the provisions of
Article VII, the closing of the Merger (the "Closing") shall take place at the
offices of Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx LLP, One New York Plaza, New
York, New York, as soon as practicable, but in no event later than the third
business day after the satisfaction or waiver of the conditions set forth in
Article VII (other than those conditions that can only be fulfilled at the
Effective Time, but subject to the fulfillment or waiver of those conditions),
or at such other place or at such other date as Parent and the Company may
mutually agree. The date on which the Closing actually occurs is hereinafter
referred to as the "Closing Date". At the Closing, the parties hereto shall
cause articles of merger ("Articles of Merger") to be filed with, delivered in
the manner required by the MGCL and the MLLCA to and accepted for record by the
State Department of Assessments and Taxation of Maryland (the "Department") (the
date and time of the acceptance for record of the Articles of Merger with the
Department, or such later time as is specified in the Articles of Merger and as
is agreed to by the parties hereto, being the "Effective Time") and shall make
all other filings or recordings required under the MGCL and the MLLCA in
connection with the Merger.
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SECTION 1.3 Effects of the Merger. From and after the Effective
Time, the Merger shall have the effects set forth in the applicable provisions
of the MGCL and the MLLCA. Without limiting the generality of the foregoing and
subject thereto, at the Effective Time, all the property, rights, privileges,
powers and franchises of the Company and Merger Sub shall vest in the Surviving
Corporation and all debts, liabilities, duties and obligations of the Company
and Merger Sub shall become the debts, liabilities, duties and obligations of
the Surviving Corporation.
SECTION 1.4 Charter; Bylaws. From and after the Effective Time, the
charter of the Company shall be the charter of the Surviving Corporation until
thereafter amended in accordance with its terms and applicable law. From and
after the Effective Time, the Bylaws of the Company shall be the bylaws of the
Surviving Corporation until thereafter amended in accordance with their terms,
the charter of the Surviving Corporation and applicable law.
SECTION 1.5 Directors and Officers. From and after the Effective
Time, the directors of Merger Sub immediately prior to the Effective Time shall
be the directors of the Surviving Corporation, each to hold office in accordance
with the charter and bylaws of the Surviving Corporation and until their
respective successors are duly elected and qualify, and the officers of the
Company immediately prior to the Effective Time shall remain the officers of the
Surviving Corporation, in each case until the earlier of their resignation or
removal or the date their respective successors are duly elected or appointed
(as the case may be) and qualify.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS
SECTION 2.1 Conversion of Securities. At the Effective Time, by
virtue of the Merger and without any action on the part of Parent, Merger Sub,
the Company or the holders of any of the stock of the Company:
(a) Merger Consideration.
(i) Subject to Section 2.1(c), each issued and outstanding
share of Company common stock, par value $0.01 per share (the "Company Common
Stock"), outstanding immediately prior to the Effective Time shall be converted
into the right to receive from Parent $67.50 in cash, without interest, minus
the amount, if any, of the Dividend Adjustment (the "Merger Consideration").
"Dividend Adjustment" shall mean the sum of (i) the lesser of (x) $2.42 and (y)
the amount per share of Company Common Stock of any dividend declared by the
Company, if any, after the date hereof and having a record date prior to the
Effective Time other than as permitted by Section 6.11(a)(ii) or 6.11(b) (the
amount of any dividend described in this clause (y), an "Excess Dividend") and
(ii) the product of 1.1 and the amount of any Excess Dividend over $2.42.
(ii) As of the Effective Time, subject to Section 2.1(c), all
shares of Company Common Stock outstanding immediately prior to the Effective
Time shall no longer be outstanding and shall automatically be canceled and
retired and shall cease to exist, and each
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holder of a certificate representing any such shares of Company Common Stock
(each, a "Certificate") shall cease to have any rights with respect thereto,
except the right to receive the Merger Consideration upon surrender of such
certificate in accordance with Section 2.2, without interest.
(iii) Notwithstanding anything in this Agreement to the
contrary, if, between the date of this Agreement and the Effective Time, the
outstanding shares of Company Common Stock shall have been changed into a
different number of shares or a different class by reason of any
reclassification, recapitalization, split, combination, exchange of shares,
readjustment or other similar transaction, or a stock dividend thereon shall be
declared with a record date within said period, the Merger Consideration and any
other relevant provisions of this Agreement shall be equitably adjusted.
(b) Membership Interests of Merger Sub. The issued and
outstanding membership interests of Merger Sub immediately prior to the
Effective Time shall be converted into one share of common stock, par value
$.01 per share, of the Surviving Corporation.
(c) Cancellation of Parent-Owned and Merger Sub-Owned Stock. As
of the Effective Time, each share of Company Common Stock outstanding
immediately prior to the Effective Time and that is owned by Parent or Merger
Sub (or any direct or indirect wholly owned subsidiary of Parent or Merger
Sub) shall no longer be outstanding and shall automatically be canceled and
retired and shall cease to exist, and no cash or other consideration shall be
delivered or deliverable in exchange therefor.
SECTION 2.2 Exchange of Certificates. (a) Paying Agent. Prior to the
Closing, Parent shall select a bank or trust company reasonably satisfactory to
the Company to act as paying agent (the "Paying Agent") for payment of the
Merger Consideration upon surrender of Certificates. Promptly following the
Effective Time, Parent shall deposit with the Paying Agent, for the benefit of
the holders of shares of Company Common Stock, for exchange in accordance with
this Article II, the amount of cash consideration payable pursuant to Section
2.1(a) in exchange for outstanding shares of Company Common Stock (such cash
being hereinafter referred to as the "Exchange Fund"). The Exchange Fund may not
be used for any purpose that is not provided for herein.
(b) Payment Procedures. As soon as reasonably practicable after
the Effective Time, the Paying Agent shall mail to each holder of record of a
Certificate or Certificates whose shares were converted into the right to
receive the Merger Consideration pursuant to Section 2.1(a), (i) a letter of
transmittal and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for the Merger Consideration. Upon surrender of a
Certificate for cancellation to the Paying Agent or to such other agent or
agents as may be appointed by Parent, together with such letter of
transmittal, duly executed, and such other documents as may reasonably be
required by the Paying Agent, the holder of such Certificate shall be
entitled to receive in exchange therefor the amount of cash into which the
aggregate number of shares of Company Common Stock previously represented by
such Certificate shall have been converted pursuant to Section 2.1(a), and
the Certificate so surrendered shall forthwith be canceled. In the event of a
transfer of ownership of Company Common Stock
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that is not registered in the transfer records of the Company, payment may be
made to a person other than the person in whose name the Certificate so
surrendered is registered, if such Certificate shall be properly endorsed or
otherwise be in proper form for transfer and the person requesting such
payment shall pay any transfer or other taxes required by reason of the
payment to a person other than the registered holder of such Certificate or
establish to the satisfaction of Parent that such tax has been paid or is not
applicable. Until surrendered as contemplated by this Section 2.2, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive, upon surrender of such Certificate, the Merger
Consideration into which the shares of Company Common Stock theretofore
represented by such Certificate shall have been converted pursuant to Section
2.1(a). No interest shall be paid or accrue on any cash payable upon
surrender of any Certificate.
(c) No Further Ownership Rights in Company Common Stock. The
Merger Consideration paid in accordance with the terms of this Article II
upon conversion of any shares of Company Common Stock shall be deemed to have
been paid in full satisfaction of all rights pertaining to such shares of
Company Common Stock, subject, however, to the Surviving Corporation's
obligation to pay any dividends or make any other distributions with a record
date prior to the Effective Time that may have been declared or made by the
Company on such shares of Company Common Stock in accordance with the terms
of this Agreement or prior to the date of this Agreement and which remain
unpaid at the Effective Time, and after the Effective Time there shall be no
further registration of transfers on the stock transfer books of the
Surviving Corporation of shares of Company Common Stock that were outstanding
immediately prior to the Effective Time. If, after the Effective Time, any
Certificates formerly representing shares of Company Common Stock are
presented to the Surviving Corporation or the Paying Agent for any reason,
they shall be canceled as provided in this Article II.
(d) Termination of Exchange Fund. Any portion of the Exchange
Fund that remains undistributed to the holders of Company Common Stock for
nine months after the Effective Time shall be delivered to Parent and any
holder of Company Common Stock who has not theretofore complied with this
Article II shall thereafter look only to Parent and the Surviving Corporation
for payment of its claim for Merger Consideration without any interest
thereon.
(e) No Liability. None of Parent, Merger Sub or the Company or
the Paying Agent shall be liable to any person in respect of any cash
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law. If any Certificate has not been surrendered prior to
seven years after the Effective Time (or immediately prior to such earlier
date on which Merger Consideration in respect of such Certificate would
otherwise escheat to or become the property of any governmental authority),
any such cash in respect of such Certificate shall, to the extent permitted
by applicable law, become the property of the Surviving Corporation, free and
clear of all claims or interest of any person previously entitled thereto.
(f) Investment of Exchange Fund. The Paying Agent shall invest
the cash included in the Exchange Fund on a daily basis, as directed by
Parent, in direct obligations of the United States of America, obligations
for which the full faith and credit of the United
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States of America is pledged to provide for the payment of all principal and
interest or commercial paper obligations receiving the highest rating from
either Xxxxx'x Investors Service, Inc. or Standard & Poor's or a combination
thereof, provided that, in any such case, no such instrument shall have a
maturity exceeding three months. Any interest and other income resulting from
such investments shall be paid to Parent. To the extent that there are losses
with respect to such investments, or the Exchange Fund diminishes for other
reasons below the level required to make prompt cash payments of the Merger
Consideration as contemplated hereby, Parent shall promptly replace or
restore the cash portion of the Exchange Fund lost through investments or
other events so as to ensure that the Exchange Fund is, at all times,
maintained at a level sufficient to make such cash payments.
SECTION 2.3 Treatment of Company Options and Phantom Stock Rights.
(a) As of the Effective Time, each Company Option which is
outstanding as of immediately prior to the Effective Time shall be cancelled
and the holder thereof shall be entitled to receive, as soon as practicable
thereafter, an amount of cash from the Surviving Corporation equal to the
product of (x) the total number of shares of Company Common Stock subject to
such Company Option multiplied by (y) the excess of the amount of the Merger
Consideration over the exercise price per share subject to such Company
Option (with the aggregate amount of such payment to the holder to be rounded
to the nearest cent).
(b) Each Phantom Stock Right that is outstanding as of
immediately prior to the Effective Time shall be adjusted to provide that
such Phantom Stock Right shall be cancelled as of the Effective Time, and, in
consideration of such cancellation, the holder thereof shall become entitled
to receive for each Phantom Stock Right an amount of cash from the Surviving
Corporation equal to the Merger Consideration; provided, that no such payment
shall be made to such a holder with respect to a Phantom Stock Right if the
holder has elected to defer payment thereof to a deferred compensation
account under a Company Plan, and, in lieu thereof, such account shall be
credited with a fully vested amount of cash equal to such payment.
(c) The Company shall take all steps necessary to give effect to
this Section 2.3. Any cash payments required to be made pursuant to this
Section 2.3, and any cash payment in respect of Stock Awards, shall be
subject to all applicable withholdings of Taxes.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Merger Sub
as of the date of this Agreement (except in the case of any representation or
warranty that by its express terms is made as of another specified date) that,
except as set forth on the corresponding section of the disclosure schedule
delivered by the Company to Parent and Merger Sub prior to the execution of this
Agreement (the "Company Disclosure Schedule"):
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SECTION 3.1 Organization and Qualification; Subsidiaries. The
Company and each of its subsidiaries is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization and has the
requisite power and authority to own, lease and operate its properties and
assets and to carry on its business as it is now being conducted, except where
any such failure to be so organized, existing or in good standing or to have
such power or authority would not, individually or in the aggregate, have a
Company Material Adverse Effect. Each of the Company and its subsidiaries is
duly qualified or licensed to do business, and is in good standing, in each
jurisdiction where the character of the properties owned, leased or operated by
it or the management of properties for others or the conduct of its business
makes such qualification or licensing necessary, except for any such failure to
be so qualified or licensed or in good standing which would not, individually or
in the aggregate, have a Company Material Adverse Effect. "Company Material
Adverse Effect" means (x) any change or effect that has been or would be
materially adverse to the business, financial condition or results of operations
of the Company and its subsidiaries taken as a whole, other than any change or
effect resulting from (i) changes in general international, national or regional
economic or financial conditions, or changes in the securities market in
general, (ii) general changes or developments in the industries in which the
Company and its subsidiaries operate or (iii) changes in any laws or regulations
or accounting regulations or principles applicable to the Company and its
subsidiaries, or (y) any change or effect that would prevent or materially delay
the ability of the Company to consummate the Merger and the transactions
contemplated by this Agreement.
SECTION 3.2 Charter and Bylaws. The Company has heretofore furnished
or otherwise provided to Parent a complete and correct copy of the amended and
restated charter together with any articles of amendment and articles
supplementary thereto (the "Charter") and the bylaws together with any
amendments thereto (the "Bylaws") of the Company as currently in effect. The
Charter and the Bylaws are in full force and effect. The Company is not in
violation of any provisions of its Charter or Bylaws in any material respect.
SECTION 3.3 Capitalization. (a) The authorized capital stock of the
Company consists of (i) 500,000,000 shares of Company Common Stock and (ii)
50,000,000 shares of preferred stock, par value $0.01 per share (the "Preferred
Stock"), of which 10,000,000 shares are designated as Increasing Rate Cumulative
Preferred Stock. As of August 17, 2004, (i) 103,306,804 shares of Company Common
Stock were issued and outstanding, all of which were validly issued, fully paid
and nonassessable and were issued free of preemptive rights or similar rights
existing under the Charter, Bylaws or the MGCL or any contract or instrument to
which the Company is a party or by which it is bound; (ii) an aggregate of
6,310,410 shares of Company Common Stock are deliverable in connection with the
exercise of outstanding Company Options granted pursuant to the Company's 2001
Stock Incentive Plan, Amended and Restated 1999 Stock Incentive Plan, 1997 Stock
Incentive Plan, 1994 Stock Incentive Plan and 1990 Stock Option Plan (the
"Company Stock Plans"); (iii) 192,128 rights, (a) the value of each of which is
equal to the value of a Share (each, a "Phantom Stock Right"), are outstanding
under the Company's Deferred Compensation Plan for Outside Directors and Special
Option Plan, and the Employment Agreement, dated September 24, 1998, as amended,
to which the Company and its Chief Executive Officer are parties, (b) 87,128 of
which are included in the number of shares of Company Common Stock issued and
outstanding provided in clause (i) above, and (c) 105,000 of which are not
included in the number of shares of Company Common Stock issued and outstanding
provided in clause (i) above; (iv) an aggregate of 9,359,217 shares of
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Company Common Stock were reserved for issuance under the Contingent Stock
Agreement effective as of January 1, 1996 (the "CSA") by the Company in favor of
the parties named therein; and (v) no shares of Preferred Stock were
outstanding. Since August 17, 2004, no options to purchase shares of Company
Common Stock (the "Company Options") or Preferred Stock have been granted and no
shares of Company Common Stock or Preferred Stock have been issued, except (i)
for shares of Company Common Stock issued pursuant to the exercise of Company
Options or any Company Stock Plan that were subject to issuance on August 17,
2004, (ii) for the grant of awards consisting of shares of Company Common Stock
("Stock Awards") and Company Options (and issuances of Company Common Stock
pursuant thereto) after the date hereof in accordance with Section 5.1 of this
Agreement, (iii) for the issuance of shares of Company Common Stock in
accordance with the CSA, or (iv) as otherwise permitted after the date hereof in
accordance with Section 5.1. Except as set forth above, (A) there are not
outstanding or authorized any (1) shares of capital stock or other voting
securities of the Company, (2) securities of the Company or any of its
subsidiaries convertible into or exchangeable for shares of capital stock or
voting securities of the Company or any of its subsidiaries or (3) options or
other rights to acquire from the Company or any of its subsidiaries, and no
obligation of the Company to issue, any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or voting
securities of the Company or any of its subsidiaries (collectively, "Company
Securities"), (B) there are no outstanding obligations of the Company or any of
its subsidiaries to repurchase, redeem or otherwise acquire any Company
Securities and (C) there are no other options, calls, warrants or other rights,
agreements, arrangements or commitments of any character, including registration
rights agreements, relating to the issued or unissued capital stock of the
Company or any of its subsidiaries to which the Company or the applicable
subsidiary is a party.
