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EXHIBIT 10 (e)
AGREEMENT AND PLAN OF MERGER
between
XXXXXX PROPERTIES, INC.
and
EASTGROUP PROPERTIES
Dated as of February 12, 1996
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TABLE OF CONTENTS
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ARTICLE 1. THE MERGER......................................................................................1
1.1 The Merger......................................................................................1
1.2 The Closing.....................................................................................2
1.3 Effective Time..................................................................................2
ARTICLE 2. CHARTER AND TRUSTEES REGULATIONS OF THE SURVIVING
CORPORATION.....................................................................................2
2.1 Charter.........................................................................................2
2.2 Trustees Regulations............................................................................2
ARTICLE 3. TRUSTEES AND OFFICERS OF THE SURVIVING CORPORATION..............................................2
3.1 Trustees........................................................................................2
3.2 Officers........................................................................................3
ARTICLE 4. EXCHANGE OF STOCK...............................................................................3
4.1 Conversion and Redemption of Stock..............................................................3
4.2 Exchange of Certificates Representing Xxxxxx Stock..............................................4
4.3 Return of Exchange Fund.........................................................................6
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF XXXXXX........................................................6
5.1 Existence; Good Standing; Authority; Compliance With Law........................................6
5.2 Authorization, Validity and Effect of Agreements................................................7
5.3 Capitalization..................................................................................8
5.4 Subsidiaries....................................................................................8
5.5 Other Interests.................................................................................9
5.6 No Violation....................................................................................9
5.7 SEC Documents...................................................................................9
5.8 Litigation.....................................................................................10
5.9 Absence of Certain Changes.....................................................................10
5.10 Taxes..........................................................................................11
5.11 Books and Records..............................................................................12
5.12 Properties.....................................................................................12
5.13 Environmental Matters..........................................................................14
5.14 No Brokers.....................................................................................15
5.15 Opinion of Financial Advisor...................................................................15
5.16 Related Party Transactions.....................................................................15
5.17 Contracts and Commitments......................................................................15
5.18 Definition of Xxxxxx'x Knowledge...............................................................16
(i)
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ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF BUYER........................................................16
6.1 Existence; Good Standing; Authority; Compliance With Law.......................................16
6.2 Authorization, Validity and Effect of Agreements...............................................17
6.3 Capitalization.................................................................................17
6.4 Subsidiaries...................................................................................18
6.5 Other Interests................................................................................18
6.6 No Violation...................................................................................18
6.7 SEC Documents..................................................................................19
6.8 Litigation.....................................................................................19
6.9 Absence of Certain Changes.....................................................................20
6.10 Taxes..........................................................................................20
6.11 Books and Records..............................................................................21
6.12 Properties.....................................................................................21
6.13 Environmental Matters..........................................................................22
6.14 No Brokers.....................................................................................23
6.15 Opinion of Financial Advisor...................................................................23
6.16 Xxxxxx Stock Ownership.........................................................................24
6.17 Related Party Transactions.....................................................................24
6.18 Contracts and Commitments......................................................................24
6.19 Buyer Stock....................................................................................24
6.20 Convertible Securities.........................................................................25
6.21 Definition of Buyer's Knowledge................................................................25
ARTICLE 7. COVENANTS......................................................................................25
7.1 Acquisition Proposals..........................................................................25
7.2 Conduct of Businesses..........................................................................26
7.3 Meetings of Stockholders.......................................................................30
7.4 Filings; Other ................................................................................31
7.5 Inspection of Records..........................................................................31
7.6 Publicity......................................................................................31
7.7 Registration Statement.........................................................................31
7.8 Listing Application............................................................................32
7.9 Further Action.................................................................................32
7.10 Affiliates of Xxxxxx...........................................................................32
7.11 Expenses.......................................................................................33
7.12 Indemnification and Insurance..................................................................33
7.13 Reorganization.................................................................................35
7.14 Redemption of Rights...........................................................................35
7.15 Payment of Advisory Fee........................................................................35
7.16 REIT Status....................................................................................35
ARTICLE 8. CONDITIONS.....................................................................................36
8.1 Conditions to Each Party's Obligation to Effect the Merger.....................................36
8.2 Conditions to Obligations of Xxxxxx to Effect the Merger.......................................37
(ii)
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8.3 Conditions to Obligation of Buyer to Effect the Merger.........................................38
ARTICLE 9. TERMINATION....................................................................................38
9.1 Termination....................................................................................38
9.2 Effect of Termination..........................................................................40
9.4 Extension; Waiver..............................................................................42
ARTICLE 10. GENERAL PROVISIONS.............................................................................42
10.1 Nonsurvival of Representations, Warranties and Agreements......................................42
10.2 Notices........................................................................................42
10.3 Assignment; Binding Effect; Benefit............................................................43
10.4 Entire Agreement...............................................................................44
10.5 Confidentiality................................................................................44
10.6 Amendment......................................................................................44
10.7 Governing Law..................................................................................44
10.8 Counterparts...................................................................................44
10.9 Headings.......................................................................................45
10.10 Waivers........................................................................................45
10.11 Incorporation..................................................................................45
10.12 Severability...................................................................................45
10.13 Interpretation and Certain Definitions.........................................................45
10.14 Schedules......................................................................................46
EXHIBIT A - Bermant/UBC Purchase and Sale Agreement
EXHIBIT B - Form of Affiliate Letter
EXHIBIT C - Quarterly Dividend Dates
EXHIBIT D - Proxy Agreement
(iii)
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of February 12, 1996 between Xxxxxx Properties, Inc., a Delaware
corporation which operates as a real estate investment trust ("Xxxxxx"), and
EastGroup Properties, a Maryland real estate investment trust ("Buyer").
RECITALS
A. The Board of Directors of Xxxxxx and the Board of Trustees of Buyer
each have determined that a business combination between Xxxxxx and Buyer is in
the best interests of their respective companies and stockholders and presents
an opportunity for their respective companies to achieve long-term strategic and
financial benefits, and accordingly have agreed to effect the merger provided
for herein upon the terms and subject to the conditions set forth herein.
B. It is intended that the merger provided for herein, for federal
income tax purposes, shall qualify as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
and for financial accounting purposes shall be accounted for as a "purchase."
X. Xxxxxx and Buyer have each received a fairness opinion from their
respective financial advisors relating to the transactions contemplated hereby
as more fully described herein.
X. Xxxxxx and Buyer desire to make certain representations,
warranties and agreements in connection with the merger.
E. As a condition to the willingness of Xxxxxx to enter into this
Agreement, the principal stockholders of Buyer (the "Principal Stockholders")
have entered into a Proxy Agreement, dated as of the date hereof, with Xxxxxx
substantially in the form of EXHIBIT D attached hereto (the "Proxy Agreement"),
pursuant to which each of the Principal Stockholders has granted to Xxxxxx an
irrevocable proxy to vote his or its shares of Buyer Stock (as defined below) in
favor of the merger and all other actions necessary to consummate the merger,
upon the terms and subject to the conditions set forth in the Proxy Agreement.
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE 1. THE MERGER
1.1 THE MERGER. Subject to the terms and conditions of this
Agreement, at the Effective Time (as defined in Section 1.3 hereof), Xxxxxx
shall be merged with and into Buyer
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in accordance with this Agreement and the separate corporate existence of Xxxxxx
shall thereupon cease (the "Merger"). Buyer shall be the surviving corporation
in the Merger (sometimes hereinafter referred to as the "Surviving
Corporation"). The Merger shall have the effects specified in Section 259 of the
Delaware General Corporation Law (the "DGCL"), Section 3-114 of the Maryland
General Corporation Law (the "MGCL") and Section 8-501.1 of the Maryland Real
Estate Investment Trust Law ("MDREIT Law").
1.2 THE CLOSING. Subject to the terms and conditions of this Agreement,
the closing of the Merger (the "Closing") shall take place (a) at the offices of
Xxxx and Xxxx in Boston, Massachusetts, at 9:00 a.m., local time, on the first
business day immediately following the day on which the last of the conditions
set forth in Article 8 shall be fulfilled or waived in accordance herewith or
(b) at such other time, date or place as the parties hereto may agree. The date
on which the Closing occurs is hereinafter referred to as the "Closing Date."
1.3 EFFECTIVE TIME. If all the conditions to the Merger set forth in
Article 8 shall have been fulfilled or waived in accordance herewith and this
Agreement shall not have been terminated as provided in Article 9, the parties
hereto shall cause Articles of Merger satisfying the requirements of the MGCL
and MDREIT Law to be properly executed, verified and delivered for filing in
accordance with the MGCL and MDREIT Law on the Closing Date. The Merger shall
become effective upon the acceptance for record of the Articles of Merger by the
State Department of Assessments and Taxation of Maryland in accordance with the
MGCL and MDREIT Law or at such later time which the parties hereto shall have
agreed upon and designated in such filing in accordance with applicable law as
the effective time of the Merger (the "Effective Time").
ARTICLE 2. CHARTER AND TRUSTEES REGULATIONS OF THE SURVIVING
CORPORATION
2.1 CHARTER. The Restated Declaration of Trust, as amended (the
"Declaration of Trust") of Buyer in effect immediately prior to the Effective
Time shall be the Declaration of Trust of the Surviving Corporation, until duly
amended in accordance with applicable law.
2.2 TRUSTEES REGULATIONS. The Trustees Regulations of Buyer in effect
immediately prior to the Effective Time shall be the Trustees Regulations of
the Surviving Corporation, until duly amended in accordance with applicable law.
ARTICLE 3. TRUSTEES AND OFFICERS OF THE SURVIVING CORPORATION
3.1 TRUSTEES. The trustees of Buyer immediately prior to the
Effective Time, shall be the trustees of the Surviving Corporation as of the
Effective Time.
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3.2 OFFICERS. The officers of Buyer immediately prior to the
Effective Time shall be the officers of the Surviving Corporation as of the
Effective Time.
ARTICLE 4. EXCHANGE OF STOCK
4.1 CONVERSION AND REDEMPTION OF STOCK.
(a) At the Effective Time, each share of beneficial interest,
par value $1.00 per share, of Buyer ("Buyer Stock") outstanding immediately
prior to the Effective Time shall remain outstanding and shall represent one
share of beneficial interest, par value $1.00 per share, of the Surviving
Corporation.
(b) At the Effective Time, the outstanding share of Class A
common stock, $1.00 par value per share, of Xxxxxx (the "Xxxxxx Class A Stock")
issued and outstanding immediately prior to the Effective Time shall be redeemed
for a price of $1.00.
(c) At the Effective Time, each share of common stock, par
value $1.00 per share, of Xxxxxx (the "Xxxxxx Stock") issued and outstanding
immediately prior to the Effective Time (other than those shares of Xxxxxx Stock
to be canceled pursuant to Section 4.1(f)) shall, by virtue of the Merger and
without any action on the part of Xxxxxx, Buyer or the holders of any of the
securities of any of these corporations, be converted into a number of shares of
Buyer Stock equal to a fraction, the numerator of which is the Share Value and
the denominator of which is the Buyer Stock Price (collectively, the "Stock
Consideration"). The "Buyer Stock Price" means an amount equal to the average of
the closing sales prices of Buyer Stock on the New York Stock Exchange on the
twenty trading days immediately preceding the fifth trading day prior to the
date of the Effective Time; PROVIDED, that if such average closing price as
calculated in accordance with this sentence (i) is less than $20.25, the Buyer
Stock Price shall be deemed to equal $20.25 or (ii) is greater than $23.00, the
Buyer Stock Price shall be deemed to equal $23.00. Notwithstanding the
foregoing, if the average closing sales prices of Buyer Stock on the New York
Stock Exchange on the twenty (20) trading days immediately preceding the fifth
trading day prior to either (A) the date on which the Form S-4 (as hereinafter
defined) is declared effective by the Securities and Exchange Commission or (B)
the date on which the meeting of Xxxxxx stockholders is to be convened pursuant
to Section 7.3 hereof, is equal to or less than $18.25, Xxxxxx shall have the
right, waivable by it, to terminate this Agreement pursuant to Section 9.1(f)
without any liability on the part of Xxxxxx. The "Share Value" shall equal
(subject to the adjustments as described in the next succeeding sentences and as
described in Section 7.16) $15.60; PROVIDED, HOWEVER, that if prior to the
Effective Time Xxxxxx shall have conveyed all of its right, title and interest
in and to its partnership interest (the "UBC Interest") in University Business
Center Associates, a California general partnership, to JCB Limited, or an
affiliate or nominee thereof ("Bermant"), pursuant to a Purchase and Sale
Agreement in substantially the form of EXHIBIT A attached hereto (as the same
may be amended from time to time, the "Bermant/UBC Agreement"), then the Share
Value shall equal $12.00. In the event the Summer Hill Option
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(as defined in Section 7.1 hereof) is exercised and Xxxxxx conveys the real
property subject to such option to Summer Hill Ltd. prior to the Effective Date
in accordance with the terms of such option, the Share Value shall be reduced by
the quotient equal to (x) $1,060,000 divided by (y) the total number of shares
of Xxxxxx Stock issued and outstanding immediately prior to the Effective Time.
(d) Buyer acknowledges and agrees that the value of the UBC
Interest is $12,903,660 and that Xxxxxx may disclose such valuation to Bermant
in accordance with the provisions of that certain Second Amended and Restated
Joint Venture Agreement, dated as of November 1, 1993 and amended as of January
19, 1996, between Xxxxxx and Xxxxxxx (the "Joint Venture Agreement").
Immediately following the execution of this Agreement, Xxxxxx shall deliver to
Bermant written notice of the terms of this Agreement in accordance with the
Joint Venture Agreement.
(e) As a result of the Merger and without any action on the
part of the holders thereof, all shares of Xxxxxx Stock shall cease to be
outstanding, shall be canceled and retired and shall cease to exist and each
holder of a certificate (a "Certificate") representing any shares of Xxxxxx
Stock shall thereafter cease to have any rights with respect to such shares of
Xxxxxx Stock, except the right to receive, without interest, shares of Buyer
Stock, dividends payable in accordance with Section 4.2(c) and cash in lieu of
fractional shares of Buyer Stock in accordance with Section 4.2(e) upon the
surrender of such Certificate.