(b) There are no bonds, debentures, notes or other indebtedness
of the Company having the right under applicable law or the Charter or Bylaws
to vote (or convertible into, or exchangeable for, securities having the
right to vote) on any matters on which stockholders of the Company may vote.
(c) All (i) outstanding shares of capital stock of each of the
Company's subsidiaries that is a corporation are duly authorized, validly
issued, fully paid and nonassessable and (ii) equity interests of each of the
Company's subsidiaries that is a partnership, limited liability company,
business trust or other entity are duly authorized and validly issued.
Section 3.3(c) of the Company Disclosure Schedule sets forth an accurate and
complete list of each of the Company's subsidiaries, and the Company's
ownership interests therein. All such shares and equity interests are owned
by the Company or another subsidiary of the Company free and clear of all
security interests, liens, claims, pledges, limitations in voting rights,
charges or other encumbrances of any nature whatsoever ("Liens"), except
where any such failure to own any such shares or equity interests free and
clear would not, individually or in the aggregate, have a Company Material
Adverse Effect.
(d) The sole general partner of The Xxxxx Company LP (the
"Operating Partnership") is TRCGP, Inc., a wholly owned subsidiary of the
Company, and the limited partners of the Operating Partnership are The Xxxxx
Company Business Trust and Xxxxxx Xxxxxx Properties, Inc., each of which is a
wholly owned subsidiary of the Company.
7
SECTION 3.4 Authority Relative to This Agreement. The Company has
all necessary corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Company, the performance by the Company of its obligations hereunder, and
the consummation by the Company of the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate action and no other
corporate proceedings on the part of the Company are necessary pursuant to the
Charter or the MGCL to authorize this Agreement or to consummate the
transactions so contemplated (other than the approval of the Merger by the
affirmative vote of the holders of at least two-thirds of the voting power of
the outstanding shares of Company Common Stock entitled to vote thereon (the
"Company Requisite Vote")). This Agreement has been duly and validly executed
and delivered by the Company and, assuming the due authorization, execution and
delivery hereof by Parent and Merger Sub, constitutes a legal, valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, and general equitable principles (whether
considered in a proceeding in equity or at law). The board of directors of the
Company (the "Company Board") has (i) approved this Agreement and declared the
Merger advisable and fair to, and in the best interests of, the Company and the
stockholders of the Company, (ii) resolved to recommend the approval of the
Merger to the stockholders of the Company, and (iii) directed that the Merger be
submitted to the stockholders of the Company for their approval. The only vote
of the stockholders of the Company required pursuant to the Charter or the MGCL
to approve the Merger is the Company Requisite Vote.
SECTION 3.5 No Conflict; Required Filings and Consents. (a) The
execution and delivery of, and the performance by the Company of its obligations
under, this Agreement, do not and will not (i) conflict with or violate the
Charter or Bylaws or any organizational document of any of the Company's
subsidiaries, (ii) assuming that all consents, approvals and authorizations
contemplated by subsection (b) below have been obtained and all filings
described in such subsection (b) have been made, conflict with or violate any
law, rule, regulation, order, judgment or decree applicable to the Company or
any of its subsidiaries or by which its or any of their respective properties
are bound, (iii) result in the creation of any Lien on any of the material
properties or assets of the Company or any of its subsidiaries or (iv) result in
(A) any breach or violation of or constitute a default (or an event which with
notice or lapse of time or both would become a default) or result in the loss of
a benefit under, or give rise to any right of termination, cancellation,
amendment or acceleration of, any Contract to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or
its or any of their respective properties or assets are bound or (B) any change
of any rights or obligations of any party to a Contract to which the Company or
any of its subsidiaries is a party or by which the Company or any of its
subsidiaries or its or any of their respective properties or assets are bound,
except, in the case of clauses (ii), (iii) and (iv) above, for any such
conflict, violation, Lien, breach, default, loss, right, change or other
occurrence which would not, individually or in the aggregate, have a Company
Material Adverse Effect.
(b) The execution and delivery of this Agreement by the Company,
the performance by the Company of its obligations hereunder, and the
consummation of the Merger and the other transactions contemplated hereby, do
not and will not require any
8
consent, approval, authorization or permit of, action by, filing with or
notification to, any governmental or regulatory authority, except for (i)
applicable requirements of the Securities Exchange Act of 1934, as amended
(together with the rules and regulations promulgated thereunder, the
"Exchange Act"), and state securities, takeover and "blue sky" laws, (ii) the
filing with and acceptance for record by the Department of the Articles of
Merger as required by the MGCL and MLLCA and appropriate documents with the
relevant authorities of other states in which the Company is qualified to do
business, and (iii) any such consent, approval, authorization, permit,
action, filing or notification the failure to make or obtain which would not,
individually or in the aggregate, have a Company Material Adverse Effect.
SECTION 3.6 Compliance. Neither the Company nor any of its
subsidiaries is in violation of any law, rule, regulation, order, judgment or
decree applicable to the Company or any of its subsidiaries or by which its or
any of their respective properties or assets are bound, except for any such
violation which would not, individually or in the aggregate, have a Company
Material Adverse Effect. The Company and its subsidiaries have all permits,
licenses, authorizations, exemptions, orders, consents, approvals and franchises
from governmental and regulatory agencies required to conduct their respective
businesses as now being conducted, except for any such permit, license,
authorization, exemption, order, consent, approval or franchise the absence of
which would not, individually or in the aggregate, have a Company Material
Adverse Effect.
SECTION 3.7 SEC Filings; Financial Statements. (a) The Company has
filed or otherwise transmitted all forms, reports, statements, certifications
and other documents required to be filed with the Securities and Exchange
Commission (the "SEC") since January 1, 2003 (collectively with the forms,
reports, statements, certifications and other documents required to be filed
with the SEC subsequent to the date of this Agreement, the "Company SEC
Reports"), each of which, as finally amended, has complied as to form in all
material respects with the applicable requirements of the Securities Act of
1933, as amended (together with the rules and regulations promulgated
thereunder, the "Securities Act"), or the Exchange Act, each as in effect on the
date so filed. None of the Company SEC Reports already filed contained, when
filed as finally amended, nor will any Company SEC Reports filed subsequent to
the date of this Agreement contain, any untrue statement of a material fact or
omitted or will omit to state a material fact required to be stated or
incorporated by reference therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(b) The audited consolidated financial statements of the Company
(including any related notes thereto) for the fiscal years ended December 31,
2002 and December 31, 2003 included in the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 2003 filed with the SEC have been
prepared and, any audited consolidated financial statements of the Company
(including any related notes thereto) filed after the date of this Agreement,
will be prepared, in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods involved (except as may
be indicated in the notes thereto) and fairly present, and, if filed after
the date of this Agreement, will fairly present, in all material respects the
consolidated financial position of the Company and its subsidiaries at the
respective dates thereof and the consolidated statements of operations, cash
flows and changes in stockholders' equity for the periods indicated. The
9
unaudited consolidated financial statements of the Company (including any
related notes thereto) included in or incorporated by reference into the
Company SEC Reports filed with the SEC have been prepared, and, if filed
after the date of this Agreement, will be prepared, in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes
thereto) and fairly present, and, if filed after the date of this Agreement,
will fairly present, in all material respects the consolidated financial
position of the Company and its subsidiaries as of the date thereof and the
consolidated statements of operations and cash flows for the periods
indicated (subject to normal period-end adjustments that will not be material
in amount or effect).
(c) The management of the Company has (x) implemented disclosure
controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) to
ensure that material information relating to the Company, including its
consolidated subsidiaries, is made known to the management of the Company by
others within those entities, and (y) has disclosed, based on its most recent
evaluation, to the Company's outside auditors and the audit committee of the
Company Board (A) all significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting (as defined
in Rule 13a-15(f) of the Exchange Act) which are reasonably likely to
adversely affect the Company's ability to record, process, summarize and
report financial data and (B) any fraud, whether or not material, that
involves management or other employees who have a significant role in the
Company's internal control over financial reporting. A summary of any of
those disclosures made by management to the Company's auditors and audit
committee is set forth in Section 3.7(c) of the Company Disclosure Schedule.
(d) Since July 31, 2002, (x) neither the Company nor any of
subsidiaries nor, to the knowledge of the officers of the Company, any
director, officer, employee, auditor, accountant or representative of the
Company or any of its subsidiaries has received or otherwise had or obtained
knowledge of any material complaint, allegation, assertion or claim, whether
written or oral, regarding the accounting or auditing practices, procedures,
methodologies or methods of the Company or any of its subsidiaries or their
respective internal accounting controls, including any material complaint,
allegation, assertion or claim that the Company or any of its subsidiaries
has engaged in questionable accounting or auditing practices, and (y) no
attorney representing the Company or any of its subsidiaries, whether or not
employed by the Company or any of its subsidiaries, has reported evidence of
a material violation of securities laws, breach of fiduciary duty or similar
violation by the Company or any of its officers, directors, employees or
agents to the Company Board or any committee thereof or to any director or
officer of the Company.
SECTION 3.8 Absence of Certain Changes or Events. Except with
respect to factual developments disclosed in the Company SEC Reports filed on or
after March 9, 2004 and prior to the date hereof (and excluding any forward
looking statements or other expressions of expectation, possibility or risk
disclosed in such Company SEC Reports), since December 31, 2003, the Company and
its subsidiaries have conducted their respective businesses only in, and have
not engaged in any material transaction other than according to, the ordinary
course of such businesses consistent with past practices and there has not been
any change, development, event or occurrence that, individually or in the
aggregate, has had or would have a Company Material Adverse Effect.
SECTION 3.9 Absence of Litigation. There are no suits, claims, actions,
proceedings or investigations pending or, to the knowledge of the Company,
threatened against the Company or any of its subsidiaries, other than any such
suit, claim, action, proceeding or investigation that would not, individually or
in the aggregate, have a Company Material Adverse Effect. Neither the Company
nor any of its subsidiaries nor any of their respective properties or assets is
or are subject to any order, writ, judgment, injunction, decree or award which
has or would have a Company Material Adverse Effect. As of the date hereof, no
investigation or review, including with respect to any accounting or disclosure
practices of the Company or any of its subsidiaries or any malfeasance by any
executive officer or director of the Company, by any governmental authority,
including the SEC, is pending or, to the knowledge of the Company, has been
threatened against the Company or any of its subsidiaries.
SECTION 3.10 Employee Benefit Plans; Labor. (a) Section 3.10(a) of the
Company Disclosure Schedule contains a true and complete list of each material
"employee benefit plan" (within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and each other
material director and employee plan, program, agreement or arrangement, vacation
or sick pay policy, fringe benefit plan, and compensation, severance or
employment agreement contributed to, sponsored or maintained by the Company or
any of its subsidiaries as of the date hereof for the benefit of any employees
(and former employees) and directors (and former directors) of the Company and
its subsidiaries (such plans, programs, agreements and arrangements,
collectively, "Company Plans") and also describes any multiemployer plans
(within the meaning of ERISA Section 4001(a)(3)) contributed to by the Company.
(b) Except as would not, individually or in the aggregate, have a
Company Material Adverse Effect, each Company Plan has been established
and administered in accordance with its terms and in compliance with the
applicable provisions of ERISA, the Internal Revenue Code of 1986, as
amended (the "Code"), and other applicable laws, rules and regulations.
(c) Neither the Company nor any of its subsidiaries has now, or at
any time has had, any material liability or obligation to any
multiemployer plan (within the meaning of ERISA Section 4001(a)(3)).
(d) Except as would not, individually or in the aggregate, have a
Company Material Adverse Effect, with respect to each Company Plan, no
actions, suits or claims (other than routine claims for benefits in the
ordinary course) are pending or, to the knowledge of the Company,
threatened. The Company or its subsidiaries may amend or terminate any
retiree health and life coverage obligation at any time without incurring
any material liability thereunder other than in respect of claims incurred
prior to such amendment or termination.
(e) Except as would not, individually or in the aggregate, have a
Company Material Adverse Effect, (i) the Company has not incurred any
liability under Title IV of ERISA that has not been satisfied in full, and
(ii) to the knowledge of the Company, no condition exists that presents a
risk to the Company of incurring any such liability other than liability
for premiums due the Pension Benefit Guaranty Corporation.
11
(f) Except as would not, individually or in the aggregate, have a
Company Material Adverse Effect, all contributions required to be made
under each Company Plan have been timely made.
(g) Except as would not, individually or in the aggregate, have a
Company Material Adverse Effect, each Company Plan which is intended to be
qualified under Section 401(a) of the Code has received a determination
letter to that effect from the Internal Revenue Service (the "IRS")
covering all tax law changes prior to the Economic Growth and Tax Relief
Reconciliation Act of 2001 or has applied to the IRS for such favorable
determination letter within the applicable remedial amendment period and,
to the knowledge of the Company, no circumstances exist which could
reasonably be expected to materially adversely affect such qualification
or any exemption from such qualification.
(h) Except as would not, individually or in the aggregate, have a
Company Material Adverse Effect, there has been no amendment to,
announcement by the Company or any of its subsidiaries relating to, or
change in employee participation or coverage under, any Company Plan that
would increase the expense of maintaining such Company Plan above the
level of the expense incurred therefor for the most recent fiscal year.
None of the execution and delivery of, the stockholder approval of, the
performance by the Company of its obligations under, or the consummation
of the transactions contemplated by, this Agreement, will (either alone or
upon occurrence of any additional or subsequent events) (i) constitute an
event under any Company Plan or any trust or loan related to any of those
plans or agreements that will or may result in any material payment,
acceleration, forgiveness of indebtedness, vesting, distribution, increase
in benefits or obligation to fund benefits with respect to any employee of
the Company or any of its subsidiaries, or (ii) result in the triggering
or imposition of (x) any material restrictions or limitations on the right
of the Company or any of its subsidiaries to amend or terminate any
Company Plan, or (y) result in any material "excess parachute payments"
within the meaning of Section 280G(b)(1) of the Code.
(i) Except as would not, individually or in the aggregate, have a
Company Material Adverse Effect, (i) there are no controversies pending
or, to the knowledge of the Company, threatened, between the Company or
any of its subsidiaries and any of their respective employees; (ii)
neither the Company nor any of its subsidiaries is in breach of any
collective bargaining agreement or other labor union contract applicable
to persons employed by the Company or any of its subsidiaries, nor does
the Company know of any activities or proceedings of any labor union to
organize any significant number of such employees; and (iii) within the
past three years there have been no, nor does the Company have any
knowledge of any, threatened strikes, slowdowns, work stoppages, lockouts,
or threats thereof, by or with respect to any employees of the Company or
any of its subsidiaries.
SECTION 3.11 Tax Matters. (a) Except as would not, individually or in the
aggregate, have a Company Material Adverse Effect, the Company and each of its
subsidiaries have (i) timely filed (taking into account any extension of time
within which to file) all Tax Returns required to be filed by any of them in the
manner provided by law and all such filed Tax Returns were complete and accurate
in all material respects and (ii) paid all Taxes shown on such Tax Returns to be
due and payable. Except as would not, individually or in the aggregate, have a
12
Company Material Adverse Effect, since December 31, 2003, the Company has
incurred no liability for Taxes under Sections 857(b), 860(c), or 4981 of the
Code. Except as would not, individually or in the aggregate, have a Company
Material Adverse Effect, (x) since December 31, 2003, neither the Company nor
any of its subsidiaries has incurred any material liability for Taxes other than
in the ordinary course of business and (y) no audits have begun or been
threatened in writing and no deficiencies for material Taxes have been asserted
or assessed or threatened in writing by a governmental authority against the
Company or any of its subsidiaries.
(b) Neither the Company nor any of its subsidiaries (i) is or, since
January 1, 1997, has been a member of an affiliated group filing a
consolidated tax return (other than a group the common parent of which was
the Company or an entity listed in Section 3.11(b) of the Company
Disclosure Schedule) or (ii) is a party to any (1) Tax allocation or
sharing agreement and/or (2) Tax Protection Agreement.
(c) The Company, (i) for each taxable year beginning with its
taxable year ended on December 31, 1998, has been subject to taxation as a
real estate investment trust within the meaning of the Code ("REIT") and
has satisfied the requirements to qualify as a REIT for such years, (ii)
has operated since December 31, 2003, and intends to continue to operate,
consistent with the requirements for qualification and taxation as a REIT,
and (iii) has not taken any action or omitted to take any action which
would reasonably be expected to result in a successful challenge by the
Internal Revenue Service to the Company's status as a REIT, and no such
challenge is pending, or to the knowledge of the Company, threatened.
(d) The Company is a "domestically-controlled REIT" within the
meaning of Section 897(h) of the Code.
As used in this Agreement, the term (i) "Taxes" shall mean all
federal, state, local and foreign income, profits, franchise, license,
transfer, recording, gross receipts, environmental, customs duty, capital
stock, severances, stamp, payroll, sales, employment, unemployment,
disability, use, property, withholding, excise, production, value added,
occupancy and other taxes, duties or assessments of any nature whatsoever,
together with all interest, penalties and additions imposed with respect
to such amounts and any interest in respect of such penalties and
additions, and (ii) "Tax Return" shall mean all returns and reports
(including elections, declarations, disclosures, attachments, schedules,
work papers, estimates and information returns) required to be supplied to
a Tax authority relating to Taxes.
(e) As used herein, "Tax Protection Agreement" mean a Contract,
either oral or written, that has as one of its purposes to permit a person
to take a position that such person could defer federal taxable income
that otherwise might have been recognized upon a transfer of property to
the Company or any of its subsidiaries and that (i) prohibits or restricts
in any manner the disposition of any assets of the Company or any of its
subsidiaries, (ii) requires that the Company or any of its subsidiaries
maintain, put in place, or replace, indebtedness, whether or not secured
by one or more Properties, or (iii) requires that the Company or any of
its subsidiaries offer to any Person at any time the opportunity to
guarantee or otherwise assume, directly or indirectly (including, without
limitation, through a
13
"deficit restoration obligation," guarantee (including, without
limitation, a "bottom" guarantee), indemnification agreement or other
similar arrangement), the risk of loss for federal income tax purposes of
indebtedness or other liabilities of the Company or any of its
subsidiaries. Except as would not, individually or in the aggregate, have
a Company Material Adverse Effect, none of the Company or any of its
subsidiaries is in violation of or in default of any Tax Protection
Agreement.
SECTION 3.12 Proxy Statement. The Proxy Statement shall not at the time
the Proxy Statement is cleared by the SEC contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Proxy Statement to
be sent to the stockholders of the Company in connection with the Company
Stockholders Meeting will, at the time of the Company Stockholders Meeting,
comply as to form in all material respects with the requirements of the Exchange
Act. Notwithstanding the foregoing, the Company makes no representations or
warranties with respect to information that has been or will be supplied by
Parent or Merger Sub, or any of their respective representatives, specifically
for use in the Proxy Statement.
SECTION 3.13 Opinion of Financial Advisor. Each of Xxxxxxx, Xxxxx & Co.
and Deutsche Bank Securities Inc. (the "Company Financial Advisors") has
delivered to the Company Board its written opinion (or oral opinion to be
confirmed in writing), dated as of the date hereof, that, as of such date, the
Merger Consideration is fair, from a financial point of view, to the holders of
the Company Common Stock.
SECTION 3.14 Brokers. No broker, finder or investment banker (other than
the Company Financial Advisors) is entitled to any brokerage, finder's or other
fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by and on behalf of the Company or any of
its subsidiaries.
SECTION 3.15 Takeover Statutes; Rights Plans. No "fair price,"
"moratorium," "control share acquisition" or other similar anti-takeover statute
or regulation enacted under the MGCL or the federal laws in the United States
applicable to the Company is applicable to the Merger, including any takeover
provision in its organizational documents. As of the date of this Agreement, the
Company does not have any stockholder rights plan in effect. The Company Board
has approved this Agreement and declared the Merger advisable for purposes of
Sections 3-601 et seq. of the MGCL.
SECTION 3.16 Intellectual Property. Except as would not, individually or
in the aggregate, have a Company Material Adverse Effect: (i) the Company and
its subsidiaries own or have the rights to use all patents, inventions,
copyrights, software, trademarks, service marks, domain names, trade dress,
trade secrets and all other intellectual property rights of any kind or nature
("Intellectual Property") used in their business as currently conducted, all of
which shall survive the execution of this Agreement and the consummation of the
Merger and the other transactions contemplated hereby; and (ii)(x) to the
knowledge of the Company, such Intellectual Property does not infringe the
Intellectual Property of any third party and is not being infringed by any third
party; and (y) there is no action pending and no claim has been asserted or
threatened in writing alleging the same.
14
SECTION 3.17 Environmental Matters. (a) Except as would not, individually
or in the aggregate, have a Company Material Adverse Effect: (i) the Company and
each of its subsidiaries have complied with all applicable Environmental Laws
(as defined below), and possess and comply with all applicable Environmental
Permits (as defined below) required under such laws to operate as it presently
operates; (ii) there have been no releases of Materials of Environmental Concern
(as defined below) at any property owned or operated by the Company or any of
its subsidiaries or, to the knowledge of the Company, by any other party, under
circumstances that would reasonably be expected to result in liability of the
Company or any of its subsidiaries under any applicable Environmental Law; (iii)
neither the Company nor any of its subsidiaries has received any written
notification alleging any violation of any Environmental Law or that it is
liable for, or requesting information pursuant to Section 104(e) of the
Comprehensive Environmental Response, Compensation and Liability Act or similar
state statute concerning, any release or threatened release of Materials of
Environmental Concern at any location, except, with respect to any such
notification or request for information concerning any such release or
threatened release, to the extent such matter has been resolved with the
appropriate foreign, Federal, state or local regulatory authority or otherwise;
(iv) neither the Company nor any of its subsidiaries is subject to any order,
decree or injunction issued by any governmental authority or any indemnity or
other agreement with any third party relating to liability under any
Environmental Law or otherwise relating to any Materials of Environmental
Concern; and (v) there are no conditions or circumstances that would give rise
to liability under any Environmental Laws.
(b) Notwithstanding any other representations and warranties in this
Agreement, the representations and warranties in this Section 3.17 are the
only representations and warranties in this Agreement with respect to
Environmental Laws or Materials of Environmental Concern.
(c) For purposes of this Agreement, the following terms shall have
the meanings assigned below:
"Environmental Laws" shall mean all foreign, federal, state, or
local statutes, regulations, ordinances, codes, or decrees
protecting the environment and health and safety, including the
quality of the ambient air, soil, surface water or groundwater, in
effect as of the date of this Agreement.
"Environmental Permits" shall mean all permits, licenses,
registrations, and other authorizations required under applicable
Environmental Laws.
"Materials of Environmental Concern" shall mean any "hazardous",
"acutely hazardous", or "toxic" substance, pollutant, contaminant or
waste as defined and regulated under Environmental Laws, including
the Comprehensive Environmental Response, Compensation and Liability
Act and the Resource Conservation and Recovery Act.
SECTION 3.18 Investment Company Act of 1940. Neither the Company nor any
of its subsidiaries is required to be registered as an investment company under
the Investment Company Act of 1940, as amended.
15
SECTION 3.19 Affiliate Transactions. There are no transactions,
agreements, arrangements or understandings between the Company or its
subsidiaries, on the one hand, and the Company's affiliates (other than
subsidiaries of the Company) or other persons, on the other hand, that would be
required to be disclosed under Item 404 of Regulation S-K.
SECTION 3.20 Contracts. (a) Except for any default that would not,
individually or in the aggregate, have a Company Material Adverse Effect, (i)
neither the Company nor any of its subsidiaries is in default under any material
Contract to which the Company or any of its subsidiaries is a party or by which
it or any of the Company Properties or Leased Properties or assets is bound nor,
to the knowledge of the Company, is any other party thereto in default
thereunder, and (ii) no event has occurred that with the lapse of time or the
giving of notice or both would constitute a default thereunder by the Company or
any of its subsidiaries, or to the knowledge of the Company, any other party. No
party to any such material Contract, has given notice to the Company or any of
its subsidiaries of, or made a claim against the Company or any of its
subsidiaries with respect to, any breach or default thereunder, in any such
case, where such breach or default would, individually or in the aggregate, have
a Company Material Adverse Effect. Assuming the material Contracts have been
duly authorized, executed and delivered by the respective other parties thereto,
except as would not have a Company Material Adverse Effect, the material
Contracts are valid, binding and enforceable obligations of the Company, its
subsidiaries and the other parties thereto (except as such enforceability may be
subject to any bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other similar laws relating to or affecting creditors rights
generally and general equitable principles.
(b) Section 3.20(b) of the Company Disclosure Schedule contains a
true and complete list of all Contracts between the Company or any of its
subsidiaries, on the one hand, and the persons listed therein, on the
other hand, pursuant to which the Company or any of its subsidiaries, on
the one hand, and such persons, on the other hand, have any continuing
obligations.
SECTION 3.21 Properties. The Company or a subsidiary of the Company (each
a "Company Property Owner") owns fee simple title to each of the real properties
(or the applicable portion thereof) described in the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 2003 as being owned in fee, as
adjusted to reflect purchases and sales disclosed in the Company SEC Reports
prior to the date hereof (collectively, the "Company Properties"), and a valid
leasehold estate to each of the real properties subject to a lease described in
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2003, as adjusted to reflect purchases and sales disclosed in the Company SEC
Reports prior to the date hereof (collectively, the "Leased Properties"). Except
as would not, individually or in the aggregate, have a Company Material Adverse
Effect, the interests of the Company Property Owners in the Company Properties
and the Leased Properties are good, marketable and insurable, and the same are
owned free and clear of Encumbrances except for (i) liens, mortgages or deeds of
trust, claims against title, options, rights of first offer or refusal, charges
which are liens, security interests or other encumbrances on title
(collectively, "Encumbrances") related to indebtedness incurred in the ordinary
course of business, (ii) inchoate Encumbrances imposed for construction work in
progress, including mechanics' liens, workers' or repairmen's liens, or
otherwise incurred in the ordinary course of business that do not adversely
affect in any material
16
respect the use or operation of the applicable Company Property, (iii) easement
agreements that do not adversely affect in any material respect the use or
operation of the applicable Company Property, (iv) matters as would be disclosed
on current title reports or surveys that arise in the ordinary course and do not
adversely affect in any material respect the value, use or operation of the
applicable Company Property, (v) real estate Taxes and special assessments not
yet due and payable (except as are being contested in good faith by appropriate
proceedings or for which reserves in accordance with generally accepted
accounting practices have been set forth on the books of the relevant Company
Property Owner), (vi) leases or other occupancy agreements affecting a Company
Property and (vii) other Encumbrances that would not have a Company Material
Adverse Effect. No written termination of or notice of default has been received
by the Company or any of its subsidiaries under a ground lease relating to the
Lease Properties, except as would, individually or in the aggregate, have a
Company Material Adverse Effect. Except as would not have a Company Material
Adverse Effect, valid policies of title insurance have been issued insuring the
Company Property Owner's fee simple title or leasehold estate to each of the
Company Properties, and no material claim has been made against any such
policies.
SECTION 3.22 Non-Competition Agreements. Except with respect to single
purpose entities which are restricted as such under terms of their
organizational documents or financings applicable to them, neither the Company
nor any of its subsidiaries is a party to any Contract which purports to
restrict or prohibit in any material respect any of them from, directly or
indirectly, (a) engaging in any business currently engaged in by the Company or
(b) conducting any business currently engaged in by the Company in any
geographic location, except those non-material restrictions contained in the
reciprocal easement agreements in respect of the Company Properties and the
Leased Properties. To the knowledge of the Company, none of the officers,
directors or key employees of the Company or any of its subsidiaries is a party
to any Contract which, by virtue of such person's relationship with Company or
any of its subsidiaries, restricts in any material respect Company or any of its
subsidiaries from, directly or indirectly, engaging in any of the businesses
described above.
SECTION 3.23 Insurance. The Company and each of its subsidiaries maintains
insurance coverage with reputable insurers, or maintains self-insurance
practices, in such amounts and covering such risks as are in accordance with
normal industry practice for companies engaged in businesses similar to that of
the Company and its subsidiaries (taking into account the cost and availability
of such insurance). Neither the Company nor any of its subsidiaries has received
any notice of cancellation or termination with respect to any insurance policy
of the Company or any of its subsidiaries. Each insurance policy that currently
insures the business, property, operations, employees or officers of the Company
or any of its subsidiaries is in full force and effect and the premiums due
thereunder have been paid as they became due and payable.
SECTION 3.24 No Other Representations or Warranties. Except for the
representations and warranties contained in this Article III, each of Parent and
Merger Sub acknowledges that neither the Company nor any other person on behalf
of the Company makes any other express or implied representation or warranty
with respect to the Company or with respect to any other information provided to
Parent or Merger Sub. Neither the Company nor any other person will have or be
subject to any liability or indemnification obligation to Parent, Merger Sub or
any other person resulting from the distribution to Parent or Merger Sub of, or
17
Parent's or Merger Sub's use of, any such information, including any
information, documents or other material made available to Parent or Merger Sub
in expectation of the transactions contemplated by this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT AND MERGER SUB
Parent and Merger Sub hereby, jointly and severally, represent and warrant
to the Company as of the date of this Agreement (except in the case of any
representation or warranty that by its express terms is made as of another
specified date) that, except as set forth on the corresponding section of the
disclosure schedule delivered by Parent and Merger Sub to the Company prior to
the execution of this Agreement (the "Parent Disclosure Schedule"):
SECTION 4.1 Organization and Qualification. Each of Parent and Merger Sub,
is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has the requisite power and authority to
own, operate or lease its properties and assets and to carry on its business as
it is now being or will be conducted, except where the failure to be so
organized, existing or in good standing or to have such power or authority would
not, individually or in the aggregate, prevent or materially delay or impair the
ability of Parent or Merger Sub to consummate the transactions contemplated
hereby (a "Parent Material Adverse Effect"). Parent and each of its subsidiaries
is duly qualified or licensed to do business, and is in good standing in each
jurisdiction where the character of its properties owned, leased or operated by
it or the management of properties for others or the conduct of its business
makes such qualification or licensing necessary, except for any such failure to
be so qualified or licensed or in good standing which would not, individually or
in the aggregate, have a Parent Material Adverse Effect. Parent owns
beneficially and of record all of the outstanding membership interests of Merger
Sub free and clear of all Liens.
SECTION 4.2 Authority Relative to This Agreement. Each of Parent and
Merger Sub has all necessary corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement by each of Parent and Merger Sub, the performance by each of Parent
and Merger Sub of its obligations under this Agreement, and the consummation by
each of Parent and Merger Sub of the transactions contemplated hereby have been
duly and validly authorized by all necessary action and no other proceedings on
the part of Parent or Merger Sub are necessary pursuant to their respective
organizational documents, the Delaware General Corporation Law, the MGCL or the
MLLCA to authorize this Agreement or to consummate the transactions so
contemplated. This Agreement has been duly and validly executed and delivered by
Parent and Merger Sub and, assuming the due authorization, execution and
delivery hereof by the Company, constitutes a legal, valid and binding
obligation of each such entity enforceable against such entity in accordance
with its terms, subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, and general equitable principles (whether
considered in a proceeding in equity or at law). The board of directors of
Parent (the "Parent Board") and Parent, as the sole member of Merger Sub, have
approved this Agreement.