(f) Each share of Xxxxxx Stock issued and held in Xxxxxx'x
treasury and each share of Xxxxxx Stock held by Buyer or any of the Buyer
Subsidiaries immediately prior to the Effective Time, if any, by virtue of the
Merger, shall cease to be outstanding, shall be canceled and retired and shall
cease to exist and no payment of any consideration shall be made with respect
thereto.
4.2 EXCHANGE OF CERTIFICATES REPRESENTING XXXXXX STOCK.
(a) As of the Effective Time, Buyer shall deposit, or shall
cause to be deposited, with an exchange agent selected by Buyer on or prior to
the Effective Time (the "Exchange Agent"), for the benefit of the holders of
shares of Xxxxxx Stock, for exchange in accordance with this Article 4,
certificates representing the shares of Buyer Stock and the cash in lieu of
fractional shares (such cash and certificates for shares of Buyer Stock being
hereinafter referred to as the "Exchange Fund") to be issued pursuant to Section
4.1 and paid pursuant to this Section 4.2, respectively, in exchange for
outstanding shares of Xxxxxx Stock.
(b) Promptly after the Effective Time, Buyer shall cause the
Exchange Agent to mail to each holder of record of a Certificate or Certificates
(i) a letter of transmittal which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon delivery of
the Certificates to the Exchange Agent and shall be in such form and have such
other provisions as Buyer may reasonably specify and (ii) instructions for use
in effecting the surrender of the Certificates in exchange for certificates
representing
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shares of Buyer Stock and cash in lieu of fractional shares. Upon surrender of a
Certificate for cancellation to the Exchange Agent together with such letter of
transmittal, duly executed and completed in accordance with the instructions
thereto, the holder of such Certificate shall be entitled to receive in exchange
therefor (x) a certificate representing the number of whole shares of Buyer
Stock to which such holder shall be entitled, and (y) a check representing the
amount of cash in lieu of fractional shares, if any, plus the amount of any
dividends or distributions, if any, pursuant to paragraph (c) below, after
giving effect to any required withholding tax, and the Certificate so
surrendered shall forthwith be canceled. No interest will be paid or accrued on
the cash in lieu of fractional shares or on the dividend or distribution, if
any, payable to holders of Certificates, pursuant to this Section 4.2. In the
event of a transfer of ownership of Xxxxxx Stock which is not registered in the
transfer records of Xxxxxx, a Certificate representing the proper number of
shares of Buyer Stock, together with a check for the cash to be paid in lieu of
fractional shares plus, to the extent applicable, the amount of any dividend or
distribution, if any, payable pursuant to paragraph (c) below, may be issued to
such a transferee if the Certificate representing shares of such Xxxxxx Stock is
presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and to evidence that any applicable stock
transfer taxes have been paid.
(c) Notwithstanding any other provisions of this Agreement, no
dividends or other distributions on Buyer Stock shall be paid with respect to
any shares of Xxxxxx Stock represented by a Certificate until such Certificate
is surrendered for exchange as provided herein; provided, however, that subject
to the effect of applicable laws, following surrender of any such Certificate,
there shall be paid by the Surviving Corporation to the holder of the
certificates representing whole shares of Buyer Stock issued in exchange
therefor, without interest, (i) at the time of such surrender, the amount of
dividends or other distributions with a record date after the Effective Time
theretofore payable with respect to such whole shares of Buyer Stock and not
paid, less the amount of any withholding taxes which may be required thereon,
and (ii) at the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time but prior to surrender
and a payment date subsequent to surrender payable with respect to such whole
shares of Buyer Stock, less the amount of any withholding taxes which may be
required thereon.
(d) At and after the Effective Time, there shall be no
transfers on the stock transfer books of Xxxxxx of the shares of Xxxxxx Stock
which were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation, they
shall be canceled and exchanged for certificates for shares of Buyer Stock,
dividends and cash in lieu of fractional shares, if any, in accordance with this
Section 4.2. Certificates surrendered for exchange by any person constituting an
"affiliate" of Xxxxxx for purposes of Rule 145, as such rule may be amended from
time to time ("Rule 145"), of the rules and regulations promulgated under the
Securities Act of 1933, as amended (the "Securities Act"), shall not be
exchanged until Buyer has received an Affiliate Letter in the form of EXHIBIT B
attached hereto, from such person as provided in Section 7.10.
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(e) No fractional shares of Buyer Stock shall be issued
pursuant hereto. In lieu of the issuance of any fractional share of Buyer Stock
pursuant to this Agreement, each holder of Xxxxxx Stock upon surrender of a
Certificate for exchange shall be paid an amount in cash (without interest),
rounded to the nearest cent, determined by multiplying (i) the Buyer Stock Price
by (ii) the fraction of a share of Buyer Stock which such holder would otherwise
be entitled to receive under this Article 4.
4.3 RETURN OF EXCHANGE FUND. Any portion of the Exchange Fund
(including the proceeds of any investments thereof and any shares of Buyer
Stock) that remains unclaimed by the former stockholders of Xxxxxx one year
after the Effective Time shall be delivered to the Surviving Corporation. Any
former stockholders of Xxxxxx who have not theretofore complied with this
Article 4 shall thereafter look only to the Surviving Corporation for payment of
their shares of Buyer Stock and cash in lieu of fractional shares (plus
dividends and distributions to the extent set forth in Section 4.2(c), if any),
as determined pursuant to this Agreement, without any interest thereon. None of
Buyer, Xxxxxx, the Exchange Agent or any other person shall be liable to any
former holder of shares of Xxxxxx Stock for any amount properly delivered to a
public official pursuant to applicable abandoned property, escheat or similar
laws. In the event any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person claiming such
Certificate to be lost, stolen or destroyed and, if required by the Surviving
Corporation, the posting by such person of a bond in such reasonable amount as
the Surviving Corporation may direct as indemnity against any claim that may be
made against it with respect to such Certificate, the Exchange Agent or the
Surviving Corporation will issue in exchange for such lost, stolen or destroyed
Certificate the shares of Buyer Stock and cash in lieu of fractional shares (and
to the extent applicable, dividends and distributions payable pursuant to
Section 4.2(c)).
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF XXXXXX
Except as set forth in the disclosure letter delivered at or prior to
the execution hereof to Buyer, which shall refer to the relevant Sections of
this Agreement (the "Xxxxxx Disclosure Letter"), Xxxxxx represents and warrants
to Buyer as follows:
5.1 EXISTENCE; GOOD STANDING; AUTHORITY; COMPLIANCE WITH LAW.
(a) Xxxxxx is a corporation duly organized, validly existing
and in good standing under the laws of Delaware. Xxxxxx is duly licensed or
qualified to do business as a foreign corporation and is in good standing under
the laws of any other state of the United States in which the character of the
properties owned or leased by it therein or in which the transaction of its
business makes such qualification necessary, except where the failure to be so
licensed or qualified would not have a material adverse effect on the business,
results of operations or financial condition of Xxxxxx and the Xxxxxx
Subsidiaries (as defined below) taken as a whole (a "Xxxxxx Material Adverse
Effect"). Xxxxxx has all requisite corporate
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power and authority to own, operate, lease and encumber its properties and carry
on its business as now conducted.
(b) Each of the Xxxxxx Subsidiaries is a corporation or
partnership duly incorporated or organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or organization,
has the corporate or partnership power and authority to own its properties and
to carry on its business as it is now being conducted, and is duly qualified to
do business and is in good standing in each jurisdiction in which the ownership
of its property or the conduct of its business requires such qualification,
except for jurisdictions in which such failure to be so qualified or to be in
good standing would not have a Xxxxxx Material Adverse Effect.
(c) Except as set forth in Section 5.1(c) of the Xxxxxx
Disclosure Letter, to the best knowledge of Xxxxxx, neither Xxxxxx nor any of
the Xxxxxx Subsidiaries is in violation of any order of any court, governmental
authority or arbitration board or tribunal, or any law, ordinance, governmental
rule or regulation to which Xxxxxx or any Xxxxxx Subsidiary or any of their
respective properties or assets is subject, where such violation would have a
Xxxxxx Material Adverse Effect.
(d) Copies of the Certificate of Incorporation or other
charter documents, Bylaws, organizational documents and partnership and joint
venture agreements (and in each such case, all amendments thereto) of Xxxxxx and
each of the Xxxxxx Subsidiaries are listed in Section 5.1 of the Xxxxxx
Disclosure Letter, and the copies of such documents, which have previously been
delivered or made available to Buyer and its counsel, are true and correct. For
the purposes of this Agreement, the term "Xxxxxx Subsidiary" shall include any
of the entities listed under such heading in Section 5.4 of the Xxxxxx
Disclosure Letter.
5.2 AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS. Each of Xxxxxx
and the Xxxxxx Subsidiaries has the requisite power and authority to enter into
the transactions contemplated hereby and to execute and deliver this Agreement.
The Board of Directors of Xxxxxx has approved this Agreement, the Merger, and
the transactions contemplated by this Agreement and has agreed to recommend that
the holders of Xxxxxx Stock adopt and approve this Agreement, the Merger, and
the transactions contemplated by this Agreement at the Xxxxxx stockholders'
meeting which will be held in accordance with the provisions of Section 7.3
hereof. In connection with the foregoing, the Board of Directors of Xxxxxx has
taken such actions and votes as are necessary on its part to render the
provisions of Section 203 of the DGCL, Article Ninth of Xxxxxx'x Restated
Certificate of Incorporation ("Xxxxxx'x Certificate"), and the Rights Agreement,
dated as of June 28, 1990, between Xxxxxx and State Street Bank and Trust
Company, as amended (the "Rights Agreement"), inapplicable to this Agreement,
the Merger, and the transactions contemplated by this Agreement. As of the date
hereof, all of the directors and executive officers of Xxxxxx have indicated
that they presently intend to vote all shares of Xxxxxx Stock which they own to
approve this Agreement, the Merger, and the transactions contemplated by this
Agreement at the Xxxxxx stockholders meeting which will be held in accordance
with the provisions of
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Section 7.3. Subject only to the approval of this Agreement and the transactions
contemplated hereby by the holders of a majority of the outstanding shares of
Xxxxxx Stock, the execution by Xxxxxx of this Agreement and the consummation of
the transactions contemplated by this Agreement have been duly authorized by all
requisite action on the part of Xxxxxx. This Agreement constitutes the valid and
legally binding obligations of Xxxxxx, enforceable against Xxxxxx in accordance
with its terms, subject to applicable bankruptcy, insolvency, moratorium or
other similar laws relating to creditors' rights and general principles of
equity.
5.3 CAPITALIZATION. The authorized capital stock of Xxxxxx consists of
20,000,000 shares of Xxxxxx Stock and one (1) share of Xxxxxx Class A Stock. As
of the date hereof, there are 3,584,350 shares of Xxxxxx Stock issued and
outstanding and one share of Xxxxxx Class A Stock issued and outstanding. All
such shares of Xxxxxx Stock are duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights. Except as set forth in Section 5.3
of the Xxxxxx Disclosure Letter, Xxxxxx has no outstanding bonds, debentures,
notes or other obligations the holders of which have the right to vote (or which
are convertible into or exercisable for securities having the right to vote)
with the stockholders of Xxxxxx on any matter. There are not at the date of this
Agreement any existing options, warrants, calls, subscriptions, convertible
securities, or other rights, agreements or commitments which obligate Xxxxxx to
issue, transfer or sell any shares of capital stock of Xxxxxx except for the
provisions of Xxxxxx'x Certificate relating to the Xxxxxx Class A Stock and the
rights issued pursuant to the Rights Agreement. Except as set forth in Section
5.3 of the Xxxxxx Disclosure Letter, there are no agreements or understandings
to which Xxxxxx or any Xxxxxx Subsidiary is a party with respect to the voting
of any shares of capital stock of Xxxxxx or which restrict the transfer of any
such shares, nor does Xxxxxx have knowledge of any such agreements or
understandings with respect to the voting of any such shares or which restrict
the transfer of any such shares other than those set forth in Xxxxxx'x
Certificate with respect to the maintenance of Xxxxxx as a real estate
investment trust ("REIT"). Except as set forth in Section 5.3 of the Xxxxxx
Disclosure Letter, there are no outstanding contractual obligations of Xxxxxx or
any Xxxxxx Subsidiary to repurchase, redeem or otherwise acquire any shares of
capital stock, partnership interests or any other securities of Xxxxxx or any
Xxxxxx Subsidiary. Except as set forth in Section 5.3 of the Xxxxxx Disclosure
Letter, neither Xxxxxx nor any Xxxxxx Subsidiary is under any obligation,
contingent or otherwise, by reason of any agreement to register any of their
securities under the Securities Act.
5.4 SUBSIDIARIES. Except as set forth in Section 5.4 of the Xxxxxx
Disclosure Letter, Xxxxxx owns directly or indirectly each of the outstanding
shares of capital stock or all of the partnership or other equity interests of
each of the Xxxxxx Subsidiaries. Each of the outstanding shares of capital stock
in each of the Xxxxxx Subsidiaries having corporate form is duly authorized,
validly issued, fully paid and nonassessable. Except as set forth in Section 5.4
of the Xxxxxx Disclosure Letter, each of the outstanding shares of capital stock
of, or partnership or other equity interests in, each of the Xxxxxx Subsidiaries
is owned, directly or indirectly, by Xxxxxx free and clear of all liens,
pledges, security interests, claims or other encumbrances. The following
information for each Xxxxxx Subsidiary as of February 12, 1996 is set forth in
Section 5.4 of the Xxxxxx Disclosure Letter: (i) its name and jurisdiction
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of incorporation or organization; (ii) its authorized capital stock or share
capital or partnership or other interests; (iii) the name of each stockholder or
owner of a partnership or other equity interest and the number of issued and
outstanding shares of capital stock or share capital or percentage ownership for
non-corporate entities held by it and (iv) the names of the general partners, if
applicable.