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The vote or consent of Parent or a subsidiary of Parent as the sole member of
Merger Sub (which shall have occurred prior to the Effective Time) is the only
vote or consent of the stockholders of Parent or the members of Merger Sub
necessary to approve this Agreement or the Merger or the transactions
contemplated hereby.
SECTION 4.3 No Conflict; Required Filings and Consents. (a) The execution
and delivery of, and performance by each of Parent and Merger Sub of its
obligations under, this Agreement, do not and will not (i) conflict with or
violate the respective organizational documents of Parent or Merger Sub, (ii)
assuming that all consents, approvals and authorizations contemplated by
subsection (b) below have been obtained and all filings described in subsection
(b) below have been made, conflict with or violate any law, rule, regulation,
order, judgment or decree applicable to Parent or Merger Sub or by which either
of them or their respective properties are bound or (iii) result in any breach
or violation of or constitute a default (or an event which with notice or lapse
of time or both would become a default) or result in the loss of a material
benefit under, or give rise to any right of termination, cancellation, material
amendment or material acceleration of, any Contract to which Parent or Merger
Sub is a party or by which Parent or Merger Sub or any of their respective
properties are bound, except, in the case of clauses (ii) and (iii) of this
subsection (a), for any such conflict, violation, breach, default, loss, right
or other occurrence which would not, individually or in the aggregate, have a
Parent Material Adverse Effect.
(b) The execution and delivery of this Agreement by each of Parent
and Merger Sub, the performance by each of Parent and Merger Sub of its
obligations under this Agreement, and the consummation by Merger Sub of
the Merger and the other transactions contemplated hereby do not and will
not require any consent, approval, authorization or permit of, action by,
filing with or notification to, any governmental or regulatory authority,
except for (i) applicable requirements of the Exchange Act, and state
securities, takeover and "blue sky" laws, (ii) the filing with and the
acceptance for record by the Department of the Articles of Merger as
required by the MGCL and appropriate documents with the relevant
authorities of other states in which Parent is qualified to do business,
and (iii) any such consent, approval, authorization, permit, action,
filing or notification the failure of which to make or obtain would not,
individually or in the aggregate, have a Parent Material Adverse Effect.
SECTION 4.4 Compliance. Neither Parent nor any of its subsidiaries is in
violation of any law, rule, regulation, order, judgment or decree applicable to
Parent or any of its subsidiaries or by which its or any of their respective
properties are bound, except for any such violation which would not,
individually or in the aggregate, have a Parent Material Adverse Effect. Parent
and its subsidiaries have all permits, licenses, authorizations, exemptions,
orders, consents, approvals and franchises from governmental and regulatory
agencies required to conduct their respective businesses as now being conducted,
except for any such permit, license, authorization, exemption, order, consent,
approval or franchise the absence of which would not, individually or in the
aggregate, have a Parent Material Adverse Effect.
SECTION 4.5 SEC Filings; Financial Statements. (a) Parent has filed or
otherwise transmitted all forms, reports, statements, certifications and other
documents required to be filed with the SEC since January 1, 2003 (collectively
with the forms, reports, statements,
19
certifications and other documents required to be filed with the SEC subsequent
to the date of this Agreement, the "Parent SEC Reports"), each of which, as
finally amended, has complied as to form in all material respects with the
applicable requirements of the Securities Act or the Exchange Act, each as in
effect on the date so filed. None of the Parent SEC Reports already filed
contained, when filed as finally amended, nor will any Parent SEC Reports filed
subsequent to the date of this Agreement contain, any untrue statement of a
material fact or omitted or will omit to state a material fact required to be
stated or incorporated by reference therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(b) The audited consolidated financial statements of Parent
(including any notes related thereto) for the fiscal years ended December
31, 2002 and December 31, 2003 included in Parent's Annual Report on Form
10-K for the fiscal year ended December 31, 2003 filed with the SEC have
been prepared, and, any audited consolidated financial statements of
Parent (including any related notes thereto) filed after the date of this
Agreement, will be prepared, in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto) and fairly
present, and, if filed after the date of this Agreement, will fairly
present, in all material respects the consolidated financial position of
the Parent and its subsidiaries at the respective dates thereof and the
consolidated statements of operations, cash flows and changes in
stockholders' equity for the periods indicated. The unaudited consolidated
financial statements of Parent (including any related notes thereto)
included in or incorporated by reference into the Parent SEC Reports filed
with the SEC have been prepared, and, if filed after the date of this
Agreement, will be prepared, in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto) and fairly
present, and, if filed after the date of this Agreement, will fairly
present, in all material respects the consolidated financial position of
Parent and its subsidiaries as of the date thereof and the consolidated
statements of operations and cash flows for the periods indicated (subject
to normal period-end adjustments that will not be material in amount or
effect).
(c) The management of Parent has (x) implemented disclosure controls
and procedures (as defined in Rule 13a-15(e) of the Exchange Act) to
ensure that material information relating to Parent, including its
consolidated subsidiaries, is made known to the management of Parent by
others within those entities, and (y) has disclosed, based on its most
recent evaluation, to Parent's outside auditors and the audit committee of
the Parent Board (A) all significant deficiencies and material weaknesses
in the design or operation of internal control over financial reporting
(as defined in Rule 13a-15(f) of the Exchange Act) which are reasonably
likely to adversely affect Parent's ability to record, process, summarize
and report financial data and (B) any fraud, whether or not material, that
involves management or other employees who have a significant role in
Parent's internal control over financial reporting. A summary of any of
those disclosures made by management to Parent's auditors and audit
committee is set forth in Section 4.4(c) of the Parent Disclosure
Schedule.
(d) Since July 31, 2002, (x) neither Parent nor any of its
subsidiaries nor, to the knowledge of the officers of Parent, any
director, officer, employee, auditor, accountant or representative of
Parent or any of its subsidiaries has received or otherwise had or
20
obtained knowledge of any material complaint, allegation, assertion or
claim, whether written or oral, regarding the accounting or auditing
practices, procedures, methodologies or methods of Parent or any of its
subsidiaries or their respective internal accounting controls, including
any material complaint, allegation, assertion or claim that Parent or any
of its subsidiaries has engaged in questionable accounting or auditing
practices, and (y) no attorney representing Parent or any of its
subsidiaries, whether or not employed by Parent or any of its
subsidiaries, has reported evidence of a material violation of securities
laws, breach of fiduciary duty or similar violation by Parent or any of
its officers, directors, employees or agents to the Parent Board or any
committee thereof or to any director or officer of Parent.
SECTION 4.6 Absence of Certain Changes or Events. Except with respect to
factual developments disclosed in the Parent SEC Reports filed on or after March
12, 2004 and prior to the date hereof (and excluding any forward looking
statements or other expressions of expectation, possibility or risk disclosed in
such Parent SEC Reports), since December 31, 2003, Parent and its subsidiaries
have conducted their respective businesses only in, and have not engaged in any
material transaction other than according to, the ordinary course of such
businesses consistent with past practices and there has not been any change,
development, event or occurrence that, individually or in the aggregate, has had
or would have a Parent Material Adverse Effect.
SECTION 4.7 Absence of Litigation. There are no suits, claims, actions,
proceedings or investigations pending or, to the knowledge of Parent, threatened
against Parent or any of its subsidiaries, other than any such suit, claim,
action, proceeding or investigation that would not, individually or in the
aggregate, have a Parent Material Adverse Effect. Neither Parent nor any of its
subsidiaries nor any of their respective properties or assets is or are subject
to any order, writ, judgment, injunction, decree or award which would,
individually or in the aggregate, have a Parent Material Adverse Effect. As of
the date hereof, no investigation or review, including with respect to any
accounting or disclosure practices of Parent or any of its subsidiaries or any
malfeasance by any executive officer or director of Parent, by any governmental
authority, including the SEC, is pending or, to the knowledge of Parent, has
been threatened against Parent or any of its subsidiaries.
SECTION 4.8 Brokers. No broker, finder or investment bank (other than
Xxxxxx Brothers, Wachovia Bank and Credit Suisse First Boston) is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by and
on behalf of Parent or Merger Sub.
SECTION 4.9 Operations of Merger Sub. Merger Sub has been organized as a
Maryland limited liability company solely for the purposes of effecting the
Merger and the other transactions contemplated hereby, and prior to the
Effective Time Merger Sub will have engaged in no other business activities and
will have no material assets or liabilities other than as contemplated herein.
SECTION 4.10 Ownership of Shares of Company Common Stock. As of the date
of this Agreement, none of Parent, Merger Sub or their respective affiliates
owns (directly or indirectly, beneficially or of record) any shares of Company
Common Stock, except for any shares of Company Common Stock held by employee
benefit plans of Parent, Merger Sub or their respective affiliates, and none of
Parent or Merger Sub or
21
their respective affiliates holds any rights to acquire any shares of Company
Common Stock except pursuant to this Agreement.
SECTION 4.11 Financing. Parent has, in connection with entering into this
Agreement, delivered to the Company a complete and correct copy of the
commitment letters, dated August 19, 2004 relating to the debt and/or equity
financing necessary for the consummation of the Merger and the other
transactions contemplated by this Agreement, which commitment letters are in
full force and effect (the "Commitment Letters"). It is Parent's good faith
belief as of the date hereof that it will obtain the financing set forth in the
Commitment Letters and that as a result it will have available to it internal
funds and third party financing that, in the aggregate, will be sufficient to
enable Parent and Merger Sub to make all necessary payments by them in
connection with the Merger and the other transactions contemplated by this
Agreement, including any amounts necessary to repay or refinance any outstanding
indebtedness of the Company and its subsidiaries to the extent such repayment or
refinancing is required in connection with the transactions contemplated by this
Agreement.
SECTION 4.12 No Other Representations or Warranties. Except for the
representations and warranties contained in this Article IV, the Company
acknowledges that none of Parent, Merger Sub or any other person on behalf of
Parent or Merger Sub makes any other express or implied representation or
warranty with respect to Parent or Merger Sub or with respect to any other
information provided to the Company.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.1 Conduct of Business of the Company Pending the Merger. The
Company covenants and agrees as to itself and to any of its subsidiaries of
which the Company has, directly or indirectly, the power generally to direct or
control the day-to-day management and policies thereof, whether through
ownership of securities, by contract or otherwise (each, a "Controlled
Subsidiary"), that, during the period from the date hereof until the Effective
Time, except as expressly permitted by this Agreement, as disclosed in Section
5.1 of the Company Disclosure Schedule, or as required by law, or unless Parent
shall otherwise agree in writing, (A) the business of the Company and its
Controlled Subsidiaries shall be conducted in the ordinary course of business
and substantially in the same manner as heretofore conducted, (B) it shall take
all actions necessary to continue to qualify as a REIT, (C) the Company and its
Controlled Subsidiaries shall use best efforts to preserve their business
organization and their present relationships with persons with which the Company
or any of its Controlled Subsidiaries has significant business relations and (D)
neither the Company nor any of its Controlled Subsidiaries shall without the
prior written consent of Parent (which consent shall not be unreasonably
withheld or delayed):
(a) amend or otherwise change any of its organizational documents;
(b) issue, deliver, sell, pledge, dispose of, grant, transfer,
lease, license, guarantee, encumber or authorize the issuance, delivery,
sale, pledge, disposition, grant, transfer, lease, license, guarantee or
encumbrance of any shares of capital stock or other equity interests, or
any options, warrants, convertible securities or other rights of any kind
to
22
acquire any shares of capital stock or equity interests, or any other
ownership interest (including but not limited to stock appreciation rights
or phantom stock), of the Company or any of its subsidiaries, except (i)
for the issuance of shares of Company Common Stock issuable to or in
accordance with the terms of outstanding Company Options or (ii) the
issuance of shares of Company Common Stock to the extent required under
the CSA;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect
to any of its stock, except (i) as expressly provided in Section 6.11 and
(ii) any dividend or distribution by a wholly owned subsidiary of the
Company to the Company or another wholly owned subsidiary of the Company
or by a non-wholly owned subsidiary of the Company to the extent required
by its organizational documents;
(d) reclassify, combine, split, subdivide, redeem, purchase or
otherwise acquire any stock of the Company, or reclassify, combine, split
or subdivide any capital stock or other equity interests of any of its
subsidiaries;
(e) fail to use commercially reasonable efforts to maintain in full
force and effect insurance coverage substantially similar to insurance
coverage maintained on the date hereof;
(f) (i) incur any Indebtedness or guarantee such Indebtedness of
another person, or issue or sell any debt securities or warrants or other
rights to acquire any debt security of the Company or any of its
subsidiaries, except for Indebtedness incurred (A) in accordance with
Section 5.1(f) of the Company Disclosure Schedule, (B) in accordance with
Section 6.11, (C) to repurchase shares of Company Common Stock under the
CSA, or (D) in the ordinary course of business consistent with past
practices (I) not to exceed a total of $700 million drawn on existing
lines of credit or (II) from guarantees incurred in compliance with this
Section 5.1(f) by the Company of Indebtedness of any of its wholly owned
subsidiaries or (ii) modify, amend or terminate any Indebtedness (secured
or unsecured) in existence as of the date hereof;
(g) acquire, enter into any option to acquire, or exercise an option
or other right or election or enter into any Contract for the acquisition
of any real property or other material assets, encumber assets or commence
construction of, or enter into any Contract to develop or construct other
real estate projects, except for construction of or Contracts to develop
or construct real estate projects in respect of the community development
business to the extent consistent with past practice and the budget and
business plan of the Company for the community development business as of
the date hereof;
(h) sell, lease, mortgage, subject to Lien (or, in the case of an
involuntary Lien, fail to use commercially reasonable efforts to have such
Lien removed within 30 days of the creation thereof) or otherwise dispose
of, any of the Company Properties or Leased Properties or any other
material assets of the Company or any of its subsidiaries, except in
connection with a transaction that is permitted by Section 5.1(f) of this
Agreement, that is made in the ordinary course of business or disclosed in
Section 5.1(h) of the Company Disclosure Schedule;
23
(i) make any loans, advances or capital contributions to, or
investments in, any other person, except to any wholly owned subsidiary of
the Company or as required under any Contract existing as of the date hereof
with any joint venture partner;
(j) enter into any new, or amend or supplement any existing
Contract with any Company TRS;
(k) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the
ordinary course of business consistent with past practice or in accordance
with their terms, of liabilities reflected or reserved against in, or
contemplated by, the most recent consolidated financial statements (or the
notes thereto) included in the Company SEC Reports filed prior to the date
hereof or incurred in the ordinary course of business;
(l) enter into any material Contract with respect to the Company
Properties or Leased Properties under development (other than in respect of
the community development business for such Contracts which are consistent
with past practice and the budget and business plan of the Company for the
community development business as of the date hereof); provided, however,
that "development" shall not include capital improvements made in the
ordinary course of business to existing Company Properties or Leased
Properties and repairs made to existing Company Properties or Leased
Properties;
(m) except as required pursuant to existing written, binding
agreements in effect prior to the date of this Agreement, or as otherwise
required by law, (i) hire or enter into any commitment to provide any
severance or termination benefits to (or amend any existing arrangement with)
any director, officer or employee of the Company or any of its subsidiaries,
except with respect to non-corporate office function employees or any
property manager if consistent with the budget and staffing plan at the
applicable Company Property or Leased Property, (ii) increase the benefits
payable under any existing severance or termination benefit policy or
employment agreement (other than as required to be increased pursuant to the
existing terms of any such policy or agreement), (iii) enter into any
employment, deferred compensation or other similar agreement (or amend any
such existing agreement) with any director or officer of the Company or any
of its subsidiaries, (iv) establish, adopt, amend, terminate or make any new
awards under any bonus, profit-sharing, thrift, pension, retirement, deferred
compensation, compensation, stock option, restricted stock or other benefit
plan or arrangement covering any director, officer or employee of the Company
or any of its subsidiaries, except that the Company or any of its
subsidiaries may amend any such existing plan or arrangement if the effect of
any such amendment is immaterial in respect of costs or benefits available
under such plan or arrangement, (v) increase the compensation, bonus or other
benefits payable to any director, officer, employee, consultant or
independent contractor of the Company or any of its subsidiaries, except for
employees who are not officers of the Company or property managers of a
Company Property or Leased Property increases of less than 3% in any case in
the ordinary course of business consistent with past practices, or (vi) amend
the terms of any outstanding Company Option or other equity-based award;
provided, that the Company shall take all steps necessary so that actions
taken pursuant to exceptions to the restrictions set
24
forth in this clause (m) do not increase the amount of any severance benefits
payable by the Company or any of its subsidiaries;
(n) add any new participants to the SERP or Excess Savings Plan;
(o) change the ownership of any of its subsidiaries or merge or
consolidate the Company or any of its subsidiaries with any other person;
(p) enter into, amend, or supplement any Tax Protection
Agreement;
(q) make any changes with respect to accounting policies or
material procedures, except as required by changes in generally accepted
accounting principles or internal controls requirements to comply with
Section 404 of the Xxxxxxxx-Xxxxx Act of 2002;
(r) settle any material litigation or other proceedings before a
governmental authority or arbitrator or cancel, modify or waive material
claims held by it or waive any material rights;
(s) make or rescind any express or deemed material election
relative to Taxes, unless such election or rescission is (i) required by law,
(ii) necessary to preserve the status of the Company as a REIT or of any
subsidiary of the Company as a partnership for federal income tax purposes or
(iii) consistent with elections historically made by the Company;
(t) enter into, terminate or make any material amendment or
modification to any material Contract, including the CSA, except as permitted
by Section 5.1(g) or 5.1(l) of this Agreement or as disclosed in Section
5.1(t) of the Company Disclosure Schedule;
(u) take any action or omit to take any action that could
reasonably be expected to cause any of the Company's representations and
warranties contained in Article III to become untrue in any material respect;
provided, however, that the taking of any action required by this Section 5.1
or the failure to take any action which is prohibited by this Section 5.1
(which action Parent has not consented to after a request to take such action
by the Company or any of its Controlled Subsidiaries) by the Company or any
of its Controlled Subsidiaries shall not be deemed a breach of this clause
(u);
(v) take any action, or fail to take any action, which can
reasonably be expected to cause (i) the Company to fail to qualify as a REIT,
or (ii) any of its subsidiaries to cease to be treated as a partnership for
federal income tax purposes, as a REIT, as a qualified REIT subsidiary under
Section 856(i) of the Code, or as a taxable REIT subsidiary under Section
856(l) of the Code (except as a result of the conversion of The Xxxxxx
Corporation into a limited liability company pursuant to Section 7.2(f)), as
the case may be; or
(w) agree or commit to do any of the foregoing.
SECTION 5.2 Conduct of Business of Parent Pending the Merger. Parent
covenants and agrees that, during the period from the date hereof until the
Effective Time, except
25
as expressly permitted by this Agreement, as disclosed in Section 5.2 of the
Parent Disclosure Schedule, or as required by law, or unless Company shall
otherwise agree in writing, neither Parent nor any of its subsidiaries shall
without the prior written consent of Company take any action that would prevent
or materially impede the consummation of the Merger, including the obtaining of
the financing necessary for the consummation of the Merger and the transactions
contemplated by this Agreement.
SECTION 5.3 Assistance. From the date of this Agreement until the
earlier of the Effective Date or the date of the termination of this Agreement,
the Company and its subsidiaries shall cooperate with Parent, at the sole
expense of Parent, in connection with Parent's planning for the post-Closing
integration of the business organizations of Parent and the Company; provided,
however, that neither the Company nor any of its subsidiaries shall be required
to engage in any transaction prior to the Effective Time.
SECTION 5.4 No Control of Other Party's Business. Nothing contained
in this Agreement shall give Parent, directly or indirectly, the right to
control or direct the Company's or its subsidiaries' operations prior to the
Effective Time. Prior to the Effective Time, the Company shall exercise,
consistent with the terms and conditions of this Agreement, complete control and
supervision over its and its subsidiaries' operations.
SECTION 5.5 Tax Submissions. Except as provided in Section 5.5 to
the Company Disclosure Schedule, if, prior to the Closing Date, the Company
seeks any closing agreement with or private letter ruling from, the IRS, the
Company shall (a) consult with Parent regarding the application for and
negotiation of such closing agreement or ruling request, (b) use commercially
reasonable efforts to permit Parent's designated counsel to attend meetings or
telephone calls with the IRS scheduled by the IRS or the Company (or the
Company's counsel) regarding any such closing agreement or ruling request, and
(c) provide Parent with copies of, and the right to comment on, any written
materials regarding such closing agreement or ruling request prior to submission
to the IRS; provided, however, that Parent's rights under this Section 5.5 shall
not be permitted to unduly delay or impede the Company from obtaining such
closing agreement or private letter ruling.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 Stockholders Meetings. (a)The Company shall, as soon as
reasonably practicable following the date of this Agreement, acting through the
Company Board, (i) establish a record date for, duly call, give notice of,
convene and hold a meeting of its stockholders for the purpose of obtaining the
Company Requisite Vote (the "Company Stockholders Meeting"), (ii) include in the
Proxy Statement the recommendation of the Company Board that the stockholders of
the Company vote in favor of the approval of the Merger and (iii) use its best
efforts to cause the Proxy Statement to be mailed to the Company's stockholders
and to obtain the Company Requisite Vote; provided, that the Company Board may
fail to make or withdraw, modify or change such recommendation and/or may fail
to use such efforts if it shall have determined in good faith, after
consultation with outside legal counsel to the Company, that such action is
appropriate in order for the directors of the Company to act in a
26
manner consistent with their duties under applicable law. At all times, the
Company shall comply with all material legal requirements applicable to such
Company Stockholders Meeting.
(b) Notwithstanding anything to the contrary contained in this
Agreement, the Company shall not be required to hold the Company Stockholders
Meeting if this Agreement is terminated.
SECTION 6.2 Proxy Statement. As soon as reasonably practicable
following the date of this Agreement, the Company shall prepare and file with
the SEC a proxy statement (the "Proxy Statement") in preliminary form. The
Company shall use its best efforts to resolve as promptly as practicable any
comments of the SEC with respect thereto. The Company shall notify Parent
promptly of the receipt of any comments from the SEC or its staff and of any
request by the SEC or its staff for amendments or supplements to the Proxy
Statement or for additional information and shall supply Parent with copies of
all correspondence between it or any of its representatives, on the one hand,
and the SEC or its staff, on the other hand, with respect to the Proxy Statement
or the Merger. Parent shall have the right to approve prior to filing the Proxy
Statement or any amendment or supplement thereto, which approval shall not be
unreasonably withheld or delayed. If, at any time prior to the Effective Time,
any information relating to Parent, Merger Sub or the Company is discovered by
Parent or the Company that should be set forth in an amendment or supplement to
the Proxy Statement so that such document would not include any misstatement of
a material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, the party hereto discovering such information shall promptly
notify the other parties and, to the extent required by law, an appropriate
amendment or supplement describing such information shall be promptly filed with
the SEC and, to the extent required by law, disseminated to the stockholders of
the Company.
SECTION 6.3 [INTENTIONALLY OMITTED]
SECTION 6.4 Access to Information; Confidentiality. (a) From the
date hereof to the Effective Time or the earlier termination of this Agreement,
upon reasonable prior written notice, the Company shall, and shall use its best
efforts to cause its subsidiaries and their respective officers, directors and
employees to, afford the officers, employees, auditors and other authorized
representatives of Parent reasonable access, consistent with applicable law, at
all reasonable times to its officers, employees, properties, offices and other
facilities and to all books and records, and shall furnish Parent with all
financial, operating and other data and information as Parent, through its
officers, employees or authorized representatives, may from time to time
reasonably request in writing. Notwithstanding the foregoing, any such
investigation or consultation shall be conducted in such a manner as not to
interfere unreasonably with the business or operations of the Company or any of
its subsidiaries. Neither the Company nor any of its subsidiaries shall be
required to provide access to or to disclose information where such access or
disclosure would violate the rights of any person with which it has a business
relationship, jeopardize the attorney-client privilege or contravene any law,
rule, regulation, order, judgment, decree or binding agreement entered into
prior to the date of this Agreement. The Company will make appropriate
substitute disclosure arrangements under circumstances in which the restrictions
of the preceding sentence apply.
27
(b) Each of Parent and the Company will hold and treat and will
cause their respective officers, employees, auditors and other authorized
representatives to hold and treat in confidence all documents and information
concerning the other furnished or otherwise made available to such party in
connection with the transactions contemplated by this Agreement in accordance
with the Confidentiality Agreement, dated August 7, 2004, between the Company
and Parent (the "Confidentiality Agreement"), which Confidentiality Agreement
shall remain in full force and effect in accordance with its terms.
SECTION 6.5 Company Acquisition Proposals. (a) The Company agrees
that (i) it and its executive officers and directors shall not and (ii) it shall
use reasonable best efforts to ensure that its investment bankers, attorneys,
consultants or other agents or representatives shall not, (A) directly or
indirectly, initiate, solicit or knowingly encourage or facilitate any inquiries
or the making of any proposal or offer with respect to a tender offer or
exchange offer, proposal for a merger, consolidation or other business
combination involving the Company and its subsidiaries or any proposal or offer
to acquire in any manner an equity interest representing a 25% or greater
economic interest in the Company, or assets, securities or ownership interests
of or in, the Company or any of its subsidiaries representing 25% or more of the
consolidated assets of the Company and its subsidiaries, other than the Merger
(any such proposal or offer being hereinafter referred to as a "Company
Acquisition Proposal"); provided, however, that for purposes of the references
to a Company Acquisition Proposal in clause (y) of Section 8.2(b)(ii) and (iii)
and the definition of Company Superior Proposal, the percentage 50% shall be
substituted for the percentage 25%, (B) approve, agree to or recommend any
Company Acquisition Proposal or enter into any agreement with respect to a
Company Acquisition Proposal, (C) directly or indirectly, engage in any
negotiations or discussions concerning, or provide access to its properties,
books and records or any confidential information or data to any person relating
to, a Company Acquisition Proposal, or (D) otherwise knowingly encourage or
facilitate any effort or attempt to make or implement a Company Acquisition
Proposal. Notwithstanding the foregoing, subject to the rights of Parent under
Section 8.1(d)(ii), nothing contained in this Agreement shall prevent the
Company or the Company Board from (i) taking and disclosing to its stockholders
a position contemplated by Rule 14d-9 and Rule 14e-2(a) or Item 1012(a) of
Regulation M-A promulgated under the Exchange Act (or any similar communication
to stockholders in connection with the making or amendment of a tender offer or
exchange offer) or from making any legally required disclosure to stockholders
with regard to a Company Acquisition Proposal, (ii) prior to the approval of the
Merger by the Company's stockholders in accordance with this Agreement,
providing access to its properties, books and records and providing information
or data in response to a request therefor by a person who has made an
unsolicited bona fide written Company Acquisition Proposal if the Company Board
receives from the person so requesting such information an executed
confidentiality agreement containing confidentiality restrictions on terms at
least as favorable to the Company as those contained in the Confidentiality
Agreement, (iii) prior to the approval of the Merger by the Company's
stockholders in accordance with this Agreement, engaging in any negotiations or
discussions with any person who has made an unsolicited bona fide written
Company Acquisition Proposal, or (iv) prior to the approval of the Merger by the
Company's stockholders in accordance with this Agreement and following the
receipt of a bona fide written Company Acquisition Proposal that did not result
from a breach of this Section 6.5(a), (A) withdrawing, modifying or changing in
any adverse manner its approval or recommendation of this Agreement or the
Merger or (B) recommending an unsolicited bona fide written Company Acquisition
28
Proposal; if and only to the extent that in connection with the foregoing
clauses (ii), (iii) and (iv) above, the Company Board shall have determined in
good faith, after consultation with its outside legal counsel and financial
advisors, that, (x) in the case of clause (iv) above only, such Company
Acquisition Proposal, if accepted, is reasonably capable of being consummated,
taking into account all legal, financial, regulatory, timing and similar aspects
of the proposal and the person making the proposal and would, if consummated,
result in a transaction more favorable to the Company's stockholders from a
financial point of view than the Merger (any such more favorable Company
Acquisition Proposal being referred to in this Agreement as a "Company Superior
Proposal") and (y) in the case of clauses (ii) and (iii) above only, there is a
reasonable possibility that such actions could lead to a Company Superior
Proposal. The Company agrees that it will immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any persons
conducted prior to the date of this Agreement with respect to any Company
Acquisition Proposal. After the date hereof, the Company shall promptly notify
Parent of the receipt of any Acquisition Proposal or any request for non-public
information or inquiry that it reasonably believes will lead to a Company
Acquisition Proposal, which notice shall include the identity of the person
making such Company Acquisition Proposal and the material terms thereof and
thereafter shall keep Parent informed, on a current basis, on the status and
terms of any such proposals or offers and the status of any such discussions or
negotiations. The Company shall promptly request each person that has heretofore
executed a confidentiality agreement in connection with its consideration of a
Company Acquisition Proposal to return or destroy all confidential information
furnished prior to the execution of this Agreement to or for the benefit of such
person by or on behalf of it or any of its subsidiaries.
(b) Notwithstanding anything in this Section 6.5 to the contrary,
if, at any time prior to the approval of the Merger by the Company's
stockholders in accordance with this Agreement, the Company Board determines
in good faith, after consultation with its financial advisors and outside
legal counsel, in response to a Company Acquisition Proposal that was
unsolicited and that did not otherwise result from a breach of Section 6.5(a)
of this Agreement, that such proposal is a Company Superior Proposal, the
Company or the Company Board may terminate this Agreement; provided, however,
that the Company shall not terminate this Agreement pursuant to this
sentence, and any purported termination pursuant to this sentence shall be
void and of no force or effect, unless the Company prior to or concurrently
with such termination pursuant to this Section 6.5(b) pays to Parent the fee
payable pursuant to Section 8.2(b); provided, further, however, that the
Company shall not exercise its right to terminate this Agreement and the
Company Board shall not recommend a Company Superior Proposal to the
Company's stockholders pursuant to this Section 6.5(b) unless the Company
shall have delivered to Parent a prior written notice advising Parent that
the Company or the Company Board intends to take such action with respect to
a Company Superior Proposal, specifying in reasonable detail the material
terms and conditions of the Company Superior Proposal, this notice to be
delivered not less than four business days prior to the time the action is
taken, and, during this four or more business day period, the Company and its
advisors shall have negotiated in good faith with Parent to make adjustments
in the terms and conditions of this Agreement, and the Company Board shall
have fully considered these adjustments and nonetheless concluded in good
faith, after consultation with and receipt of advice from its outside legal
counsel and financial advisors, that the Company or the Company Board must
take the applicable action.
29
SECTION 6.6 Employment and Employee Benefits Matters. (a) From and
after the Effective Time, Parent shall assume and honor, or shall cause the
Surviving Corporation to assume and honor, the obligations of the Company and
its subsidiaries under all existing Company Plans and Parent or the Surviving
Corporation, as the case may be, shall perform the obligations of the Company
and its subsidiaries under such Company Plans in the same manner and to the same
extent that the Company and its subsidiaries would have been required to perform
thereunder; provided, however, that, except as otherwise explicitly provided,
nothing herein shall be construed to prevent, on or following the Effective
Time, (i) the termination of employment of any individual who immediately prior
to the Effective Time was an employee of the Company or any of its subsidiaries
(such employees, the "Company Employees") or (ii) the amendment or termination
of any Company Plan to the extent permitted by the terms thereof and applicable
law.
(b) Subject to Sections 6.6(f) and 6.6(g), for not less than two
years following the Effective Time, subject to applicable law, Parent shall,
or shall cause the Surviving Corporation to, provide compensation and
employee benefits to the Company Employees which shall be substantially
similar, in the aggregate, to the compensation and employee benefits that
Parent and its subsidiaries (other than the Surviving Corporation and its
subsidiaries) provide to similarly situated employees other than the Company
Employees (such employees other than the Company Employees, the "Parent
Employees").