5.5 OTHER INTERESTS. Except as set forth in Sections 5.4 and 5.5 of the
Xxxxxx Disclosure Letter, neither Xxxxxx nor any Xxxxxx Subsidiary owns directly
or indirectly any interest or investment (whether equity or debt) in any
corporation, partnership, joint venture, business, trust or other entity (other
than investments in short-term investment securities).
5.6 NO VIOLATION. Except as set forth in Section 5.6 of the Xxxxxx
Disclosure Letter, neither the execution and delivery by Xxxxxx of this
Agreement nor the consummation by Xxxxxx of the transactions contemplated by
this Agreement in accordance with its terms, will: (i) conflict with or result
in a breach of any provisions of Xxxxxx'x Certificate, the Bylaws,
organizational documents, partnership agreements or joint venture agreements of
Xxxxxx or any Xxxxxx Subsidiary; (ii) violate, or conflict with, or result in a
breach of any provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or result in
the termination or in a right of termination or cancellation of, or accelerate
the performance required by, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties of Xxxxxx or the
Xxxxxx Subsidiaries under, or result in being declared void, voidable or without
further binding effect, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust or any license, franchise, permit,
lease, contract, agreement or other instrument, commitment or obligation to
which Xxxxxx or any of the Xxxxxx Subsidiaries is a party, or by which Xxxxxx or
any of the Xxxxxx Subsidiaries or any of their properties is bound or affected,
except for any of the foregoing matters which, individually or in the aggregate,
would not have a Xxxxxx Material Adverse Effect; or (iii) other than the filings
provided for in Article 1 of this Agreement, required under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 0000 (xxx "XXX Xxx"), the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Securities
Act or applicable state securities and "Blue Sky" laws (collectively, the
"Regulatory Filings"), require any consent, approval or authorization of, or
declaration, filing or registration with, any governmental or regulatory
authority, except where the failure to obtain any such consent, approval or
authorization of, or declaration, filing or registration with, any governmental
or regulatory authority would not have a Xxxxxx Material Adverse Effect.
5.7 SEC DOCUMENTS. Xxxxxx has filed all required forms, reports and
documents with the Securities and Exchange Commission ("SEC") since December 31,
1994 (collectively, the "Xxxxxx SEC Reports") all of which were prepared in
accordance with the applicable requirements of the Exchange Act and the
Securities Act. The Xxxxxx SEC Reports were filed with the SEC in a timely
manner and constitute all forms, reports and documents required to be filed by
Xxxxxx since December 31, 1994 under the Securities Act, the Exchange Act and
the rules and regulations promulgated thereunder (the "Securities Laws"). As of
their respective dates, the Xxxxxx SEC Reports (i) complied as to form in all
material
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respects with the applicable requirements of the Securities Laws and (ii) did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading. Each of the consolidated balance sheets of Xxxxxx included in or
incorporated by reference into the Xxxxxx SEC Reports (including the related
notes and schedules) fairly presents the consolidated financial position of
Xxxxxx and the Xxxxxx Subsidiaries as of its date and each of the consolidated
statements of income, retained earnings and cash flows of Xxxxxx included in or
incorporated by reference into the Xxxxxx SEC Reports (including any related
notes and schedules) fairly presents the results of operations, retained
earnings or cash flows, as the case may be, of Xxxxxx and the Xxxxxx
Subsidiaries for the periods set forth therein (subject, in the case of
unaudited statements, to normal year-end audit adjustments which would not be
material in amount or effect), in each case in accordance with generally
accepted accounting principles consistently applied during the periods involved,
except as may be noted therein and except, in the case of the unaudited
statements, as permitted by Form 10-Q pursuant to Section 13 or 15(d) of the
Exchange Act.
5.8 LITIGATION. Except as set forth in Section 5.8 of the Xxxxxx
Disclosure Letter, there are (i) no continuing orders, injunctions or decrees of
any court, arbitrator or governmental authority to which Xxxxxx or any Xxxxxx
Subsidiary is a party or by which any of its properties or assets are bound, or,
to the reasonable best knowledge of Xxxxxx, to which any person who is now, or
has been at any time prior to the date hereof, a director, officer, employee or
agent of Xxxxxx or any Xxxxxx Subsidiary acting in such capacity is a party, and
(ii) no actions, suits or proceedings pending against Xxxxxx or any Xxxxxx
Subsidiary or, to the reasonable best knowledge of Xxxxxx, threatened against
Xxxxxx or any Xxxxxx Subsidiary or against any person who is now, or has been at
any time prior to the date hereof, a director, officer, employee or agent of
Xxxxxx or any Xxxxxx Subsidiary acting in such capacity, at law or in equity, or
before or by any federal or state commission, board, bureau, agency or
instrumentality, that in the case of clause (i) or (ii) are reasonably likely,
individually or in the aggregate, to have a Xxxxxx Material Adverse Effect.
There are no written, nor to Xxxxxx'x knowledge threatened, claims made against
Xxxxxx or any Xxxxxx Subsidiary by any existing or former joint venture partner
or other partner of Xxxxxx or any Xxxxxx Subsidiary that are reasonably likely,
individually or in the aggregate, to have a Xxxxxx Material Adverse Effect.
5.9 ABSENCE OF CERTAIN CHANGES. Except as disclosed in the Xxxxxx SEC
Reports filed with the SEC prior to the date hereof or as set forth in Section
5.9 of the Xxxxxx Disclosure Letter, since December 31, 1994, Xxxxxx and the
Xxxxxx Subsidiaries have conducted their business only in the ordinary course of
such business and there has not been (i) any Xxxxxx Material Adverse Effect;
(ii) any declaration, setting aside or payment of any dividend or other
distribution with respect to the Xxxxxx Stock, except dividends of $0.25 per
share paid on April 11, 1995, and $0.27 per share paid on July 11, 1995, October
10, 1995 and December 26, 1995; (iii) any material commitment, contractual
obligation, borrowing, capital expenditure or transaction (each, a "Commitment")
entered into by Xxxxxx or any of the Xxxxxx Subsidiaries, outside the ordinary
course of business except for Commitments for
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expenses of attorneys, accountants and investment bankers incurred in connection
with the Merger; or (iv) any material change in Xxxxxx'x accounting principles,
practices or methods.
5.10 TAXES. Except as set forth in Section 5.10 of the Xxxxxx
Disclosure Letter:
(a) Xxxxxx and each of the Xxxxxx Subsidiaries has paid,
caused to be paid or accrued all federal, state, local, foreign, and other
taxes, including without limitation, income taxes, estimated taxes, alternative
minimum taxes, excise taxes, sales taxes, use taxes, value-added taxes, gross
receipts taxes, franchise taxes, capital stock taxes, employment and
payroll-related taxes, withholding taxes, stamp taxes, transfer taxes, windfall
profit taxes, property taxes and environmental taxes, whether or not measured in
whole or in part by net income, and all deficiencies, or other additions to tax,
interest, fines and penalties (collectively, "Taxes"), required to be paid or
accrued by it through the date hereof;
(b) Xxxxxx and each of the Xxxxxx Subsidiaries has timely
filed all federal, state, local and foreign tax returns required to be filed by
any of them through the date hereof, and all such returns completely and
accurately set forth the amount of any Taxes relating to the applicable period;
(c) Xxxxxx and each Xxxxxx Subsidiary has withheld and paid
all taxes required to have been withheld and paid in connection with amounts
paid or owing to any employee, independent contractor, creditor, stockholder or
other party;
(d) For its taxable year ended December 31, 1994 and at all
times thereafter up to and including the date hereof, Xxxxxx has qualified to be
treated as a REIT within the meaning of Sections 856-860 of the Code, including,
without limitation, the requirements of Sections 856 and 857 of the Code. Xxxxxx
has qualified as a REIT for every taxable year in which it existed. For the
periods described in the preceding sentence, Xxxxxx has met all requirements
necessary to be treated as a REIT for purposes of the income tax provisions of
those states in which Xxxxxx is subject to income tax and which provide for the
taxation of a REIT in a manner similar to the treatment of REITs under Sections
856-860 of the Code;
(e) Neither the Internal Revenue Service ("IRS") nor any
governmental authority is now asserting by written notice to Xxxxxx or any
Xxxxxx Subsidiary or, to the knowledge of Xxxxxx, threatening to assert against
Xxxxxx or any Xxxxxx Subsidiary any deficiency or claim for additional Taxes.
There is no dispute or claim concerning any tax liability of Xxxxxx or any
Xxxxxx Subsidiary either claimed or raised in writing by the IRS. There is no
dispute or claim concerning any tax liability of a material nature of Xxxxxx or
any Xxxxxx Subsidiary either claimed or raised in writing by any governmental
authority other than the IRS, or, to the knowledge of Xxxxxx, which may be
claimed or raised by any federal or state governmental authority. No written
claim has ever been made by a taxing authority in a jurisdiction where Xxxxxx
does not file reports and returns that Xxxxxx is or may be subject to taxation
by that jurisdiction. To the knowledge of Xxxxxx, there are no security
interests on any of the assets of Xxxxxx or any Xxxxxx Subsidiary that arose in
connection with any failure
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(or alleged failure) to pay any Taxes when due. Xxxxxx has never entered into
a closing agreement pursuant to Section 7121 of the Code;
(f) Xxxxxx has not received written notice of any audit of any
tax return filed by Xxxxxx, and Xxxxxx has not been notified in writing by any
tax authority that any such audit is contemplated or pending. Neither Xxxxxx nor
any of the Xxxxxx Subsidiaries has executed or filed with the IRS or any other
taxing authority any agreement now in effect extending the period for assessment
or collection of any income or other Taxes, and no extension of time with
respect to any date on which a tax return was or is to be filed by Xxxxxx is in
force. True, correct and complete copies of all federal, state and local income
or franchise tax returns filed by Xxxxxx and each of the Xxxxxx Subsidiaries and
all written communications relating thereto have been delivered to Buyer or made
available to representatives of Buyer; and
(g) Each of the Xxxxxx Subsidiaries of which all the
outstanding capital stock is owned solely by Xxxxxx is a Qualified REIT
Subsidiary as defined in Section 856(i) of the Code. Except as set forth in
Section 5.10 of the Xxxxxx Disclosure Letter, the Xxxxxx Subsidiaries listed as
partnerships in Section 5.4 of the Xxxxxx Disclosure Letter are, and have been
at all times, properly classified as partnerships for federal income tax
purposes and have not been classified as publicly-traded partnerships for
federal income tax purposes.
5.11 BOOKS AND RECORDS.
(a) The books of account and other financial records of Xxxxxx
and each of the Xxxxxx Subsidiaries are true, complete and correct in all
material respects, have been maintained in accordance with good business
practices, and are accurately reflected in all material respects in the
financial statements included in the Xxxxxx SEC Reports.
(b) The minute books and other records of Xxxxxx and each of
the Xxxxxx Subsidiaries have been, or will be prior to the Closing, made
available to Buyer, contain in all material respects accurate records of all
meetings and accurately reflect in all material respects all other corporate
action of the stockholders and directors and any committees of the Board of
Directors of Xxxxxx and each of the Xxxxxx Subsidiaries and all actions of the
partners of each of the Xxxxxx Subsidiaries.
5.12 PROPERTIES. All of the real estate properties owned by Xxxxxx and
each of the Xxxxxx Subsidiaries (the "Xxxxxx Properties") are set forth in
Section 5.12 of the Xxxxxx Disclosure Letter. Xxxxxx has made available to Buyer
for inspection the title reports ("Title Reports") and surveys ("Surveys")
relating to the Xxxxxx Properties listed in Section 5.12 of the Xxxxxx
Disclosure Letter. Xxxxxx is not aware of any encumbrance to title to the Xxxxxx
Properties or any survey matter affecting the Xxxxxx Properties other than (i)
matters listed in the Title Reports, (ii) matters shown on the Surveys, (iii)
ordinances and regulations, including zoning ordinances and building codes,
affecting building use or occupancy, (iv) mechanics', carriers', workmen's liens
or encumbrances which are the responsibility of tenants under
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leases, or which otherwise do not have a material adverse effect on the value of
the Xxxxxx Properties as a whole, (v) the title insurance policies referred to
in the next sentence, (vi) new Leases permitted under Section 7.2(e) hereof and
(vii) matters disclosed in Section 5.12 of the Xxxxxx Disclosure Letter. Section
5.12 of the Xxxxxx Disclosure Letter sets forth all of the title insurance
policies of Xxxxxx or the applicable Xxxxxx Subsidiary relating to the Xxxxxx
Properties and such policies are, at the date hereof, in full force and effect
and no claims have been made against any such policies. To the best knowledge of
Xxxxxx (i) except as set forth in Section 5.12 of the Xxxxxx Disclosure Letter,
Xxxxxx has obtained all material certificates, permits and licenses from any
governmental authority having jurisdiction over any of the Xxxxxx Properties
which are not the responsibility of tenants and to Xxxxxx'x knowledge no tenant
has failed to obtain any such certificate, permit or license, and all
agreements, easements and other rights which are necessary to permit the lawful
use and operation of all driveways, roads and other means of egress and ingress
to and from any of the Xxxxxx Properties, have been obtained and are in full
force and effect; (ii) the Xxxxxx Properties are in full compliance with all
governmental permits, licenses and certificates except where the failure to be
in compliance would not be reasonably likely to have a Xxxxxx Material Adverse
Effect; (iii) except as set forth in Section 5.1(c) of the Xxxxxx Disclosure
Letter, no written notice of any violation of any federal, state or municipal
law, ordinance, order, regulation or requirement affecting any portion of any of
the Xxxxxx Properties has been issued by any governmental authority which has
not been remedied or cured; (iv) there are no material structural defects
relating to any of the Xxxxxx Properties, except as set forth in the reports
referred to in Section 5.12 of the Xxxxxx Disclosure Letter; (v) the building
systems of each Xxxxxx Property are in working order in all material respects,
except as set forth in the reports referred to in Section 5.12 of the Xxxxxx
Disclosure Letter; (vi) except as set forth in Section 5.12 of the Xxxxxx
Disclosure Letter, there is no physical damage to any Xxxxxx Property in excess
of $50,000 for which there is no insurance in effect covering the full cost of
the restoration; or (vii) except as set forth in Section 5.12 of the Xxxxxx
Disclosure Letter, there is no current renovation or restoration or tenant
improvements to any Xxxxxx Property or any portion thereof, the cost of which
exceeds $50,000 individually. Except as disclosed in Section 5.1(c) of the
Xxxxxx Disclosure Letter, the use and occupancy of each of the Xxxxxx Properties
complies in all material respects with all applicable codes and zoning laws and
regulations, and Xxxxxx has no knowledge of any pending or threatened proceeding
or action that will in any manner affect the size of, use of, improvements on,
construction on, or access to any of the Xxxxxx Properties, with such exceptions
as are not material and do not interfere with the use made and proposed to be
made of such Xxxxxx Properties. Neither Xxxxxx nor any of the Xxxxxx
Subsidiaries has received any written notice to the effect that (A) any
betterment assessments have been levied against, or any condemnation or rezoning
proceedings are pending or threatened with respect to any of the Xxxxxx
Properties except as set forth in the Title Reports referred to in Section 5.12
of the Xxxxxx Disclosure Letter, or (B) any zoning, building or similar law,
code, ordinance, order or regulation is or will be violated by the continued
maintenance, operation or use of any buildings or other improvements on any of
the Xxxxxx Properties or by the continued maintenance, operation or use of the
parking areas except as set forth in Section 5.1(c) of the Xxxxxx Disclosure
Letter.
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5.13 ENVIRONMENTAL MATTERS. Except as set forth in Section 5.13 of the
Xxxxxx Disclosure Letter and any environmental assessment or report listed
therein, to the best of Xxxxxx'x actual knowledge: (i) no Hazardous Substances
or Hazardous Wastes have been or are being released into the environment,
discharged into the environment or disposed of from, at, on or under the Xxxxxx
Properties; (ii) no Hazardous Substances or Hazardous Wastes have been or are
being generated or treated at the Xxxxxx Properties or discharged from the
Xxxxxx Properties, except in compliance in all material respects with applicable
Laws (defined below); (iii) no Hazardous Wastes have been or are being stored
for more than 90 days or handled at or on the Xxxxxx Properties, except in
compliance in all material respects with applicable Laws; (iv) none of the
Xxxxxx Properties are listed on, and Xxxxxx has not received written or oral
notice that any of the Xxxxxx Properties are being considered for inclusion on,
the National Priorities List ("NPL"), the Comprehensive Environmental Response,
Compensation and Liability Information System ("CERCLIS"), or any State or local
listing of sites which are known or suspected to be contaminated by Hazardous
Substances or Hazardous Wastes; (v) there are no on-going violations of any
Federal, State or local law, statute, ordinance, rule or regulation ("Law") at
any Xxxxxx Properties which could result in contamination of the land, surface
water or groundwater from, at, on or under any such properties; and (vi) no
Federal, State or local governmental board, body, department or agency
(collectively "Government Agency") is investigating or has provided written
notice that it is considering investigating any alleged or potential release,
discharge, disposal or storage of Hazardous Substances or Hazardous Wastes at,
on, under or from any Xxxxxx Properties.
Except as disclosed in Section 5.13 of the Xxxxxx Disclosure Letter,
with respect to properties previously owned, leased or in the possession of
Xxxxxx or Xxxxxx Subsidiaries ("Xxxxxx Previous Properties"), Xxxxxx has no
actual knowledge that any of the activities or conditions described in clauses
(i), (ii) or (iii) as not having taken place or existed at the Xxxxxx
Properties, took place or existed at the Xxxxxx Previous Properties during the
period when Xxxxxx or the Xxxxxx Subsidiaries owned, leased or possessed the
properties. In addition, Xxxxxx has no actual knowledge that any of the Xxxxxx
Previous Properties are listed or are being considered for listing on any of the
lists described in clause (iv) or are being investigated or considered for
investigation as described in clause (vi).
As used in this Agreement, the term "Hazardous Substance" shall mean
any hazardous or toxic chemical, waste, byproduct, pollutant, contaminant,
compound, product or substance, including without limitation, asbestos,
polychlorinated biphenyls, petroleum (including crude oil or any fraction
thereof), radioactive substances and any material the manufacture, possession,
presence, use, generation, storage, transportation, treatment, release,
disposal, discharge, abatement, cleanup, removal, remediation or handling of
which is prohibited, controlled or regulated by any Government Agency pursuant
to any Law relating to protection of the environment or human health. The term
"Hazardous Waste" shall have the meaning set forth in the Resource Conservation
and Recovery Act, as amended, the regulations thereunder, and any similar or
implementing State or local law, statute, ordinance, rule or regulation.
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Except as disclosed in Section 5.13 of the Xxxxxx Disclosure Letter, to
the best knowledge of Xxxxxx after due inquiry, neither Xxxxxx nor any Xxxxxx
Subsidiary has received any written notice from any Government Agency with
respect to alleged or potential liability relating in any way to Hazardous
Substances or Hazardous Wastes at, on, under or from any Xxxxxx Property or
Xxxxxx Previous Properties.
5.14 NO BROKERS. Neither Xxxxxx nor any of the Xxxxxx Subsidiaries has
entered into any contract, arrangement or understanding with any person or firm
which may result in the obligation of such entity or Buyer to pay any finder's
fees, brokerage or agent's commissions or other like payments in connection with
the negotiations leading to this Agreement or the consummation of the
transactions contemplated hereby, except that Xxxxxx has retained Xxxxxx Xxxxxxx
& Co. Incorporated ("Xxxxxx Xxxxxxx") to act as its financial advisor in
connection with the transactions contemplated by this Agreement. Other than
Buyer's arrangement with PaineWebber Incorporated ("PaineWebber"), Xxxxxx is not
aware of any claim for payment of any finder's fees, brokerage or agent's
commissions or other like payments in connection with the negotiations leading
to this Agreement or the consummation of the transactions contemplated hereby.
5.15 OPINION OF FINANCIAL ADVISOR. Xxxxxx has received the opinion of
Xxxxxx Xxxxxxx, to the effect that, as of the date hereof, the Stock
Consideration is fair to the holders of Xxxxxx Stock from a financial point of
view, and has delivered a true and correct copy of such opinion to Buyer.
5.16 RELATED PARTY TRANSACTIONS. Set forth in Section 5.16 of the
Xxxxxx Disclosure Letter is a list of all arrangements, agreements and contracts
entered into by Xxxxxx or any of the Xxxxxx Subsidiaries (which are or will be
in effect as of or after the date of this Agreement) with (i) any consultant
(excluding legal counsel, accountants and financial advisors) involving payments
in excess of $50,000 and which may not be terminated within 90 days by Xxxxxx or
the Xxxxxx Subsidiary which is a party thereto, (ii) any person who is an
officer, director or affiliate of Xxxxxx or any of the Xxxxxx Subsidiaries, any
relative of any of the foregoing or any entity of which any of the foregoing is
an affiliate or (iii) any person who acquired Xxxxxx Stock in a private
placement. All such documents are listed in Section 5.16 of the Xxxxxx
Disclosure Letter and the copies of such documents, which have previously been
provided or made available to Buyer and its counsel, are true and correct
copies.
5.17 CONTRACTS AND COMMITMENTS. Section 5.17 of the Xxxxxx Disclosure
Letter sets forth (i) all notes, debentures, bonds and other evidence of
indebtedness which are secured or collateralized by mortgages, deeds of trust or
other security interests in the Xxxxxx Properties or personal property of Xxxxxx
and each of the Xxxxxx Subsidiaries and (ii) each Commitment entered into by
Xxxxxx or any of the Xxxxxx Subsidiaries which may result in total payments by
or liability of Xxxxxx or any Xxxxxx Subsidiary in excess of $50,000 and which
may not be terminated within 90 days by Xxxxxx or the Xxxxxx Subsidiary which is
a party thereto. Copies of the foregoing are listed in Section 5.17 of the
Xxxxxx Disclosure Letter and the copies of such documents, which have previously
been provided or made available to Buyer
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and its counsel, are true and correct. None of Xxxxxx or any of the Xxxxxx
Subsidiaries has received any written notice of a default that has not been
cured under any of the documents described in clause (i) above or is in default
respecting any payment obligations thereunder beyond any applicable grace
periods except where such default would not have a Xxxxxx Material Adverse
Effect. To the best knowledge of Xxxxxx, neither Xxxxxx nor any of the Xxxxxx
Subsidiaries is in default with respect to any obligations, which individually
or in the aggregate are material, under any joint venture agreements to which
Xxxxxx or any of the Xxxxxx Subsidiaries is a party.
5.18 DEFINITION OF XXXXXX'X KNOWLEDGE. As used in this Agreement, the
phrase "to the knowledge of Xxxxxx" or "to the best knowledge of Xxxxxx" or any
similar phrase means the actual, not the constructive or imputed, knowledge of
Xxxx Xxxxx, Xxxxxx X. Xxxxxxx and Xxxxxx xx Xxxxx without any obligation on any
of their parts to make any independent investigation of the matters being
represented and warranted, or to make any inquiry of any other persons, or to
search or examine any files, records, books, correspondence and the like.
ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF BUYER
Except as set forth in the disclosure letter delivered at or prior to
the execution hereof to Xxxxxx, which shall refer to the relevant Sections of
this Agreement (the "Buyer Disclosure Letter"), Buyer represents and warrants to
Xxxxxx as follows:
6.1 EXISTENCE; GOOD STANDING; AUTHORITY; COMPLIANCE WITH LAW.
(a) Buyer is a REIT duly formed, validly existing and in good
standing under the laws of the State of Maryland. Buyer is duly licensed or
qualified to do business as a foreign corporation and is in good standing under
the laws of any other state of the United States in which the character of the
properties owned or leased by it therein or in which the transaction of its
business makes such qualification necessary, except where the failure to be so
licensed or qualified would not have a material adverse effect on the business,
results of operations or financial condition of Buyer and the Buyer Subsidiaries
(as defined below) taken as a whole (a "Buyer Material Adverse Effect"). Buyer
has all requisite corporate power and authority to own, operate, lease and
encumber its properties and carry on its business as now conducted.
(b) Each of the Buyer Subsidiaries is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization, has the corporate power and
authority to own its properties and to carry on its business as it is now being
conducted, and is duly qualified to do business and is in good standing in each
jurisdiction in which the ownership of its property or the conduct of its
business requires such qualification, except for jurisdictions in which such
failure to be so qualified or to be in good standing would not have a Buyer
Material Adverse Effect.
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(c) To the best knowledge of Buyer, neither Buyer nor any
Buyer Subsidiary is in violation of any order of any court, governmental
authority or arbitration board or tribunal, or any law, ordinance, governmental
rule or regulation to which Buyer or any Buyer Subsidiary or any of their
respective properties or assets is subject, where such violation would have a
Buyer Material Adverse Effect.
(d) Copies of the Declaration of Trust or other charter
documents and Trustees Regulations (and all amendments thereto) of Buyer and
each of the Buyer Subsidiaries are listed in Section 6.1 of the Buyer Disclosure
Letter, and the copies of such documents, which have previously been delivered
or made available to Xxxxxx or its counsel, are true and correct copies. For
purposes of this Agreement, the term "Buyer Subsidiary" shall include any of the
entities set forth under such heading in Section 6.4 of the Buyer Disclosure
Letter.
(e) Neither Buyer nor any of the Buyer Subsidiaries is an
"interested stockholder" of Xxxxxx for purposes of Section 203(c)(5) of the
DGCL.
6.2 AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS. Buyer has the
requisite corporate power and authority to enter into the transactions
contemplated hereby and to execute and deliver this Agreement. The Board of
Trustees of Buyer has, by resolutions adopted by unanimous vote, approved this
Agreement, the Merger and the other transactions contemplated by this Agreement
and has agreed to recommend that the holders of Buyer Stock adopt and approve
this Agreement, the Merger, and the transactions contemplated by this Agreement
at the Buyer stockholders' meeting which will be held in accordance with the
provisions of Section 7.3 hereof. In connection with the foregoing, the Board of
Trustees of Buyer has taken such actions and votes as are necessary on its part
to render the provisions of the Control Share Acquisition Statute, the Business
Combination Statute and all other applicable takeover statutes of the MGCL and
any other applicable takeover statutes of any state, inapplicable to this
Agreement, the Merger, and the transactions contemplated by this Agreement. As
of the date hereof, all of the trustees and executive officers of Buyer have
indicated that they presently intend to vote all shares of Buyer Stock which
they own to approve this Agreement, the Merger, and the transactions
contemplated by this Agreement at the Buyer stockholders meeting which will be
held in accordance with the provisions of Section 7.3. Subject only to the
approval of this Agreement and the transactions contemplated hereby by the
holders of a majority of the outstanding shares of Buyer Stock, the execution by
Buyer of this Agreement, and the consummation of the transactions contemplated
by this Agreement have been duly authorized by all requisite corporate action on
the part of Buyer. This Agreement constitutes the valid and legally binding
obligations of Buyer, enforceable against Buyer in accordance with its terms,
subject to applicable bankruptcy, insolvency, moratorium or other similar laws
relating to creditors' rights and general principles of equity.
6.3 CAPITALIZATION. The authorized capital stock of Buyer consists of
10,000,000 shares of Buyer Stock. As of the date hereof, there are 4,231,656
shares of Buyer Stock issued and outstanding. All such issued and outstanding
shares of Buyer Stock are duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights. Buyer has
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no outstanding bonds, debentures, notes or other obligations the holders of
which have the right to vote (or which are convertible into or exercisable for
securities having the right to vote) with the stockholders of Buyer on any
matter. There are not at the date of this Agreement any existing options,
warrants, calls, subscriptions, convertible securities, or other rights,
agreements or commitments which obligate Buyer to issue, transfer or sell any
shares of Buyer Stock, other than the issuance by Buyer of up to 222,750 shares
of Buyer Stock upon the exercise of stock options issued pursuant to Buyer's
stock option plans. There are no agreements or understandings to which Buyer or
any Buyer Subsidiary is a party with respect to the voting of any shares of
Buyer Stock or which restrict the transfer of any such shares, nor does Buyer
have knowledge of any such agreements or understandings with respect to the
voting of any such shares or which restrict the transfer of such shares.