(c) To the extent that any employee benefit plan is made
available to the Company Employees on or following the Effective Time, Parent
shall, or shall cause one of its subsidiaries to, grant the Company Employees
credit for all service with the Company and its subsidiaries prior to the
Effective Time for purposes of eligibility and vesting (but not benefit
accrual), to the extent that service of the Parent Employees is recognized
for any such purpose. In addition, and without limiting the generality of the
foregoing: (i) each Company Employee shall be immediately eligible to
participate, without any waiting time, in any and all employee benefit plans,
programs, policies and arrangements sponsored by Parent and its subsidiaries
(such plans, collectively, the "New Plans") to the extent coverage under such
plan replaces coverage under a comparable Company Plan in which such employee
participates immediately before or at any time after the Effective Time (such
plans, collectively, the "Old Plans"); and (ii) for purposes of each New Plan
providing medical, dental, pharmaceutical, vision and/or disability benefits
to any Company Employee, Parent shall cause all pre-existing condition
exclusions and actively-at-work requirements of such New Plan to be waived
for such employee and his or her covered dependents, and Parent shall cause
any eligible expenses incurred by such employee and his or her covered
dependents during the portion of the plan year of the Old Plan ending on the
date such employee's participation in the corresponding New Plan begins to be
taken into account under such New Plan for purposes of satisfying all
deductible, coinsurance and maximum out-of-pocket requirements applicable to
such employee and his or her covered dependents for the applicable plan year
as if such amounts had been paid in accordance with such New Plan.
(d) Parent acknowledges that a "change of control" or a "change
in control," as that term is used in any Company Plan that contains such
term, shall occur at the Effective Time.
30
(e) To the extent that the Company has not done so prior to the
Effective Time, upon the date on which distributions are made from the
Company's Pension Plan by reason of the termination of such plan, Parent
shall cause the Surviving Corporation to (1) credit, in respect of each
participant in the Company's Excess Pension Plan, the lump sum present value
of such participant's accrued benefit under the Excess Pension Plan to the
participant's account maintained under the Company's Excess Savings Plan,
which lump sum (to be calculated using the same actuarial assumptions and
factors as used to calculate lump sum distributions under the Company's
qualified pension plan in connection with its termination) shall thereafter
be governed by the terms and conditions of the Excess Savings Plan, and (2)
contribute an amount of cash equal to the aggregate amount of all outstanding
account balances under the Excess Savings Plan (including, without
limitation, the credits made pursuant to clause (1) of this Section 6.6(e))
to a grantor trust to be established by the Company prior to the Effective
Time.
(f) In the event of the involuntary termination of employment
without Cause (as defined below) of any Company Employee during 2004 but
following the Effective Time, Parent shall, or shall cause the Surviving
Corporation to, pay such Company Employee a bonus for 2004 under the
applicable annual cash bonus plan of the Company (all such plans,
collectively, the "2004 Bonus Plans") in an amount not less than the bonus to
which such Company Employee would have been entitled under such plan as in
effect immediately prior to the Effective Time assuming satisfaction of all
applicable performance at the "target," "satisfactory," "acceptable" or
other, similar level multiplied by a fraction, the numerator of which is the
number of days elapsed from January 1, 2004 through the date of termination
and the denominator of which is 365, and deeming to be satisfied all other
terms and conditions of such plan (including, without limitation, any
requirement of continued employment). Such payment shall be made at or as
soon as practicable after the date of termination. In addition, to the extent
not inconsistent with the preceding two sentences, Parent shall, or shall
cause the Company to, (i) retain the 2004 Bonus Plans in accordance with
their terms as in effect immediately prior to the Acceptance Date for the
entirety of 2004 and (ii) administer the 2004 Bonus Plans (including the
making of bonus determinations thereunder) in a manner consistent with the
Company's historical practice. For purposes of this Agreement, (i) in the
case of a Company Employee who is a party to an employment agreement or
Executive Agreement, "Cause" shall have the meaning set forth therein, and
(ii) in the case of all other Company Employees, "Cause" shall mean grounds
that would permit a "Discharge" under the Company's separation policy as in
effect on the date hereof.
(g) In the event of the involuntary termination of employment
without Cause (as defined in Section 6.6(f)) of any Company Employee during
2004 but following the Effective Time, Parent shall cause the Surviving
Corporation to make an employer fixed contribution with respect to such
Company Employee's account under the qualified and non-qualified savings
plans of the Company (all such plans, collectively, the "Savings Plans") in
an amount not less than the employer fixed contribution to which such Company
Employee would have been entitled under each such Savings Plan as in effect
immediately prior to the Effective Time multiplied by a fraction, the
numerator of which is the number of days elapsed from January 1, 2004 through
the date of termination and the denominator of which is 365, and deeming to
be satisfied all other terms and conditions of each such Savings Plan
(including, without limitation, any requirement of continued employment).
Such fixed
31
contribution shall be made at the same time as the employer fixed
contribution would have been made if the Company Employee had remained
employed through December 31, 2004. To the extent such contribution is not
practical or permissible under the terms of the qualified Savings Plan,
Parent shall cause the Company to make a payment in cash to such affected
Company Employee. In addition, to the extent not inconsistent with the
preceding two sentences, Parent shall cause the Company to retain the
employer fixed contribution feature of the Savings Plans in accordance with
its terms as in effect immediately prior to the Effective Time for the
entirety of 2004, subject to such adjustments as may be necessary or
advisable to maintain the tax qualified status of the Savings Plan. At the
Effective Time, all account balances under the Savings Plans shall become
fully vested.
(h) For the period beginning on the Effective Time and ending on
the Plan Conversion Date (as hereinafter defined), Parent shall cause the
Surviving Corporation to maintain those Company Plans that provide medical,
prescription drug, dental, vision and disability benefits for active Company
Employees. In addition, for the period beginning on the Effective Time and
ending on the first anniversary of the Effective Time, Parent shall cause the
Surviving Corporation to maintain the Company's severance policy for the
Company Employees (other than those Company Employees with an individual
agreement providing for a severance benefit) as in effect immediately prior
to the Effective Time. For purposes of this Section 6.6(h), "Plan Conversion
Date" shall mean the first day of the first plan year following the Effective
Time of the health plans for Parent's similarly situated employees.
SECTION 6.7 Directors' and Officers' Indemnification and Insurance.
(a) Without limiting any additional rights that any director,
officer or employee may have under any Employment Agreement or Company Plan,
from the Effective Time through the sixth anniversary of the Effective Time,
Parent shall, and shall cause the Surviving Corporation to, indemnify and
hold harmless each individual who was (as of the Effective Time) a present or
former officer or director of the Company and its subsidiaries (the
"Indemnified Parties"), against all claims, losses, liabilities, damages,
judgments, inquiries, fines and reasonable fees, costs and expenses,
including, without limitation, attorneys' fees and disbursements
(collectively, "Costs"), incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of or pertaining to (i) the fact that the
Indemnified Party is or was an officer or director of the Company or any of
its subsidiaries, or (ii) matters existing or occurring at or prior to the
Effective Time (including, without limitation, arising out of or pertaining
to this Agreement and the transactions and actions contemplated hereby). Each
Indemnified Party will be entitled to advancement of reasonable expenses
incurred in the defense of any claim, action, suit, proceeding or
investigation from Parent or the Surviving Corporation within ten business
days of receipt by Parent from the Indemnified Party of a request therefor,
subject only to the provisions of undertakings required for such advancement
by the MGCL.
(b) The charter and bylaws of the Surviving Corporation shall
contain provisions no less favorable with respect to indemnification,
advancement of expenses and exculpation of the Indemnified Parties than are
set forth in the Charter and the Bylaws in effect immediately prior to the
execution of this Agreement, which provisions shall not be amended, repealed
or otherwise modified for a period ending on the sixth anniversary of the
32
Effective Time in any manner that would materially adversely affect the
rights thereunder as of the Effective Time of any of the Indemnified Parties.
Parent shall, or shall cause the Surviving Corporation to, maintain, at no
expense to the beneficiaries, in effect until the sixth anniversary of the
Effective Time the current policies of the directors' and officers' liability
insurance maintained by the Company with respect to matters existing or
occurring at or prior to the Effective Time so long as the annual premium
therefor is not in excess of 300% of the last annual premium paid prior to
the date of this Agreement (provided, that Parent or the Surviving
Corporation may substitute therefor policies of at least the same coverage
containing terms and conditions which are not materially less advantageous to
any beneficiary thereof). Parent agrees to honor and perform under, and to
cause the Surviving Corporation to honor and perform under, all
indemnification agreements with the Indemnified Parties entered into by the
Company or any of its subsidiaries prior to the date of this Agreement.
(c) Notwithstanding anything herein to the contrary, if any
claim, action, suit, proceeding or investigation (whether arising before, at
or after the Effective Time) is made against or involves any Indemnified
Party, on or prior to the sixth anniversary of the Effective Time, the
provisions of this Section 6.7 shall continue in effect until the final
disposition of such claim, action, suit, proceeding or investigation.
(d) This covenant is intended to be for the benefit of, and shall
be enforceable by, each of the Indemnified Parties and their respective heirs
and legal representatives. The indemnification provided for herein shall not
be deemed exclusive of any other rights to which an Indemnified Party is
entitled, whether pursuant to law, contract or otherwise.
SECTION 6.8 Tax Matters. (a)From the date of this Agreement until
the Effective Time, each of the Company and its subsidiaries will duly and
timely file all Tax Returns and other documents required by it to be filed with
federal, state and local Tax authorities the failure to file of which could have
a material negative impact, financial or otherwise, subject to extensions
permitted by law and properly granted by the appropriate authority, provided
that the Company notifies Parent that it or any of its subsidiaries is availing
itself of such extensions, and provided, further, that such extensions do not
adversely affect the Company's status as a REIT under the Code.
(b) Each party shall cooperate in the preparation, execution, and
filing of all returns, questionnaires, applications, or other documents
regarding any real property transfer or gains, sales, use, transfer, value
added, stock transfer and stamp taxes, any transfer, recording, registration and
other fees and any similar taxes which become payable in connection with the
transactions contemplated by this Agreement.
(c) The Company shall provide Parent an opinion of Xxxxxx & Xxxxxx
LLP or other outside counsel reasonably satisfactory to Parent, dated as of the
Closing Date, to the Company in the form of Exhibit 6.8(c) (the "REIT Opinion").
In rendering the REIT Opinion, such counsel shall be entitled to rely upon
customary assumptions, qualifications, and representations as to factual matters
(but not legal conclusions), provided, however, that such assumptions,
qualifications, and representations are set forth in writing and are reasonably
satisfactory to Parent.
33
SECTION 6.9 Further Action; Best Efforts. (a) Subject to the terms
and conditions of this Agreement, each party shall cooperate with the other and
use its best efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to satisfy the conditions to Closing set forth herein and
to consummate the Merger and the other transactions contemplated by this
Agreement, including the financing for the Merger based upon the Commitment
Letters or alternative financing; provided, that Parent and Merger Sub are not
required to procure such alternative financing if the material terms and
conditions of such alternative financing are in the aggregate materially less
favorable than contemplated in the Commitment Letters (it being understood that
the foregoing proviso shall not relieve Parent or Merger Sub of their
obligations under this Agreement if all conditions to their obligation under
Article VII hereof are satisfied or waived or are readily capable of being
satisfied but Parent and Merger Sub are unable to satisfy their obligation to
pay the Merger Consideration). In furtherance and not in limitation of the
foregoing, each party hereto agrees, to the extent necessary, to make an
appropriate filing pursuant to any Antitrust Law (as defined below) with respect
to the transactions contemplated hereby as promptly as practicable after the
date hereof and to supply as promptly as practicable any additional information
and documentary material that may be requested pursuant to any Antitrust Law and
to take all other actions necessary, proper or advisable to cause the expiration
or termination of the applicable waiting periods under any Antitrust Law as soon
as practicable.
(b) Each of Parent and Merger Sub on the one hand, and the
Company on the other hand, shall, in connection with the efforts referenced
in Section 6.9(a) to obtain any requisite approvals and authorizations for
the transactions contemplated by this Agreement under any Antitrust Law, use
its best efforts to (i) cooperate in all respects with each other in
connection with any filing or submission and in connection with any
investigation or other inquiry, including any proceeding initiated by a
private party; (ii) keep the other party informed of any communication
received by such party from, or given by such party to, the Federal Trade
Commission (the "FTC"), the Antitrust Division of the Department of Justice
(the "DOJ") or any other United States or foreign governmental authority and
of any communication received or given in connection with any proceeding by a
private party, in each case regarding any of the transactions contemplated
hereby; and (iii) permit the other party to review any communication given by
it to, and consult with each other in advance of any meeting or conference
with, the FTC, the DOJ or any such other governmental authority or, in
connection with any proceeding by a private party, with any other person, and
to the extent permitted by the FTC, the DOJ or such other applicable
governmental authority or other person, give the other party the opportunity
to attend and participate in such meetings and conferences. For purposes of
this Agreement, "Antitrust Law" means the Xxxxxxx Act, as amended, the
Xxxxxxx Act, as amended, the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, the Federal Trade Commission Act, as amended, and all other
federal, state and foreign, if any, statutes, rules, regulations, orders,
decrees, administrative and judicial doctrines and other laws that are
designed or intended to prohibit, restrict or regulate actions having the
purpose or effect of monopolization or restraint of trade or lessening of
competition through merger or acquisition.
(c) In furtherance and not in limitation of the covenants of the
parties contained in Sections 6.9(a) and 6.9(b), if any objections are
asserted with respect to the transactions contemplated hereby under any
Antitrust Law or if any suit is instituted (or
34
threatened to be instituted) by the FTC, the DOJ or any other applicable
governmental authority or any private party challenging any of the
transactions contemplated hereby as violative of any Antitrust Law or which
would otherwise prohibit or materially impair or materially delay the
consummation of the transactions contemplated hereby, each of Parent, Merger
Sub and the Company shall use its best efforts to resolve any such objections
or suits so as to permit consummation of the transactions contemplated by
this Agreement, including, without limitation, in order to resolve such
objections or suits which, in any case if not resolved, would reasonably be
expected to prohibit or materially impair or delay the consummation of the
transactions contemplated hereby, including selling, holding separate or
otherwise disposing of or conducting its business in a manner which would
resolve such objections or suits or agreeing to sell, hold separate or
otherwise dispose of or conduct its business in a manner which would resolve
such objections or suits or permitting the sale, holding separate or other
disposition of, any of its assets or the assets of its subsidiaries or the
conducting of its business in a manner which would resolve such objections or
suits. Without excluding other possibilities, the transactions contemplated
by this Agreement shall be deemed to be materially delayed if unresolved
objections or suits delay or would reasonably be expected to delay the
consummation of the transactions contemplated hereby beyond February 28,
2005.
(d) Subject to the obligations of the parties under Section
6.9(c), in the event that any administrative or judicial action or proceeding
is instituted (or threatened to be instituted) by a governmental authority or
private party challenging any transaction contemplated by this Agreement, or
any other agreement contemplated hereby, each of Parent, Merger Sub and the
Company shall cooperate in all respects with each other and use its
respective best efforts to contest and resist any such action or proceeding
and to have vacated, lifted, reversed or overturned any decree, judgment,
injunction or other order, whether temporary, preliminary or permanent, that
is in effect and that prohibits, prevents or restricts consummation of the
Merger or the transactions contemplated by this Agreement. In furtherance and
not in limitation of the foregoing, the parties hereto shall use their
respective best efforts to change the proposed structure of the transactions
contemplated hereby if such change would cause such action or proceeding to
be vacated, lifted, reversed or overturned in a manner that preserves the
intended benefits of the transactions contemplated hereby; provided, however,
that no party hereto shall be required to agree to any change that (i)
modifies the amount or kind of consideration to be received by holders of
Company Common Stock as provided herein or (ii) materially adversely effects
the ability of Parent to obtain financing for the transactions contemplated
hereby or the material terms thereof in the aggregate.