6.4 SUBSIDIARIES. Buyer owns all of the outstanding shares of capital
stock of each of the Buyer Subsidiaries. All of the outstanding shares of
capital stock of each of the Buyer Subsidiaries are duly authorized, validly
issued, fully paid and nonassessable, and are owned, by Buyer free and clear of
all liens, pledges, security interests, claims or other encumbrances. The
following information for each Buyer Subsidiary as of February 12, 1996 is set
forth in Section 6.4 of the Buyer Disclosure Letter: (i) its name and
jurisdiction of incorporation or organization and (ii) its authorized capital
stock.
6.5 OTHER INTERESTS. Except for interests in the Buyer Subsidiaries,
neither Buyer nor any Buyer Subsidiary owns directly or indirectly any interest
or investment (whether equity or debt) in any corporation, partnership, joint
venture, business, trust or other entity (other than investments in short-term
investment securities).
6.6 NO VIOLATION. Except as set forth in Section 6.6 of the Buyer
Disclosure Letter, neither the execution and delivery by Buyer of this Agreement
nor the consummation by Buyer of the transactions contemplated by this Agreement
in accordance with its terms will: (i) conflict with or result in a breach of
any provisions of the Declaration of Trust, Trustees Regulations, organizational
documents, partnership agreements or joint venture agreements of Buyer or any
Buyer Subsidiary; (ii) result in a breach or violation of, a default under, or
the triggering of any payment or other material obligations pursuant to, or
accelerate vesting under, any of Buyer's stock option plans, or any grant or
award under any of the foregoing; (iii) violate, or conflict with, or result in
a breach of any provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under, or result in
the termination or in a right of termination or cancellation of, or accelerate
the performance required by, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties of Buyer or any of
the Buyer Subsidiaries under, or result in being declared void, voidable, or
without further binding effect, any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, deed of trust or any license, franchise,
permit, lease, contract, agreement or other instrument, commitment or obligation
to which Buyer or any of the Buyer Subsidiaries is a party, or by which Buyer or
any of the Buyer Subsidiaries or any of their properties is bound or affected,
except for any of the foregoing matters which, individually or in the aggregate,
would not have a Buyer Material
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Adverse Effect; or (iv) other than the Regulatory Filings, require any consent,
approval or authorization of, or declaration, filing or registration with, any
governmental or regulatory authority except where the failure to obtain any such
consent, approval or authorization of, or declaration, filing or registration
with, any governmental or regulatory authority would not have a Buyer Material
Adverse Effect.
6.7 SEC DOCUMENTS. Buyer has filed all required forms, reports and
documents with the SEC since December 31, 1994 (collectively, the "Buyer SEC
Reports") all of which were prepared in accordance with the applicable
requirements of the Securities Laws. The Buyer SEC Reports were filed with the
SEC in a timely manner and constitute all forms, reports and documents required
to be filed by Buyer since December 31, 1994 under the Securities Laws. As of
their respective dates, the Buyer SEC Reports (i) complied as to form in all
material respects with the applicable requirements of the Securities Laws and
(ii) did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading. Each of the consolidated balance sheets of Buyer included in or
incorporated by reference into the Buyer SEC Reports (including the related
notes and schedules) fairly presents the consolidated financial position of
Buyer and the Buyer Subsidiaries as of its date and each of the consolidated
statements of income, retained earnings and cash flows of Buyer included in or
incorporated by reference into the Buyer SEC Reports (including any related
notes and schedules) fairly presents the results of operations, retained
earnings or cash flows, as the case may be, of Buyer and the Buyer Subsidiaries
for the periods set forth therein (subject, in the case of unaudited statements,
to normal year-end audit adjustments which would not be material in amount or
effect), in each case in accordance with generally accepted accounting
principles consistently applied during the periods involved, except as may be
noted therein and except, in the case of the unaudited statements, as permitted
by Form 10-Q pursuant to Section 13 or 15(d) of the Exchange Act.
6.8 LITIGATION. Except as set forth in Section 6.8 of the Buyer
Disclosure Letter, there are (i) no continuing orders, injunctions or decrees of
any court, arbitrator or governmental authority to which Buyer or any Buyer
Subsidiary is a party or by which any of its properties or assets are bound, or,
to the reasonable best knowledge of Buyer, to which any person who is now, or
has been at any time prior to the date hereof, a director, officer, employee or
agent of Buyer or any Buyer Subsidiary acting in such capacity is a party, and
(ii) no actions, suits or proceedings pending against Buyer or any Buyer
Subsidiary or, to the reasonable best knowledge of Buyer, threatened against
Buyer or any Buyer Subsidiary or against any person who is now, or has been at
any time prior to the date hereof, a director, officer, employee or agent of
Buyer or any Buyer Subsidiary acting in such capacity, at law or in equity, or
before or by any federal or state commission, board, bureau, agency or
instrumentality, that in the case of clause (i) or (ii) are reasonably likely,
individually or in the aggregate, to have a Buyer Material Adverse Effect. There
are no written, nor to Buyer's knowledge threatened, claims made against Buyer
or any Buyer Subsidiary by any existing or
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former joint venture partner or other partner of Buyer or any Buyer Subsidiary
that are reasonably likely, individually or in the aggregate, to have a Buyer
Material Adverse Effect.
6.9 ABSENCE OF CERTAIN CHANGES. Except as disclosed in the Buyer SEC
Reports filed with the SEC prior to the date hereof, since December 31, 1994,
Buyer and the Buyer Subsidiaries have conducted their business only in the
ordinary course of such business and there has not been (i) any Buyer Material
Adverse Effect; (ii) as of the date hereof, any declaration, setting aside or
payment of any dividend or other distribution with respect to the Buyer Stock,
except dividends of $0.45 per share paid on March 31, 1995 and June 30, 1995,
and $0.47 per share paid on September 29, 1995 and December 29, 1995; or (iii)
any material change in Buyer's accounting principles, practices or methods.
6.10 TAXES. Except as set forth in Section 6.10 of the Buyer
Disclosure Letter:
(a) Buyer and each of the Buyer Subsidiaries has paid,
caused to be paid or accrued all Taxes required to be paid or accrued by it
through the date hereof;
(b) Buyer and each of the Buyer Subsidiaries has timely filed
all federal, state, local and foreign tax returns required to be filed by any of
them through the date hereof, and all such returns completely and accurately set
forth the amount of any Taxes relating to the applicable period;
(c) Buyer and each Buyer Subsidiary has withheld and paid all
taxes required to have been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor, stockholder or other
party;
(d) For its taxable year ended December 31, 1994 and at all
times thereafter up to and including the date hereof, Buyer has qualified to be
treated as a REIT within the meaning of Sections 856-860 of the Code, including,
without limitation, the requirements of Sections 856 and 857 of the Code. Buyer
has qualified as a REIT for every taxable year in which it existed. For the
periods described in the preceding sentence, Buyer has met all requirements
necessary to be treated as a REIT for purposes of the income tax provisions of
those states in which Buyer is subject to income tax and which provide for the
taxation of a REIT in a manner similar to the treatment of REITs under Sections
856-860 of the Code;
(e) Neither the IRS nor any governmental authority is now
asserting by written notice to Buyer or any Buyer Subsidiary or, to the
knowledge of Buyer, threatening to assert against Buyer or any Buyer Subsidiary
any deficiency or claim for additional Taxes. There is no dispute or claim
concerning any tax liability of Buyer or any Buyer Subsidiary either claimed or
raised in writing by the IRS. There is no dispute or claim concerning any tax
liability of a material nature of Buyer or any Buyer Subsidiary either claimed
or raised in writing by any other governmental authority, or, to the knowledge
of Buyer, which may be claimed or raised by any federal or state governmental
authority. No written claim has ever been made by a taxing authority in a
jurisdiction where Buyer does not file reports and returns
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that Buyer is or may be subject to taxation by that jurisdiction. To the
knowledge of Buyer, there are no security interests on any of the assets of
Buyer or any Buyer Subsidiary that arose in connection with any failure (or
alleged failure) to pay any Taxes when due. Buyer has never entered into a
closing agreement pursuant to Section 7121 of the Code;
(f) Buyer has not received written notice of any audit of any
tax return filed by Buyer, and Buyer has not been notified in writing by any tax
authority that any such audit is contemplated or pending. Neither Buyer nor any
of the Buyer Subsidiaries has executed or filed with the IRS or any other taxing
authority any agreement now in effect extending the period for assessment or
collection of any income or other Taxes, and no extension of time with respect
to any date on which a tax return was or is to be filed by Buyer is in force.
True, correct and complete copies of all federal, state and local income or
franchise tax returns filed by Buyer and each of the Buyer Subsidiaries and all
written communications relating thereto have been delivered to Xxxxxx or made
available to representatives of Xxxxxx; and
(g) Each of the Buyer Subsidiaries of which all the
outstanding capital stock is owned solely by Buyer is a Qualified REIT
Subsidiary as defined in Section 856(i) of the Code. The Buyer Subsidiaries
listed as partnerships in Section 6.4 of the Buyer Disclosure Letter are, and
have been at all times, properly classified as partnerships for federal income
tax purposes and have not been classified as publicly-traded partnerships for
federal income tax purposes.
6.11 BOOKS AND RECORDS.
(a) The books of account and other financial records of Buyer
and each of the Buyer Subsidiaries are true, complete and correct in all
material respects, have been maintained in accordance with good business
practices, and are accurately reflected in all material respects in the
financial statements included in the Buyer SEC Reports.
(b) The minute books and other records of Buyer and each of
the Buyer Subsidiaries have been made available to Xxxxxx, contain in all
material respects accurate records of all meetings and accurately reflect in all
material respects all other corporate action of the shareholders and directors
and any committees of the Board of Directors of Buyer and each of the Buyer
Subsidiaries.
6.12 PROPERTIES. All of the real estate properties owned by Buyer and
each of the Buyer Subsidiaries (the "Buyer Properties") are set forth in Section
6.12 of the Buyer Disclosure Letter. Buyer has made available to Xxxxxx for
inspection the title reports ("Buyer Title Reports") and surveys ("Buyer
Surveys") relating to the Buyer Properties listed in Section 6.12 of the Buyer
Disclosure Letter. Buyer is not aware of any encumbrance to title to the Buyer
Properties or any survey matter affecting the Buyer Properties other than (i)
matters listed in the Buyer Title Reports, (ii) matters shown on the Buyer
Surveys, (iii) ordinances and regulations, including zoning ordinances and
building codes, affecting building use or occupancy, (iv) mechanics', carriers',
workmen's liens or encumbrances which are the
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responsibility of tenants under leases, or which otherwise do not have a
material adverse effect on the value of the Buyer Properties as a whole and (v)
the title insurance policies referred to in the next sentence. Section 6.12 of
the Buyer Disclosure Letter sets forth all of the title insurance policies of
Buyer or the applicable Buyer Subsidiary relating to the Buyer Properties and
such policies are, at the date hereof, in full force and effect and no claims
have been made against any such policies. Except as set forth in Section 6.12 of
the Buyer Disclosure Letter, to the best knowledge of Buyer (i) Buyer has
obtained all material certificates, permits and licenses from any governmental
authority having jurisdiction over any of the Buyer Properties which are not the
responsibility of tenants and to Buyer's knowledge no tenant has failed to
obtain any such certificate, permit or license, and all agreements, easements
and other rights which are necessary to permit the lawful use and operation of
all driveways, roads and other means of egress and ingress to and from any of
the Buyer Properties have been obtained and are in full force and effect; (ii)
the Buyer Properties are in full compliance with all governmental permits,
licenses and certificates except where the failure to be in compliance would not
be reasonably likely to have a Buyer Material Adverse Effect; (iii) no written
notice of any violation of any federal, state or municipal law, ordinance,
order, regulation or requirement affecting any portion of any of the Buyer
Properties has been issued by any governmental authority which has not been
remedied or cured; (iv) there are no material structural defects relating to any
of the Buyer Properties; (v) the building systems of each Buyer Property are in
working order in all material respects; (vi) there is no physical damage to any
Buyer Property in excess of $50,000 for which there is no insurance in effect
covering the full cost of the restoration; or (vii) there is no current
renovation or restoration or tenant improvements to any Buyer Property or any
portion thereof, the cost of which exceeds $50,000 individually. Except as
disclosed in Section 6.12 of the Buyer Disclosure Letter, the use and occupancy
of each of the Buyer Properties complies in all material respects with all
applicable codes and zoning laws and regulations, and Buyer has no knowledge of
any pending or threatened proceeding or action that will in any manner affect
the size of, use of, improvements on, construction on, or access to any of the
Buyer Properties, with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such Buyer Properties. Neither
Buyer nor any of the Buyer Subsidiaries has received any written notice to the
effect that (A) any betterment assessments have been levied against, or any
condemnation or rezoning proceedings are pending or threatened with respect to
any of the Buyer Properties, or (B) any zoning, building or similar law, code,
ordinance, order or regulation is or will be violated by the continued
maintenance, operation or use of any buildings or other improvements on any of
the Buyer Properties or by the continued maintenance, operation or use of the
parking areas.
6.13 ENVIRONMENTAL MATTERS. Except as set forth in Section 6.13 of the
Buyer Disclosure Letter and any environmental assessment or report listed
therein, to the best of Buyer's actual knowledge: (i) no Hazardous Substances or
Hazardous Wastes have been or are being released into the environment,
discharged into the environment or disposed of from, at, on or under the Buyer
Properties; (ii) no Hazardous Substances or Hazardous Wastes have been or are
being generated or treated at the Buyer Properties or discharged from the Buyer
Properties, except in compliance in all material respects with applicable Laws;
(iii) no
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Hazardous Wastes have been or are being stored for more than 90 days or handled
at or on the Buyer Properties, except in compliance in all material respects
with applicable Laws; (iv) none of the Buyer Properties are listed on, and Buyer
has not received written or oral notice that any of the Buyer Properties are
being considered for inclusion on, NPL, CERCLIS, or any State or local listing
of sites which are known or suspected to be contaminated by Hazardous Substances
or Hazardous Wastes; (v) there are no on-going violations of any Law at any
Buyer Properties which could result in contamination of the land, surface water
or groundwater from, at, on or under any such properties; and (vi) no Government
Agency is investigating or has provided written notice that it is considering
investigating any alleged or potential release, discharge, disposal or storage
of Hazardous Substances or Hazardous Wastes at, on, under or from any Buyer
Properties.
With respect to properties previously owned, leased or in the
possession of Buyer or Buyer Subsidiaries ("Buyer Previous Properties"), Buyer
has no actual knowledge that any of the activities or conditions described in
clauses (i), (ii) or (iii) as not having taken place or existed at the Buyer
Properties took place or existed at the Buyer Previous Properties during the
period when Buyer or the Buyer Subsidiaries owned, leased or possessed the
properties. In addition, Buyer has no actual knowledge that any of the Buyer
Previous Properties are listed or are being considered for listing on any of the
lists described in clause (iv) or are being investigated or considered for
investigation as described in clause (vi).
Except as disclosed in Section 6.13 of the Buyer Disclosure Letter, to
the best knowledge of Buyer after due inquiry, neither Buyer nor any Buyer
Subsidiary has received any written notice from any Government Agency with
respect to alleged or potential liability relating in any way to Hazardous
Substances or Hazardous Wastes at, on, under or from any Buyer Property or Buyer
Previous Properties.
6.14 NO BROKERS. Neither Buyer nor any of the Buyer Subsidiaries has
entered into any contract, arrangement or understanding with any person or firm
which may result in the obligation of such entity or Xxxxxx to pay any finder's
fees, brokerage or agent's commissions or other like payments in connection with
the negotiations leading to this Agreement or the consummation of the
transactions contemplated hereby, except that Buyer has retained PaineWebber as
its financial advisor, the arrangements with which have been disclosed in
writing to Xxxxxx prior to the date hereof. Other than the foregoing
arrangements and Xxxxxx'x arrangements set forth in Section 5.14, Buyer is not
aware of any claim for payment of any finder's fees, brokerage or agent's
commissions or other like payments in connection with the negotiations leading
to this Agreement or the consummation of the transactions contemplated hereby.
6.15 OPINION OF FINANCIAL ADVISOR. Buyer has received the opinion of
PaineWebber to the effect that, as of the date hereof, the Stock Consideration
is fair to the holders of Buyer Stock from a financial point of view, and has
delivered a true and correct copy of such opinion to Xxxxxx.
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6.16 XXXXXX STOCK OWNERSHIP. Except as set forth in Section 6.16 of the
Buyer Disclosure Letter, neither Buyer nor any of the Buyer Subsidiaries owns
any shares of capital stock of Xxxxxx or other securities convertible into
capital stock of Xxxxxx.
6.17 RELATED PARTY TRANSACTIONS. Set forth in Section 6.17 of the Buyer
Disclosure Letter is a list of all arrangements, agreements and contracts
entered into by Buyer or any of the Buyer Subsidiaries (which are or will be in
effect as of or after the date of this Agreement) with (i) any consultant
(excluding legal counsel, accountants and financial advisors) involving payments
in excess of $50,000 and which may not be terminated within 90 days by Buyer,
(ii) any person who is an officer, director or affiliate of Buyer or any of the
Buyer Subsidiaries, any relative of any of the foregoing or any entity of which
any of the foregoing is an affiliate or (iii) any person who acquired Buyer
Stock in a private placement. All such documents are listed in Section 6.17 of
the Buyer Disclosure Letter and the copies of such documents, which have
previously been provided or made available to Xxxxxx and its counsel, are true
and correct.
6.18 CONTRACTS AND COMMITMENTS. Section 6.18 of the Buyer Disclosure
Letter sets forth (i) all notes, debentures, bonds and other evidence of
indebtedness which are secured or collateralized by mortgages, deeds of trust or
other security interests in the Buyer Properties or personal property of Buyer
and each of the Buyer Subsidiaries and (ii) each Commitment entered into by
Buyer or any of the Buyer Subsidiaries which may result in total payments or
liability in excess of $50,000 and which may not be terminated within 90 days by
Buyer or the Buyer Subsidiary which is a party thereto. Copies of the foregoing
are listed in Section 6.18 of the Buyer Disclosure Letter and the copies of such
documents, which have previously been provided or made available to Xxxxxx and
its counsel, are true and correct copies. None of Buyer or any of the Buyer
Subsidiaries has received any written notice of a default that has not been
cured under any of the documents described in clause (i) above or is in default
respecting any payment obligations thereunder beyond any applicable grace
periods, except where such default would not have a Buyer Material Adverse
Effect. To the best knowledge of Buyer, neither Buyer nor any of the Buyer
Subsidiaries is in default with respect to any obligations, which individually
or in the aggregate are material, under any joint venture agreements to which
Buyer or any of the Buyer Subsidiaries is a party.
6.19 BUYER STOCK. The issuance and delivery by Buyer of shares of Buyer
Stock in connection with the Merger and this Agreement have been duly and
validly authorized by all necessary corporate action on the part of Buyer except
for the approval of its stockholders contemplated by this Agreement. The shares
of Buyer Stock to be issued in connection with the Merger and this Agreement,
when issued in accordance with the terms of this Agreement, will be validly
issued, fully paid, nonassessable and free of preemptive rights.
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6.20 CONVERTIBLE SECURITIES. Buyer has no outstanding options, warrants
or other securities exercisable for, or convertible into, shares of Buyer Stock,
the terms of which would require any anti-dilution adjustments by reason of the
consummation of the transactions contemplated hereby.
6.21 DEFINITION OF BUYER'S KNOWLEDGE. As used in this Agreement, the
phrase "to the knowledge of Buyer" or "to the best knowledge of Buyer" or any
similar phrase shall mean the actual, not constructive or imputed, knowledge of
Xxxxxx X. Speed, Xxxxx X. Xxxxxx XX and N. Xxxxx XxXxx without any obligation on
any of their parts to make any independent investigation of the matters being
represented and warranted, or to make any inquiry of any other persons, or to
search or examine any files, records, books, correspondence and the like.
ARTICLE 7. COVENANTS
7.1 ACQUISITION PROPOSALS.
(a) Unless and until this Agreement shall have been terminated
in accordance with its terms, Xxxxxx agrees and covenants that (A) neither it
nor any Xxxxxx Subsidiary shall, and each of them shall direct and use its best
efforts to cause its respective officers, directors, employees, agents and
representatives (including, without limitation, any investment banker, attorney
or accountant retained by it or any of the Xxxxxx Subsidiaries) not to, directly
or indirectly, initiate, solicit or knowingly encourage any inquiries or the
making or implementation of any proposal or offer (including, without
limitation, any proposal or offer to its stockholders) with respect to a merger,
acquisition, tender offer, exchange offer, consolidation or similar transaction
involving, or any purchase (except as permitted under Section 7.2 hereof) of 10%
or more of the assets, any equity securities or partnership interests of Xxxxxx
or any Xxxxxx Subsidiary, other than the transactions contemplated by this
Agreement (any such proposal or offer being hereinafter referred to as an
"Acquisition Proposal") or engage in any negotiations concerning, or provide any
confidential information or data to, or have any discussions with, any person
relating to an Acquisition Proposal, or otherwise facilitate any effort or
attempt to make or implement an Acquisition Proposal; (B) Xxxxxx will
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing and will take the necessary steps to inform the
individuals or entities referred to above of the obligations undertaken in this
Section 7.1; and (C) Xxxxxx will notify Buyer immediately if any such inquiries
or proposals are received by, any such information is requested from, or any
such negotiations or discussions are sought to be initiated or continued with,
Xxxxxx.
(b) Notwithstanding anything set forth in this Agreement to
the contrary (i) the Board of Directors of Xxxxxx may furnish information to or
enter into discussions or negotiations with any person or entity that makes an
unsolicited bona fide Acquisition Proposal, if, and only to the extent that, the
Board of Directors of Xxxxxx, after consultation
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with and based upon the advice of Xxxxxxx Procter & Hoar, Hale and Xxxx or
another nationally recognized law firm selected by the Board of Directors of
Xxxxxx, determines in good faith that such action is required for the Board of
Directors to comply with its fiduciary duties to stockholders under applicable
law, PROVIDED that prior to furnishing such information to, or entering into
discussions or negotiations with, such person or entity, Xxxxxx provides written
notice to Buyer to the effect that it is furnishing information to, or entering
into discussions or negotiations with, such person or entity, and Xxxxxx keeps
Buyer informed of the status of any such discussions or negotiations, (ii) the
Board of Directors of Xxxxxx may, to the extent applicable, comply with Rules
14d-9 and 14e-2 promulgated under the Exchange Act with regard to an Acquisition
Proposal, and (iii) Xxxxxx may furnish information to, enter into discussions or
negotiations with, execute an agreement with, or consummate transactions
concerning (w) Bermant (including, without limitation, the Bermant/UBC
Agreement) in connection with the sale of the UBC Interest, (x) Summer Hill,
Ltd. and its affiliates, successors and assigns in connection with that certain
purchase option of Summer Hill, Ltd. described in Section 7.2 of the Xxxxxx
Disclosure Letter (the "Summer Hill Option"), and (y) Xxxx and Xxxxxx Xxxxxx, in
connection with the exchange of tenancy-in-common interests affecting certain
property of the Company described in Section 5.9 of the Xxxxxx Disclosure
Letter.
7.2 CONDUCT OF BUSINESSES.
(a) Prior to the Effective Time, except as specifically
permitted by this Agreement, unless the other party has consented in writing
thereto, Buyer and Xxxxxx:
(i) Shall use their reasonable best efforts,
and shall cause each of their respective Subsidiaries to use their reasonable
best efforts, to preserve intact their business organizations and goodwill and
keep available the services of their respective officers and employees;
(ii) Shall confer on a regular basis with one or
more representatives of the other to report operational matters of materiality
and, subject to Section 7.1, any proposals to engage in material transactions;
(iii) Shall promptly notify the other of any
material emergency or other material change in the condition (financial or
otherwise), business, properties, assets, liabilities, prospects or the normal
course of their businesses or in the operation of their properties, any
material governmental complaints, investigations or hearings (or communications
indicating that the same may be contemplated), or the breach in any material
respect of any representation or warranty contained herein; and
(iv) Shall promptly deliver to the other true
and correct copies of any report, statement or schedule filed with the SEC
subsequent to the date of this Agreement.
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(b) Prior to the Effective Time, unless Buyer has consented
thereto (and Buyer hereby agrees to give good faith consideration to any such
request for consent by Xxxxxx and to respond to any such request within five (5)
business days and in the event no response is received by Xxxxxx by the
expiration of such five business day period, such consent shall be deemed given)
Xxxxxx:
(i) Shall, and shall cause each Xxxxxx
Subsidiary to, conduct its operations according to their usual, regular and
ordinary course in substantially the same manner as heretofore conducted,
subject to clauses (ii)-(ix) below;
(ii) Shall not, and shall cause each Xxxxxx
Subsidiary not to, acquire, enter into an option to acquire or exercise an
option or contract to acquire additional real property, incur additional
indebtedness, encumber assets or commence construction of, or enter into any
agreement or commitment to develop or construct, any other type of real estate
projects except for the transactions contemplated in the Xxxxxx Disclosure
Letter;
(iii) Shall not amend Xxxxxx'x Certificate or
its By-laws, and shall cause each Xxxxxx Subsidiary not to amend its charter,
bylaws, joint venture documents, partnership agreements or equivalent documents
except as contemplated by this Agreement or the Xxxxxx Disclosure Letter;
(iv) Shall not (A) issue any shares of its
capital stock, effect any stock split, reverse stock split, stock dividend,
recapitalization or other similar transaction, (B) grant, confer or award any
option, warrant, conversion right or other right not existing on the date
hereof to acquire any shares of its capital stock, (C) increase any
compensation or enter into or amend any employment agreement with any of its
present or future officers or directors, or (D) adopt any new employee benefit
plan (including any stock option, stock benefit or stock purchase plan) or
amend any existing employee benefit plan in any material respect, except for
changes which are less favorable to participants in such plans;
(v) Shall not, and shall not permit any of the
Xxxxxx Subsidiaries to, except in accordance with and as permitted under
Section 7.2(d) and (e) hereof or as contemplated in the Xxxxxx Disclosure
Letter, sell, lease or otherwise dispose of (A) any Xxxxxx Properties or any
portion thereof or any of the capital stock of or partnership or other
interests in any of the Xxxxxx Subsidiaries or (B) except in the ordinary
course of business, any of its other assets which are material,
individually or in the aggregate;
(vi) Shall not, and shall not permit any of the
Xxxxxx Subsidiaries to, make any loans, advances or capital contributions to,
or investments in, any other person;
(vii) Shall not, and shall not permit any of the
Xxxxxx Subsidiaries to, pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the ordinary
course of business consistent with past practice or in accordance with their
terms, of
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liabilities reflected or reserved against in, or contemplated by, the most
recent consolidated financial statements (or the notes thereto) of Xxxxxx
included in the Xxxxxx SEC Reports or incurred in the ordinary course of
business consistent with past practice;
(viii) Shall not, and shall not permit any of the
Xxxxxx Subsidiaries to, enter into any Commitment which may result in total
payments or liability by or to it in excess of $50,000 other than Commitments
for expenses of attorneys, accountants and investment bankers incurred in
connection with the Merger; and
(ix) Shall not, and shall not permit any of the
Xxxxxx Subsidiaries to, enter into any Commitment with any officer, director,
consultant or affiliate of Xxxxxx or any of the Xxxxxx Subsidiaries.