(e) Notwithstanding the foregoing or any other provision of this
Agreement, nothing in this Section 6.9 shall limit a party's right to
terminate this Agreement pursuant to Section 8.1(b) so long as such party has
up to then complied in all material respects with its obligations under this
Section 6.9.
SECTION 6.10 Public Announcements. Each of the Company, Parent and
Merger Sub agrees that the initial public release or announcement concerning the
transactions contemplated hereby shall be jointly issued by the parties and
thereafter each party shall use its reasonable best efforts to allow each other
party reasonable time to comment on press releases or
35
announcements relating to the transactions contemplated by this Agreement in
advance of their issuance, it being understood that the final form and content
of any such release or announcement shall be at the final discretion of the
disclosing party.
SECTION 6.11 Dividends. (a) From and after the date of this
Agreement, the Company shall not declare or pay any dividend or distribution to
its stockholders without the prior written consent of Parent in its sole
discretion; provided, that the written consent of Parent shall not be required
for the authorization and payment of (i) distributions required by the Code for
the Company to maintain its REIT status or necessary to eliminate any federal
Tax liability; and (ii) quarterly distributions of $0.47 per share (the
"Quarterly Rate") of Company Common Stock per quarter to the holders thereof for
the quarter ending September 30, 2004 and quarterly distributions of up to $0.47
per share for each quarter thereafter ending prior to the Effective Time with
record and payment dates in accordance with past practice. In the event that a
distribution with respect to the Company Common Stock permitted by this Section
6.11 (including pursuant to Section 6.11(b) below) has (x) a record date prior
to the Effective Time and (y) has not been paid as of the Effective Time, the
holders of Company Common Stock shall be entitled to receive such distribution
from the Company at the time such shares are exchanged pursuant to Article II of
this Agreement.
(b) The Company shall declare a dividend (the "Closing Dividend")
to its stockholders, the record date for which shall be the close of business
on the last business day prior to the Effective Time. The Closing Dividend
shall be an amount equal to the Quarterly Rate, multiplied by a fraction, the
numerator of which is the number of days elapsed since the last dividend
record date through and including the Effective Time, and the denominator is
the actual number of days in the calendar quarter in which the Effective Time
occurs.
SECTION 6.12 Contingent Stock Agreement. (a) As of the Effective
Time, Parent hereby expressly assumes and agrees to perform the CSA, as
successor to the Company, in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
Parent hereby agrees to take all actions necessary after the Effective Time to
comply with the CSA, including taking all actions necessary to ensure that
following the Effective Time the Merger will not have a prejudicial effect on
the Holders (as defined in the CSA) with respect to their non-taxable receipt of
securities pursuant to the CSA. The Company shall promptly deliver a notice
under the CSA that the Merger is not a Prohibited Transaction (as defined in the
CSA) and cooperate with Parent and facilitate communications between Parent and
the Representatives (as defined in the CSA) regarding the CSA.
(b) Parent agrees to indemnify and hold harmless the Company, its
subsidiaries and each of their respective directors, officers, agents and
representatives against any and all Costs incurred by any of them in
connection with any claim, action, suit or proceeding asserted or commenced
by any Representative or otherwise by or on behalf of any Holder (as defined
in the CSA) arising out of, resulting from or relating to (x) this Agreement
or any of the transactions contemplated hereby, or (y) the breach of any of
obligations of Parent pursuant to this Section 6.12. Parent shall have the
right to control the defense of any such claim, action, suit or proceeding
subject to indemnification pursuant to the preceding, but shall consult fully
with the Company in connection with the defense and settlement of such matter
and shall not enter into any settlement that adversely affects the
36
rights of the Company under the CSA prior to the Effective Time, without the
Company's prior written consent, which consent shall not be unreasonably
withheld or delayed. If this Agreement is terminated prior to the Effective
Time, the obligations of Parent under this Section 6.12(b) shall terminate
and the Company shall thereafter have the right to control all such claims,
actions, suits or proceedings.
ARTICLE VII
CONDITIONS OF MERGER
SECTION 7.1 Conditions to Obligation of Each Party to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the satisfaction or waiver at or prior to the Effective Time of each
of the following conditions:
(a) the Company shall have obtained the Company Requisite Vote;
(b) no statute, rule, regulation, executive order, decree,
ruling, injunction or other order (whether temporary, preliminary or
permanent) shall have been enacted, entered, promulgated or enforced by any
governmental authority which prohibits, restrains or enjoins the consummation
of the Merger or makes such consummation illegal; and
(c) all material consents, filings, approvals, orders or
authorizations from any governmental authority required to consummate the
Merger or any of the transactions contemplated hereby shall have been
obtained or made, except for any such consents, filings, approvals, orders,
or authorizations, the failure of which to have been obtained or made prior
to the Effective Time would not, individually or in the aggregate, provide a
reasonable basis to conclude that the parties or their respective directors
or officers would be subject to the risk of criminal prosecution.
SECTION 7.2 Conditions to Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub to effect the Merger shall be further
subject to the satisfaction or waiver at or prior to the Effective Time of each
of the following conditions:
(a) (i) the representations and warranties of the Company set
forth in this Agreement that are qualified as to Company Material Adverse
Effect and, except for minimal deviation, the representations and warranties
of the Company set forth in the first three sentences of Section 3.3 shall be
true and correct and (ii) the representations and warranties of the Company
in this Agreement that are not so qualified (other than the representations
and warranties set forth in the first three sentences of Section 3.3) shall
be true and correct in all material respects, in each case as of the date of
this Agreement and immediately before the Effective Time as though made
immediately before the Effective Time (except those representations and
warranties that speak of an earlier date, which shall be true and correct as
of such earlier date), except where the failure of any such representations
and warranties referred to in clause (ii) above to be so true and correct, in
the aggregate, would not have a Company Material Adverse Effect;
37
(b) the Company shall have performed in all material respects the
obligations, and complied in all material respects with the agreements and
covenants, required to be performed by or complied with by it under this
Agreement at or prior to the Closing Date;
(c) after the date of this Agreement, there shall not have
occurred or been discovered any Company Material Adverse Effect or events,
developments or circumstances that would, individually or in the aggregate,
have a Company Material Adverse Effect;
(d) Parent shall have received a certificate of the Chief
Executive Officer or the Chief Financial Officer of the Company, certifying
that the conditions set forth in Sections 7.2(a), 7.2(b) and 7.2(c) have been
satisfied;
(e) Parent shall have received evidence (in the form of a duly
filed Form 8875) that the Company and each of its subsidiaries that is listed
on Section 7.2(e) of the Company Disclosure Schedule has, prior to the
Closing Date, properly elected to treat each such subsidiary as a taxable
REIT subsidiary (as defined in Section 856(l) of the Code) with respect to
the Company;
(f) upon request of Parent, the Company shall have promptly taken
all steps necessary to convert (effective at least one day prior to the
Closing Date) The Xxxxxx Corporation to a limited liability company under the
laws of the State of Delaware that shall not have elected to be treated as a
corporation for U.S. federal income tax purposes, and shall have taken no
action (or failed to have taken any action) that is inconsistent with such
status;
(g) Parent shall have received the REIT Opinion; and
(h) Parent and Merger Sub shall have available to them sufficient
funds to pay the aggregate Merger Consideration and other Merger related
costs and expenses; provided, however, that notwithstanding anything herein
to the contrary, the condition set forth in this Section 7.2(h) shall be
deemed to have been satisfied unless the reason for the unavailability of
sufficient funds is the result of the occurrence of any of the following
events: (1) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States (whether or not mandatory),
(2) the occurrence of any act of war or terrorism or another material event
resulting in a major dislocation of financial markets that materially and
adversely affects the ability of financial institutions in the United States
to extend credit or syndicate loans, (3) any mandatory limitation by any
governmental authority on the extension of credit generally by banks or other
financial institutions, or (4) the occurrence of any act of war or terrorism
that materially and adversely affects the United States retail shopping mall
business taken as a whole.
SECTION 7.3 Conditions to Obligations of the Company. The obligation
of the Company to effect the Merger shall be further subject to the satisfaction
or waiver at or prior to the Effective Time of each of the following conditions:
(a) (i) the representations and warranties of Parent and Merger
Sub set forth in this Agreement that are qualified as to Parent Material
Adverse Effect shall be true and correct and (ii) the representations and
warranties of Parent and Merger Sub in this Agreement that are not so
qualified shall be true and correct in all material respects, in each
38
case as of the date of this Agreement and immediately before the Effective
Time as though made immediately before the Effective Time (except those
representations and warranties that speak of an earlier date, which shall be
true and correct as of such earlier date), except where the failure of any
such representations and warranties referred to in clause (ii) to be so true
and correct, in the aggregate, would not have a Parent Material Adverse
Effect;
(b) each of Parent and Merger Sub shall have performed in all
material respects the obligations, and complied in all material respects with
the agreements and covenants, required to be performed by or complied with by
it under this Agreement at or prior to the Closing Date; and
(c) the Company shall have received certificates of the Chief
Executive Officer or the Chief Financial Officer of each of Parent and Merger
Sub, certifying that the conditions set forth in Sections 7.3(a) and 7.3(b)
have been satisfied.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1 Termination. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after the receipt of the
Company Requisite Vote:
(a) by mutual written consent of Parent and the Company;
(b) by written notice of either Parent or the Company if:
(i) any governmental authority shall have issued a final
order, decree or ruling or taken any other final action restraining, enjoining
or otherwise prohibiting the consummation of the Merger and such order, decree,
ruling or other action is or shall have become final and nonappealable;
provided, that the right to terminate this Agreement pursuant to this clause (i)
shall not be available to any party which has not used its reasonable best
efforts to cause such order, decree, ruling or other action to be lifted or
otherwise taken action necessary to comply with Section 6.9;
(ii) the Effective Time shall not have occurred on or before
February 28, 2005 (as it may be extended from time to time as provided for in
this clause (ii), the "Termination Date"); provided, that the right to terminate
this Agreement pursuant to this clause (ii) shall not be available to the party
seeking to terminate if any action of such party (or, in the case of Parent,
Merger Sub) or the failure of such party (or, in the case of Parent, Merger Sub)
to perform any of its obligations under this Agreement required to be performed
at or prior to the Effective Time has been the cause of, or resulted in, the
failure of the Effective Time to occur on or before the Termination Date and
such action or failure to perform constitutes a breach of this Agreement;
provided, further, however, that if prior to the Termination Date each of the
conditions set forth in Article VII shall have been satisfied or waived or, in
the case of conditions which by their terms are to be fulfilled at the Closing,
shall have been capable of being readily satisfied or waived, but the condition
set forth in Section 7.2(h) shall not have been satisfied or waived, the Company
shall have the option, in its sole discretion, by written notice to
39
Parent, to extend the Termination Date on one or more occasions for a period of
no more than 120 days in the aggregate; or
(iii) at the Company Stockholders Meeting or any adjournment
or postponement thereof, the Company Requisite Vote is not obtained or the
Company Requisite Vote is not obtained by the fifth business day prior to the
Termination Date;
(c) by written notice of the Company:
(i) if there shall have been a material breach of any
representation, warranty, covenant or agreement on the part of Parent or Merger
Sub contained in this Agreement such that the condition set forth in either
Section 7.3(a) or 7.3(b) would not be satisfied and which shall not have been
cured prior to the earlier of (1) thirty days following notice of such breach
and (2) the Termination Date; provided, that the Company shall not have the
right to terminate this Agreement pursuant to this clause (i) if the Company is
then in material breach of any of its representations, warranties, covenants or
agreements contained in this Agreement;
(ii) prior to the approval of the Merger by the stockholders
of the Company in accordance with this Agreement, in accordance with, and
subject to the terms and conditions of, Section 6.5(b); or
(iii) if the Effective Time shall not have occurred on or
before January 31, 2005 and on or prior to such date each of the conditions set
forth in Article VII shall have been satisfied or waived or, in the case of
conditions which by their terms are to be fulfilled at the Closing, shall have
been capable of being readily satisfied or waived, but the condition set forth
in Section 7.2(h) shall not have been satisfied or waived.
(d) by written notice of Parent:
(i) if there shall have been a material breach of any
representation, warranty, covenant or agreement on the part of the Company
contained in this Agreement such that the condition set forth in either Section
7.2(a) or 7.2(b) would not be satisfied and which shall not have been cured
prior to the earlier of (1) thirty days following notice of such breach and (2)
the Termination Date; provided, that Parent shall not have the right to
terminate this Agreement pursuant to this clause (i) if Parent or Merger Sub is
then in material breach of any of its representations, warranties, covenants or
agreements contained in this Agreement; or
(ii) if the Company Board shall have withdrawn, modified or
changed in a manner adverse to Parent its approval or recommendation of this
Agreement or the Merger or shall have recommended to the stockholders of the
Company a Company Acquisition Proposal other than the Merger, or shall have
resolved to effect any of the foregoing.
SECTION 8.2 Effect of Termination. (a) In the event of the
termination of this Agreement pursuant to Section 8.1, this Agreement shall
forthwith become void and there shall be no liability or obligation on the part
of any party hereto, except with respect to Sections 6.4(b) and 6.10, this
Section 8.2, Section 8.3 and Article IX, which shall survive such termination;
40
provided, however, that nothing herein shall relieve any party from liability
for any willful and material breach hereof.
(b) (i) In the event that this Agreement is terminated by the
Company pursuant to Section 8.1(c)(ii), then the Company shall pay the Parent
Termination Fee to General Growth Limited Partnership, a Delaware limited
partnership ("Parent OP"), at or prior to the time of termination by wire
transfer of same day funds.
(ii) In the event that this Agreement is terminated pursuant
to Section 8.1(b)(iii), and (x) prior to such termination any person or "group"
(within the meaning of Section 13(d)(3) of the Exchange Act) shall have publicly
made a Company Acquisition Proposal, which proposal is not withdrawn prior to
the Company Stockholders Meeting, and (y) within 12 months of the termination of
this Agreement pursuant to Section 8.1(b)(iii), the Company enters into an
agreement in respect of any Company Acquisition Proposal or a transaction
pursuant to which any Company Acquisition Proposal is consummated, then the
Company shall pay the Parent Termination Fee to Parent OP, by wire transfer of
same day funds, on the date of execution of the agreement in respect of the
Company Acquisition Proposal or, if earlier, consummation of such transaction.
(iii) In the event that this Agreement is terminated by Parent
pursuant to Section 8.1(d)(ii), and (x) prior to such termination any person or
"group" (within the meaning of Section 13(d)(3) of the Exchange Act) shall have
publicly made a Company Acquisition Proposal, which proposal is not withdrawn
prior to the Company Stockholders Meeting, and (y) within 12 months of the
termination of this Agreement pursuant to Section 8.1(d)(ii) the Company enters
into an agreement in respect of any Company Acquisition Proposal or a
transaction pursuant to which any Company Acquisition Proposal is consummated,
then the Company shall pay the Parent Termination Fee to Parent OP, by wire
transfer of same day funds, on the date of execution of the agreement in respect
of the Company Acquisition Proposal or, if earlier, consummation of such
transaction.