(c)(i) Prior to the Effective Time, Buyer shall not,
without the prior written consent of Xxxxxx (and Xxxxxx hereby agrees to give
good faith consideration to any such request for consent by Buyer and to
respond to any such request within five (5) business days and in the event no
response is received by Buyer by the expiration of such five business day
period, such consent shall be deemed given): (x) directly or indirectly through
a Buyer Subsidiary merge or consolidate with, or acquire all or substantially
all of the assets of, any person or entity except for LNH REIT, Inc.; (y)
incur, in one transaction or a series of transactions, an additional
$15,000,000 of indebtedness; or (z) issue any shares of its capital stock
(except in connection with Buyer's employee or trustee benefit plans), effect
any stock split, reverse stock split, stock dividend, recapitalization or other
similar transaction, or grant, confer or award any option, warrant, conversion
right or other right not existing on the date hereof to acquire any shares of
its capital stock (except in connection with Buyer's employee or trustee
benefit plans). Notwithstanding anything to the contrary in the foregoing
sentence, in connection with any potential merger or acquisition relating to
TargetCo (as such term is defined in Section 7.2 of the Buyer Disclosure
Letter), prior to Buyer entering into a definitive agreement with TargetCo,
Buyer shall first deliver written notice to Xxxxxx identifying and describing
the price and other terms of the proposed transaction (the "Notice") and,
within 15 calendar days after receiving the Notice, Xxxxxx shall consent or
withhold its consent to the transaction (which consent will not be unreasonably
withheld). In the event Xxxxxx withholds its consent to the proposed
transaction, Buyer shall be prohibited from entering into a definitive
agreement with TargetCo until after the Effective Time. In the event Xxxxxx
consents to the price and terms of the proposed transaction, Buyer shall be
permitted to enter into a definitive agreement with TargetCo to consummate the
proposed transaction but only upon (A) the price which is not less favorable to
Buyer and its stockholders than the price set forth in the Notice and (B) terms
and conditions which are not less favorable in any material respect to Buyer
and its stockholders than those described in the Notice; PROVIDED, HOWEVER,
that Buyer may not enter into such definitive agreement during the period
between the mailing of the Form S-4 to the Xxxxxx stockholders and the
Effective Time.
(ii) Except for the limitations described in
clause (i) of Section 7.2(c) above. between the date of this Agreement and the
Effective Time, Buyer and the Buyer
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Subsidiaries may enter into leases with respect to all or any portion of the
Buyer Properties, acquire, lease, enter into an option to acquire, lease or
exercise an option or contract to acquire, additional real property, incur
additional indebtedness, encumber assets or commence construction of, or enter
into any agreement or commitment to develop or construct, other real estate
projects.
(d) Notwithstanding anything to the contrary set forth in this
Agreement and without limiting any of the other rights of Xxxxxx set forth
herein, between the date hereof and the Effective Time:
(i) Xxxxxx may enter into the Bermant/UBC
Agreement or any other agreement with Bermant to convey the UBC Interest,
perform its obligations contemplated thereunder and take such other actions as
Xxxxxx deems appropriate to fulfill its obligations under the Joint Venture
Agreement;
(ii) Xxxxxx may, in the event the Summer Hill
Option is exercised on or prior to the Effective Time, convey to Summer Hill
Ltd. or its successors, assigns or nominees the real property subject to such
option (the "Option Property") in accordance with the terms thereof;
(iii) to the extent Xxxxxx conveys the UBC
Interest to Bermant or the Option Property to Summer Hill Ltd., Xxxxxx shall
distribute the net proceeds therefrom to its stockholders prior to the
Effective Time; and
(iv) Xxxxxx may declare, set aside and pay
dividends of not more than $.27 per Xxxxxx Share (except as permitted in
clause (iii) above or Section 7.16 hereof) for each full calendar quarter prior
to the Effective Time, it is currently anticipated that such dividends shall
have declaration dates, record dates and payment dates substantially
similar to those dates set forth in EXHIBIT C. Notwithstanding the foregoing, in
the event the Effective Time shall occur between the record dates set forth in
EXHIBIT C, Xxxxxx may declare, establish a record date and set aside a dividend
for the period commencing on the most recent record date and ending on the date
of the Effective Time (the "Partial Period") in an amount which equals the
quotient the numerator of which equals $.27 multiplied by the number of days
comprising such Partial Period and the denominator of which equals 90.
(e) Xxxxxx shall not, without the written consent of Buyer,
which consent may not be unreasonably withheld, (i) effect any material change
in any lease or occupancy agreement currently in effect which affects the Xxxxxx
Properties (together with such additional leases approved or permitted pursuant
to this Agreement, the "Leases"), (ii) renew or extend the term of any Lease,
unless the same is an extension or expansion permitted pursuant to the terms of
an existing Lease, or (iii) enter into any new Lease or cancel or terminate any
Lease. When seeking consent to a new or modified Lease, Xxxxxx shall provide
notice of the identity of the tenant, a term sheet, letter of intent or proposed
lease containing material business terms (including, without limitation, rent,
expense base, concessions, tenant
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improvement allowances, brokerage commissions, and expansion and extension
options) and whatever credit and background information, if any, Xxxxxx then
possesses with respect to such tenant. Buyer shall be deemed to have consented
to any proposed Lease or Lease modification if it has not responded to Xxxxxx
within five (5) business days after receipt of such information. Upon Buyer's
approval or deemed approval, Xxxxxx shall be entitled to enter into a Lease on
the standard lease form for such Property, without material change other than
changes customarily made to leases to other comparable tenants of the Property.
Buyer hereby designates Xxxxx X. Xxxxxx XX and Xxxxxxxx X. Xxxx as individuals
who will be available and authorized to grant Lease approvals. Notwithstanding
anything in this Agreement to the contrary, Xxxxxx may cancel or terminate any
Lease or commence collection, unlawful detainer or other remedial action against
any tenant without Buyer's consent upon the occurrence of a default by the
tenant under said Lease.
7.3 MEETINGS OF STOCKHOLDERS. Each of Buyer and Xxxxxx will take all
action necessary in accordance with applicable law and its Certificate of
Incorporation and Bylaws or Declaration of Trust and Trustees Regulations, as
the case may be, to convene a meeting of its stockholders as promptly as
practicable to consider and vote upon the approval of this Agreement and the
transactions contemplated hereby. The Board of Trustees of Buyer and Board of
Directors of Xxxxxx each shall recommend that its stockholders approve this
Agreement and the transactions contemplated hereby and Buyer and Xxxxxx each
shall use their reasonable best efforts to obtain such approval, including,
without limitation, by timely mailing the joint proxy statement/prospectus
contained in the Form S-4 (as defined in Section 7.7 hereof) to their respective
stockholders; PROVIDED, HOWEVER, that nothing contained in this Section 7.3
shall prohibit the Board of Trustees of Buyer or the Board of Directors of
Xxxxxx from failing to make such recommendation or using their reasonable best
efforts to obtain such approval if the Board of Trustees of Buyer or the Board
of Directors of Xxxxxx, as the case may be, has determined in good faith, after
consultation with and based upon the advice of counsel, that such action is
necessary for such Board of Trustees or Board of Directors to comply with its
fiduciary duties to its stockholders under applicable law. Buyer and Xxxxxx
shall coordinate and cooperate with respect to the timing of such meetings and
shall use their reasonable best efforts to hold such meetings on the same day.
It shall be a condition to the mailing of the Form S-4 that (i) Buyer shall have
received a "comfort" letter from Xxxxxx Xxxxxxxx LLP, independent public
accountants for Xxxxxx, dated as of a date within two business days before the
date on which the Form S-4 shall become effective, with respect to the financial
statements of Xxxxxx included or incorporated in the Form S-4, in form and
substance reasonably satisfactory to Buyer, and customary in scope and substance
for "comfort" letters delivered by independent public accountants in connection
with registration statements and proxy statements similar to the Form S-4, and
(ii) Xxxxxx shall have received a "comfort" letter from KPMG Peat Marwick, LLP,
independent public accountants for Buyer, dated as of a date within two business
days before the date on which the Form S-4 shall become effective, with respect
to the financial statements of Buyer included or incorporated in the Form S-4,
in form and substance reasonably satisfactory to Xxxxxx, and customary in scope
and substance for "comfort" letters delivered by independent public accountants
in connection with registration statements and proxy statements similar to the
Form S-4.
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7.4 FILINGS; OTHER ACTION. Subject to the terms and conditions herein
provided, Xxxxxx and Buyer shall: (a) to the extent required, promptly make
their respective filings and thereafter make any other required submissions
under the HSR Act with respect to the Merger; (b) use all reasonable best
efforts to cooperate with one another in (i) determining which filings are
required to be made prior to the Effective Time with, and which consents,
approvals, permits or authorizations are required to be obtained prior to the
Effective Time from, governmental or regulatory authorities of the United
States, the several states and foreign jurisdictions and any third parties in
connection with the execution and delivery of this Agreement, the consummation
of the transactions contemplated by this Agreement and (ii) timely making all
such filings and timely seeking all such consents, approvals, permits or
authorizations; (c) use all reasonable best efforts to obtain in writing any
consents required from third parties to effectuate the Merger, such consents to
be in reasonably satisfactory form to Xxxxxx and Buyer; and (d) use all
reasonable best efforts to take, or cause to be taken, all other actions and do,
or cause to be done, all other things necessary, proper or appropriate to
consummate and make effective the transactions contemplated by this Agreement.
If, at any time after the Effective Time, any further action is necessary or
desirable to carry out the purpose of this Agreement, the proper officers and
trustees or directors of Buyer and Xxxxxx shall take all such necessary action.
7.5 INSPECTION OF RECORDS. From the date hereof to the Effective Time,
each of Xxxxxx and Buyer shall allow all designated officers, attorneys,
accountants and other representatives of the other access at all reasonable
times to the records and files, correspondence, audits and properties, as well
as to all information relating to commitments, contracts, titles and financial
position, or otherwise pertaining to the business and affairs, of Xxxxxx and
Buyer and their respective subsidiaries.
7.6 PUBLICITY. Buyer and Xxxxxx shall consult with each other before
issuing any press release or otherwise making any public statements with respect
to this Agreement or any transaction contemplated herein and shall not issue any
such press release or make any such public statement without the prior consent
of the other party, which consent shall not be unreasonably withheld; PROVIDED,
HOWEVER, that a party may, without the prior consent of the other party, issue
such press release or make such public statement as may be required by law or
the rules of the applicable stock exchange if it has used its reasonable best
efforts to consult with the other party and to obtain such party's consent but
has been unable to do so in a timely manner.
7.7 REGISTRATION STATEMENT. Buyer and Xxxxxx shall cooperate and
promptly prepare and Buyer shall file with the SEC as soon as practicable a
Registration Statement on Form S-4 under the Securities Act, with respect to the
shares of Buyer Stock issuable in the Merger, a portion of which Form S-4 shall
also serve as the joint proxy statement with respect to the meetings of the
stockholders of Xxxxxx and of Buyer in connection with the Merger (in its
entirety, the "Form S-4"). The respective parties will cause the Form S-4 to
comply as to form in all material respects with the applicable provisions of the
Securities Act, the Exchange Act and the rules and regulations thereunder. Each
of Buyer and Xxxxxx shall furnish all
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information about itself and its business and operation and all necessary
financial information to the other as the other may reasonably request in
connection with the preparation of the Form S-4. Buyer shall use its reasonable
best efforts, and Xxxxxx will cooperate with Buyer, to have the Form S-4
declared effective by the SEC as promptly as practicable. Buyer shall use its
reasonable best efforts to obtain, prior to the effective date of the Form S-4,
all necessary state securities law or "blue sky" permits or approvals required
to carry out the transactions contemplated by this Agreement and will pay all
expenses incident thereto. Buyer agrees that the Form S-4 and each amendment or
supplement thereto at the time of mailing thereof and at the time of the
respective meetings of stockholders of Buyer and Xxxxxx, will not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; PROVIDED, HOWEVER,
that the foregoing shall not apply to the extent that any such untrue statement
of a material fact or omission to state a material fact was made by Buyer in
reliance upon and in conformity with information concerning Xxxxxx furnished to
Buyer by Xxxxxx for use in the Form S-4. Xxxxxx agrees that the information
provided by it for inclusion in the Form S-4 and each amendment or supplement
thereto, at the time of mailing thereof and at the time of the respective
meetings of stockholders of Buyer and Xxxxxx, will not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Buyer will advise and
deliver copies (if any) to Xxxxxx, promptly after it receives notice thereof, of
the time when the Form S-4 has become effective or any supplement or amendment
has been filed, the issuance of any stop order, the suspension of the
qualification of the Buyer Stock issuable in connection with the Merger for
offering or sale in any jurisdiction, or any request by the SEC for amendment of
the Form S-4 or comments thereon and responses thereto or requests by the SEC
for additional information.
7.8 LISTING APPLICATION. Buyer shall promptly prepare and submit to the
New York Stock Exchange a listing application covering the shares of Buyer Stock
issuable in the Merger, and shall obtain prior to the Effective Time approval
for the listing of such Buyer Stock, subject to official notice of issuance.
7.9 FURTHER ACTION. Each party hereto shall, subject to the fulfillment
at or before the Effective Time of each of the conditions of performance set
forth herein or the waiver thereof, perform such further acts and execute such
documents as may reasonably be required to effect the Merger. In connection with
the Closing, Xxxxxx and each Xxxxxx Subsidiary shall use its best efforts to
deliver to Buyer such deeds, bills of sale, assignments, certificates,
affidavits and indemnities as are required to effectuate the consummation of the
transactions described herein.
7.10 AFFILIATES OF XXXXXX.
(a) At least 30 days prior to the Closing Date, Xxxxxx shall
deliver to Buyer a list of names and addresses of those persons who were, in
Xxxxxx'x reasonable judgment, at
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the record date for its stockholders' meeting to approve the Merger,
"affiliates" (each such person, an "Affiliate") of Xxxxxx within the meaning of
Rule 145. Xxxxxx shall provide Buyer such information and documents as Buyer
shall reasonably request for purposes of reviewing such list. Xxxxxx shall use
its reasonable best efforts to deliver or cause to be delivered to Buyer, prior
to the Closing Date, from each of the Affiliates of Xxxxxx identified in the
foregoing list, an Affiliate Letter in the form attached hereto as EXHIBIT B.
Buyer shall be entitled to place legends as specified in such Affiliate Letters
on the certificates evidencing any shares of Buyer Stock to be received by such
Affiliates pursuant to the terms of this Agreement, and to issue appropriate
stop transfer instructions to the transfer agent for the shares of Buyer Stock,
consistent with the terms of such Affiliate Letters.