(iv) "Parent Termination Fee" means the amount that may be
received by Parent OP without adversely affecting Parent's ability to meet the
requirements of either or both of Sections 856(c)(2) or (3) of the Code (the
"Parent Qualifying Amount"), as such Parent Qualifying Amount shall be
determined by Parent's independent accountants; provided, however, that under no
circumstances shall the Parent Termination Fee exceed $155 million. No later
than December 15 of the calendar year in which payment of the Parent Termination
Fee occurs, Parent's independent accountants, in their sole discretion, shall
make a final determination, subject to this clause (iii), of the Parent
Qualifying Amount (the "Final Parent Qualifying Amount"). If the Final Parent
Qualifying Amount, as determined by Parent's independent accountants, is greater
than the amount previously paid by the Company as a Parent Termination Fee,
within five business days after receipt of written notice from Parent, the
Company shall pay to Parent OP, by wire transfer of same day funds, an amount
equal to the excess of the Final Parent Qualifying Amount over such amount
previously paid by the Company. If the Final Parent Qualifying Amount, as
determined by Parent's independent accountants, is less than the amount
previously paid by the Company as a Parent Termination Fee, no later than
December 31 of such calendar year Parent OP shall pay to the Company, by wire
transfer of same day funds, an amount equal to the excess of the amount
previously paid by
41
the Company over the Final Parent Qualifying Amount. The amount by which the
Parent Termination Fee is reduced pursuant to the first sentence of this clause
(iii) as a result of Parent's potential inability to satisfy the requirements of
either or both of Sections 856(c)(2) or (3) of the Code shall be placed in
escrow by the Company and shall not be released unless Parent provides the
Company with either or both of (A) a letter from Parent's independent
accountants indicating the maximum amount that may be received at that time by
Parent OP without Parent failing to satisfy the requirements of either or both
of Sections 856(c)(2) and/or (3) of the Code or (B) an opinion letter from
outside counsel stating (x) that Parent has received a ruling from the IRS
stating that all or a portion of such amount would be (i) treated as not
includable in the calculation of "gross income" for purposes of Sections
856(c)(2) and (3) of the Code, or (ii) characterized in one of the categories of
income enumerated in 856(C)(2)(A) through (H) and 856(C)(3)(A) through (I) of
the Code or (y) that the receipt by Parent OP of all or a portion of such amount
following receipt of and pursuant to such ruling would not be deemed
constructively received prior thereto by Parent OP, and at such time either such
letter referred to in (A) or (B) of this sentence (each, a "Release Letter") is
delivered, shall promptly release the amount referred to in such letter to
Parent OP. Such escrow arrangement shall expire, and remaining funds returned to
the Company, on the date that is three years after the date of this Agreement.
Nothing herein shall be construed to limit the number of distributions pursuant
to this escrow prior to the date of the expiration of such escrow.
SECTION 8.3 Expenses. (a) If this Agreement is terminated pursuant
to Section 8.1(c)(ii) or 8.1(d)(ii), the Company shall pay to Parent OP all of
the costs and expenses incurred by Parent or its affiliates in connection with
this Agreement and the transactions contemplated by this Agreement up to a
maximum amount of $25 million (collectively, "Parent Termination Costs"), such
payment to be made not later than two days after being notified by Parent of the
amount of such costs and expenses. The Company acknowledges that the agreements
contained in Section 8.2 hereof and this Section 8.3 are an integral part of the
transactions contemplated by this Agreement, and that, without these agreements,
Parent would not enter into this Agreement. Accordingly, if the Company fails to
promptly pay the amounts due pursuant to Section 8.2 hereof or this Section 8.3,
and, in order to obtain such payments, Parent commences a suit that results in a
judgment against the Company for the fee set forth in Section 8.2 hereof, the
expenses set forth in this Section 8.3 or any portion of such fee or expenses,
the Company shall pay Parent's costs and expenses (including attorneys' fees) in
connection with such suit, together with interest on the amount of the fee at
the prime rate of Citibank, N.A. in effect on the date such payment was required
to be made from the date such payment was required to be made through the date
of payment. Parent may reduce the amount of such Parent Termination Costs to be
paid by the Company as not to adversely affect Parent's ability to meet the
requirements of either or both of Sections 856(c)(2) or (3) of the Code and the
amount of such reduction shall be placed in escrow by the Company and shall not
be released unless Parent provides the Company with a Release Letter, and at
such time any Release Letter is delivered, shall promptly release the amount
referred to in such Release Letter to Parent OP. Such escrow arrangement shall
expire, and remaining funds returned to the Company, on the date that is three
years after the date of this Agreement. Nothing herein shall be construed to
limit the number of distributions pursuant to this escrow prior to the date of
the expiration of such escrow.
42
(b) Except as provided for in this Section 8.3 and otherwise
specifically provided in this Agreement, each party shall bear its own expenses
in connection with this Agreement, the Merger and the transactions contemplated
hereby.
SECTION 8.4 Amendment. Subject to Section 9.14, this Agreement may
be amended by the parties hereto by action taken by or on behalf of their
respective Boards of Directors at any time prior to the Effective Time, whether
before or after receipt of the Company Requisite Vote; provided, however, that,
after receipt of the Company Requisite Vote, no amendment may be made which (i)
by law requires the further approval of the stockholders of the Company or (ii)
reduces the amount or changes the form of Merger Consideration, in each case,
without further approval of the stockholders of the Company. This Agreement may
not be amended except by an instrument in writing signed by the parties hereto.
SECTION 8.5 Waiver. At any time prior to the Effective Time, any
party hereto may (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (iii) subject to the requirements of
applicable law and compliance with the proviso in Section 8.4, waive compliance
with any of the agreements or conditions contained herein. Any such extension or
waiver shall be valid if set forth in an instrument in writing signed by the
party or parties to be bound thereby.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1 Non-Survival of Representations, Warranties and
Agreements. None of the representations, warranties, covenants and agreements in
this Agreement or in any instrument delivered pursuant to this Agreement,
including any rights arising out of any breach of such representations,
warranties, covenants and agreements, shall survive the Effective Time, except
for (i) those covenants and agreements contained herein that by their terms
apply or are to be performed in whole or in part after the Effective Time,
including without limitation, Article II and Sections 6.3, 6.6, 6.7, 6.11 and
6.12 of this Agreement and (ii) this Article IX.
SECTION 9.2 Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt) by delivery in person, by
facsimile or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
if to Parent or Merger Sub:
General Growth Properties, Inc.
000 X. Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Chief Executive Officer
Facsimile: (000) 000-0000
43
with a copy (which shall not constitute notice) to:
Xxxxxxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Xxxxxx X. Xxxxxxx, Esq.
Xxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
and
Xxxx, Xxxxxx & Xxxxxxxxx LLP
Xxx Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxxxxxx, Esq.
Facsimile: (000) 000-0000
if to the Company:
The Xxxxx Company
00000 Xxxxxx Xxxxxxxx Xxxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Chief Executive Officer
Facsimile: (000) 000-0000
and
Attention: General Counsel
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice) to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx LLP
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxxx, Xx., Esq.
Xxxxx Xxxxxx, Esq.
Xxxxxx xx Xxxx, Esq.
Facsimile: (000) 000-0000
SECTION 9.3 Certain Definitions. For purposes of this Agreement, the
term:
(a) "affiliate" of a person means a person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, the first mentioned person;
44
(b) "beneficial owner" with respect to any shares of Company
Common Stock means a person who shall be deemed to be the beneficial owner of
such shares of Company Common Stock (i) which such person or any of its
affiliates or associates (as defined in Rule 12b-2 under the Exchange Act)
beneficially owns, directly or indirectly, (ii) which such person or any of its
affiliates or associates (as such term is defined in Rule 12b-2 of the Exchange
Act) has, directly or indirectly, (A) the right to acquire (whether such right
is exercisable immediately or subject only to the passage of time), pursuant to
any agreement, arrangement or understanding or upon the exercise of
consideration rights, exchange rights, warrants or options, or otherwise, or (B)
the right to vote pursuant to any agreement, arrangement or understanding or
(iii) which are beneficially owned, directly or indirectly, by any other persons
with whom such person or any of its affiliates or associates has any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting or
disposing of any shares of Company Common Stock (and the term "beneficially
owned" shall have a corresponding meaning);
(c) "business day" means any day on which the principal
offices of the SEC in Washington, DC are open to accept filings or, in the case
of determining a date when any payment is due, any day on which banks are not
required or authorized to close in New York, New York;
(d) "control" (including the terms "controlled", "controlled
by" and "under common control with") means the possession, directly or
indirectly or as trustee or executor, of the power to direct or cause the
direction of the management policies of a person, whether through the ownership
of stock, as trustee or executor, by contract or credit arrangement or
otherwise;
(e) "Contract" means any contract, lease, loan or credit
agreement, indenture, mortgage, note, bond, agreement, permit, license or other
instrument, obligation, arrangement or understanding whether oral or written
(each, including all amendments thereto);
(f) "generally accepted accounting principles" shall mean the
generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other entity as
may be approved by a significant segment of the accounting profession in the
United States, in each case, as applicable, as of the time of the relevant
financial statements referred to herein;
(g) "Indebtedness" shall mean (i) indebtedness for borrowed
money, whether secured or unsecured, (ii) obligations under conditional sale or
other title retention agreements relating to property purchased by such person,
(iii) capitalized lease obligations, (iv) obligations under interest rate cap,
swap, collar or similar transaction or currency hedging transactions (valued at
the termination value thereof) and (v) guarantees of any such indebtedness of
any other person.
45
(h) "knowledge" (i) with respect to the Company means the
actual knowledge of any of the persons set forth in Section 9.3(h) of the
Company Disclosure Schedule and (ii) with respect to Parent or Merger Sub means
the actual knowledge of any of the persons set forth in Section 9.3(h) of the
Parent Disclosure Schedule;
(i) "person" means an individual, corporation, partnership,
limited liability company, association, trust, unincorporated organization,
other entity or group (as defined in Section 13(d)(3) of the Exchange Act); and
(j) "subsidiary" or "subsidiaries" of the Company, the
Surviving Corporation, Parent or any other person means any corporation,
partnership, joint venture or other legal entity of which the Company, the
Surviving Corporation, Parent or such other person, as the case may be (either
alone or through or together with any other subsidiary), owns, directly or
indirectly, 50% or more of the stock or other equity interests the holder of
which is generally entitled to vote for the election of the board of directors
or other governing body of such corporation or other legal entity.
SECTION 9.4 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the fullest extent
possible.
SECTION 9.5 Entire Agreement; Assignment. This Agreement (including
the Exhibits hereto), the Company Disclosure Schedule and the Parent Disclosure
Schedule and the Confidentiality Agreement constitute the entire agreement among
the parties with respect to the subject matter hereof and supersede all prior
agreements and undertakings, both written and oral, among the parties, or any of
them, with respect to the subject matter hereof. Neither this Agreement nor any
of the rights, interests or obligations under this Agreement shall be assigned
or delegated, in whole or in part, by operation of law or otherwise by any of
the parties without the prior written consent of the other parties and any
assignment in violation of this Agreement shall be void.
SECTION 9.6 Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any rights, benefits or remedies of any nature whatsoever under or by
reason of this Agreement, other than with respect to the provisions of Section
6.7 and 6.12(b) which shall inure to the benefit of the persons or entities
benefiting therefrom, who are intended to be third-party beneficiaries thereof.
SECTION 9.7 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE (EXCEPT THAT
MARYLAND LAW (INCLUDING, WITHOUT
46
LIMITATION, ANY LAW RELATED TO ANY DUTY OR OBLIGATION OF THE COMPANY BOARD OR
ANY MEMBER THEREOF WITH RESPECT TO THE MERGER OR THIS AGREEMENT) SHALL APPLY TO
THE MERGER) WITHOUT REGARD TO ANY APPLICABLE PRINCIPLES OF CONFLICTS OF LAW.
EACH PARTY HERETO IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF SUCH PARTY IN THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF.
SECTION 9.8 Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 9.9 Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
SECTION 9.10 Specific Performance; Jurisdiction. The parties agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this Agreement
exclusively in The Chancery Court of the State of Delaware or any court of the
United States located in the State of Delaware, this being in addition to any
other remedy to which such party is entitled at law or in equity. In addition,
each of the parties hereto irrevocably (i) consents to submit itself to the
personal jurisdiction of The Chancery Court of the State of Delaware or any
court of the United States located in the State of Delaware in the event any
dispute arises out of this Agreement or any of the transactions contemplated by
this Agreement, (ii) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court,
(iii) agrees that it will not bring any action relating to this Agreement or any
of the transactions contemplated by this Agreement in any court other than The
Chancery Court of the State of Delaware or any court of the United States
located in the State of Delaware and (iv) consents to service being made through
the notice procedures set forth in Section 9.2. Each of the Company, Parent and
Merger Sub hereby agrees that service of any process, summons, notice or
document by U.S. registered mail to the respective addresses set forth in
Section 9.2 shall be effective service of process for any suit or proceeding in
connection with this Agreement or the transactions contemplated hereby.
SECTION 9.11 Parent Guarantee. Parent agrees to take all action
necessary to cause Merger Sub or the Surviving Corporation, as applicable, to
perform all of its respective agreements, covenants and obligations under this
Agreement. Parent unconditionally guarantees to the Company the full and
complete performance by Merger Sub or the Surviving Corporation, as applicable,
of its respective obligations under this Agreement and shall be liable for any
breach of any covenant or obligation of Merger Sub or the Surviving Corporation,
as applicable, under this Agreement. Merger Sub shall at all times be a direct
or indirect subsidiary of Parent.
47
This is a guarantee of payment and performance and not collectibility. Parent
hereby waives diligence, presentment, demand of performance, filing of any
claim, any right to require any proceeding first against Merger Sub or the
Surviving Corporation, as applicable, protest, notice and all demands whatsoever
in connection with the performance of its obligations set forth in this Section
9.11. Parent further waives, to the fullest extent permitted by law, any
defenses or benefits that may be derived from or afforded by law which limit the
liability of or exonerate guarantors or sureties, except to the extent that any
such defense is available to Merger Sub, in connection with such performance.
SECTION 9.12 Interpretation. When reference is made in this
Agreement to a Section, such reference shall be to a Section of this Agreement
unless otherwise indicated. The table of contents and headings contained in this
Agreement are for convenience of reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation." Whenever the words
"herein," "hereof," "hereto," or "hereunder" are used in this Agreement, they
will be deemed to refer to this Agreement as a whole and not to any specific
Section of this Agreement. Whenever used in this Agreement, except as otherwise
expressly provided or unless the context otherwise requires, any noun or pronoun
shall be deemed to include the plural as well as the singular. The fact that any
item of information is disclosed in the Parent Disclosure Schedule or the
Company Disclosure Schedule shall not be construed to mean that such information
is required to be disclosed by this Agreement. Such information shall not be
used as a basis for interpreting the term "Material Adverse Effect" or other
similar terms in this Agreement. The parties to this Agreement have participated
jointly in the negotiating and drafting of this Agreement. In the event that an
ambiguity or a question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provision of this Agreement.
SECTION 9.13 Obligations of Parent and Company. Whenever this
Agreement requires a subsidiary of Parent to take any action, such requirements
shall be deemed to include an undertaking on the part of Parent to cause such
subsidiary to take such action. Whenever this Agreement requires a subsidiary of
the Company to take any action, such requirements shall be deemed to include an
undertaking on the part of the Company to cause such subsidiary to take such
action.
SECTION 9.14 Survival; No Amendment. In the event that the Surviving
Corporation or Parent or any of their respective successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers or conveys all or a majority of its properties and assets to any
person, then, and in each such case, proper provision shall be made so that the
successors and assigns of the Surviving Corporation or Parent, as the case may
be, shall succeed to the obligations of the Surviving Corporation or Parent, as
the case may be, under this Agreement that by their terms apply or are to be
performed in whole or in part after the Effective Time, including without
limitation Article II, Sections 6.3, 6.6, 6.7, 6.11 and 6.12, and Article IX.
Notwithstanding anything contained herein to the contrary, from and after the
Effective Time, this Agreement shall not be amended, modified or terminated in
any manner that adversely affects the rights of any person (whether or not a
party hereto) other than Parent or the Surviving Corporation contained in
Article II, Sections 6.3, 6.6, 6.7, 6.11, and 6.12, or Article IX.
48
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
GENERAL GROWTH PROPERTIES, INC.
By: /s/ Xxxx Xxxxxxxxx
-------------------------------------
Name: Xxxx Xxxxxxxxx
Title: Chief Executive Officer
RED ACQUISITION, LLC
By: /s/ Xxxx Xxxxxxxxx
-------------------------------------
Name: Xxxx Xxxxxxxxx
Title: Chief Executive Officer
THE XXXXX COMPANY
By: /s/ Xxxxxx X. XxXxxx
-------------------------------------
Name: Xxxxxx X. XxXxxx
Title: Chief Financial Officer