(b) Buyer shall file the reports required to be filed by it
under the Exchange Act and the rules and regulations adopted by the SEC
thereunder, and it will take such further action as any Affiliate of Xxxxxx may
reasonably request, all to the extent required from time to time to enable such
Affiliate to sell shares of Buyer Stock received by such Affiliate in the Merger
without registration under the Securities Act pursuant to (i) Rule 145(d)(1) or
(ii) any successor rule or regulation hereafter adopted by the SEC.
7.11 EXPENSES. Subject to the provisions of Article 9, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses. All
costs and expenses for professional services rendered pursuant to the
transactions contemplated by this Agreement including, but not limited to,
investment banking and legal services, will be paid by each party incurring such
services.
7.12 INDEMNIFICATION AND INSURANCE.
(a) In the event of any threatened or actual claim, action,
suit, proceeding or investigation, whether civil, criminal or administrative,
including, without limitation, any such claim, action, suit, proceeding or
investigation in which any person who is now, or has been at any time prior to
the date hereof, or who becomes prior to the Effective Time, a director,
officer, employee, fiduciary or agent of Xxxxxx (including Xxxxxx Real Estate
Advisors, Inc.) or any of its subsidiaries (the "Indemnified Parties") is, or is
threatened to be, made a party based in whole or in part on, or arising in whole
or in part out of, or pertaining to (i) the fact that he, she or it is or was a
director, officer, employee or agent of Xxxxxx or any of its subsidiaries, or is
or was serving at the request of Xxxxxx or any of its subsidiaries as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, or (ii) this Agreement or any of the
transactions contemplated hereby, whether in any case asserted or arising before
or after the Effective Time, the parties hereto agree to cooperate and use their
reasonable best efforts to defend against and respond thereto. It is understood
and agreed that Xxxxxx shall indemnify and hold harmless, and after the
Effective Time Buyer shall indemnify and hold harmless, as and to the full
extent permitted by applicable law, each Indemnified Party against any losses,
claims, damages, liabilities, costs, expenses (including attorneys' fees and
expenses), judgments, fines and amounts paid in
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settlement in connection with any such threatened or actual claim, action, suit,
proceeding or investigation, and in the event of any such threatened or actual
claim, action, suit, proceeding or investigation (whether asserted or arising
before or after the Effective Time), (i) Xxxxxx, and the Buyer after the
Effective Time, shall promptly pay expenses in advance of the final disposition
of any claim, suit, proceeding or investigation to each Indemnified Party to the
full extent permitted by law, (ii) the Indemnified Parties may retain counsel
satisfactory to them, and Xxxxxx, and Buyer after the Effective Time, shall pay
all fees and expenses of such counsel for the Indemnified Parties within thirty
days after statements therefor are received, and (iii) Xxxxxx and Buyer will use
their respective reasonable best efforts to assist in the vigorous defense of
any such matter; provided, that neither Xxxxxx nor Buyer shall be liable for any
settlement effected without its prior written consent (which consent shall not
be unreasonably withheld); and provided further that the Buyer shall have no
obligation hereunder to any Indemnified Party when and if a court of competent
jurisdiction shall ultimately determine, and such determination shall have
become final and non-appealable, that indemnification of such Indemnified Party
in the manner contemplated hereby is prohibited by applicable law. Any
Indemnified Party wishing to claim indemnification under this Section 7.12, upon
learning of any such claim, action, suit, proceeding or investigation, shall
notify Xxxxxx and, after the Effective Time, Buyer, thereof, provided that the
failure to so notify shall not affect the obligations of Xxxxxx or Buyer except
to the extent such failure to notify materially prejudices such party.
(b) Buyer agrees that all rights to indemnification existing
in favor, and all limitations on the personal liability, of the Indemnified
Parties provided for in Xxxxxx'x Certificate or its By-Laws or the charter or
by-laws or similar organizational documents of any of its subsidiaries as in
effect as of the date hereof with respect to matters occurring prior to the
Effective Time shall survive the Merger and shall continue in full force and
effect for a period of not less than six (6) years from the Effective Time;
PROVIDED, HOWEVER, that all rights to indemnification in respect of any claim (a
"Claim") asserted or made within such period shall continue until the
disposition of such Claim. At or prior to the Effective Time, Buyer shall
purchase directors' and officers' liability insurance coverage for Xxxxxx'x
directors and officers in a form acceptable to Xxxxxx which shall provide such
directors and officers with $5,000,000 of aggregate coverage for six years
following the Effective Time and which shall have a retention of no more than
$500,000; PROVIDED, HOWEVER, that the cost of such policy shall not exceed
$600,000.
(c) This Section 7.12 is intended for the irrevocable benefit
of, and to grant third party rights to, the Indemnified Parties and shall be
binding on all successors and assigns of Buyer and Xxxxxx. Each of the
Indemnified Parties shall be entitled to enforce the covenants contained in this
Section 7.12 and Buyer acknowledges and agrees that each Indemnified Party would
suffer irreparable harm and that no adequate remedy at law exists for a breach
of such covenants.
(d) In the event the Surviving Corporation or any of
its successors or assigns (i) consolidates with or merges into any other
person or entity and shall not be the
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continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers or conveys all or substantially all of its properties and assets
to any person or entity, then, and in each such case, proper provision shall be
made so that the successors and assigns of Buyer assume the obligations set
forth in this Section 7.12.
7.13 REORGANIZATION. From and after the date hereof and until the
Effective Time, none of Buyer, Xxxxxx or any of their respective subsidiaries or
other affiliates shall (i) knowingly take any action, or knowingly fail to take
any action, that would jeopardize qualification of the Merger as a
reorganization within the meaning of Section 368(a) of the Code or (ii) enter
into any contract, agreement, commitment or arrangement with respect to the
foregoing. Following the Effective Time, Buyer shall use its reasonable best
efforts to conduct its business in a manner that would not jeopardize the
characterization of the Merger as a reorganization within the meaning of Section
368(a) of the Code.
7.14 REDEMPTION OF RIGHTS. The Board of Directors of Xxxxxx shall amend
the Rights Agreement so that neither the execution nor the delivery of this
Agreement will trigger or otherwise affect any rights or obligations under the
Rights Agreement, including causing the occurrence of a "Distribution Date" or a
"Stock Acquisition Date," as defined in the Rights Agreement. Xxxxxx will redeem
all outstanding Rights at a redemption price of $.01 per Right effective
immediately prior to the Effective Time.
7.15 PAYMENT OF ADVISORY FEE. Notwithstanding anything to the contrary
set forth in this Agreement, Buyer and Xxxxxx hereby agree that, immediately
prior to the Effective Time, Xxxxxx shall pay to Xxxxxx Real Estate Advisors,
Inc. (the "Advisor") a fee the amount of which shall not exceed the amount of
advisory fee which the Advisor would be entitled to receive under that certain
Advisory Agreement, dated as of June 30, 1985, as amended to date, between
Xxxxxx and the Advisor.
7.16 REIT STATUS. Notwithstanding anything to the contrary set forth in
this Agreement, nothing in this Agreement shall prohibit Xxxxxx or any Xxxxxx
Subsidiary from taking any action at any time or from time to time that in the
reasonable judgment of Xxxxxx is necessary for Xxxxxx to maintain its
qualification as a REIT within the meaning of Sections 856-860 of the Code for
any period or portion thereof ending on or prior to the Merger including,
without limitations, making dividend or distribution payments to stockholders.
To the extent that any dividends or distributions are paid to Xxxxxx
stockholders other than the payments permitted to be made pursuant to Sections
7.2(d)(iii) or 7.2(d)(iv), the Share Value shall be reduced by the per share
amount of such dividend or distribution payments. Prior to the payment of any
such dividend or distribution contemplated by the preceding sentence, Xxxxxx
shall provide written notice of its intention to make such dividend or
distribution and the reasons therefor to Buyer. Following the Merger, Buyer
shall use its best efforts to take any such actions as may be necessary to
maintain Xxxxxx'x status as a REIT for any period or portion thereof ending on
or prior to the Merger (including, without limitation, the mailing of
stockholder demand letters as required by Treasury Regulation Section 1.857-8).
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ARTICLE 8.CONDITIONS
8.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger and the other
transactions contemplated herein shall be subject to the fulfillment at or prior
to the Effective Time of the following conditions, any or all of which may be
waived, in whole or in part by the parties hereto, to the extent permitted by
applicable law:
(a) This Agreement and the transactions contemplated hereby
shall have been approved by the requisite vote of stockholders of Buyer and
Xxxxxx.
(b) The waiting period applicable to the consummation of the
Merger under the HSR Act, if applicable, shall have expired or been terminated.
(c) Neither of the parties hereto shall be subject to any
order, ruling or injunction of a court of competent jurisdiction which prohibits
the consummation of the transactions contemplated by this Agreement. In the
event any such order, ruling or injunction shall have been issued, each party
agrees to use its best efforts to have any such order, ruling or injunction
lifted, stayed or reversed.
(d) The Form S-4 shall have been declared effective by the SEC
under the Securities Act, and no stop order suspending the effectiveness of the
Form S-4 shall have been issued by the SEC, and no proceedings for that purpose
shall have been initiated or, to the knowledge of Buyer or Xxxxxx, threatened by
the SEC.
(e) Buyer shall have obtained the approval for the listing of
the shares of Buyer Stock issuable in the Merger on the New York Stock Exchange,
subject to official notice of issuance.
(f) All consents, authorizations, orders and approvals of (or
filings or registrations with) any governmental commission, board, other
regulatory body or third parties required to be made or obtained by Buyer,
Xxxxxx and their respective subsidiaries and affiliated entities in connection
with the execution, delivery and performance of this Agreement shall have been
obtained or made, except (A) for any consents or approvals which are required
from any holders of mortgages affecting any Xxxxxx Properties (the "Lender
Consents") and (B) where the failure to have obtained or made any such consent,
authorization, order, approval, filing or registration, would not have a Xxxxxx
Material Adverse Effect or a Buyer Material Adverse Effect, as the case may be.
It shall be the sole responsibility of Buyer to obtain the Lender Consents and
to pay all costs, principal paydowns, fees and expenses associated therewith. In
the event Buyer is unable to obtain any Lender Consent, Buyer shall cause the
obligation underlying the respective mortgage to be satisfied and the mortgage
to be discharged on or prior to Closing. The parties acknowledge and agree that
the failure to obtain any of the Lender Consents shall not constitute a basis
for Buyer to terminate or otherwise amend the terms of this Agreement.
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8.2 CONDITIONS TO OBLIGATIONS OF XXXXXX TO EFFECT THE MERGER. The
obligation of Xxxxxx to effect the Merger shall be subject to the fulfillment at
or prior to the Effective Time of the following conditions, unless waived by
Xxxxxx:
(a) Each of the representations and warranties of Buyer
contained in this Agreement shall be true and correct in all material respects
as of the date of this Agreement and as of the Effective Time as though made on
and as of the Effective Time and Xxxxxx shall have received a certificate, dated
the Closing Date, signed on behalf of Buyer by the President of Buyer to the
foregoing effect.
(b) Buyer shall have performed or complied in all material
respects with all agreements and covenants required by this Agreement to be
performed or complied with by it on or prior to the Effective Time, and Xxxxxx
shall have received a certificate, dated the Closing Date, signed on behalf of
Buyer by the President of Buyer to the foregoing effect.
(c) Xxxxxx shall have received the opinion of counsel, dated
not less than five business days prior to the date the Form S-4 is declared
effective by the SEC, reasonably acceptable to Xxxxxx, and subject to customary
conditions and qualifications (including reliance, in part, on representations
of Buyer and Xxxxxx and certain stockholders of Xxxxxx), to the effect that the
Merger will be treated for federal income tax purposes as a tax-free
reorganization qualifying under the provisions of Sections 368(a) of the Code,
which opinion shall not have been withdrawn or modified in any material respect.
(d) From the date of this Agreement through the Effective
Time, there shall not have occurred any change concerning Buyer or any of the
Buyer Subsidiaries, that has had or could be reasonably likely to have a Buyer
Material Adverse Effect and Xxxxxx shall have received a certificate, dated the
Closing Date, signed on behalf of Buyer by the President of Buyer to the
foregoing effect.
(e) The transactions contemplated by the Bermant/UBC Agreement
shall have been consummated prior to the Effective Date and the UBC Interest
shall have been conveyed to Bermant or, alternatively, Bermant shall have failed
to exercise (or failed to fulfill its obligations under) its right of first
refusal set forth in the Joint Venture Agreement or such right of first refusal
shall have otherwise been terminated in accordance with its terms and the UBC
Interest shall remain the property of Xxxxxx at the Effective Time.
(f) Buyer shall have purchased directors' and officers'
liability insurance coverage in accordance with Section 7.12(b) hereof and such
insurance shall be in full force and effect.
(g) The officers of Xxxxxx shall have resigned from their
positions at Baygreen Eden Landing Industrial Park Owners Association and
Buyer's nominees shall have been appointed to fill such positions.
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8.3 CONDITIONS TO OBLIGATION OF BUYER TO EFFECT THE MERGER. The
obligations of Buyer to effect the Merger shall be subject to the fulfillment at
or prior to the Closing Date of the following conditions, unless waived by
Buyer:
(a) Each of the representations and warranties of Xxxxxx
contained in this Agreement shall be true and correct in all material respects
as of the date of this Agreement and as of the Effective Time as though made on
and as of the Effective Time, and Buyer shall have received a certificate, dated
the Closing Date, signed on behalf of Xxxxxx by the President of Xxxxxx to the
foregoing effect.
(b) Xxxxxx shall have performed or complied in all material
respects with all agreements and covenants required by this Agreement to be
performed or complied with by it on or prior to the Effective Time, and Buyer
shall have received a certificate, dated the Closing Date, signed on behalf of
Xxxxxx by the President of Xxxxxx to the foregoing effect.
(c) Buyer shall have received the opinion of counsel, dated
not less than five business days prior to the date the Form S-4 is declared
effective by the SEC, reasonably acceptable to Buyer, and subject to customary
conditions and qualifications (including reliance, in part, on representations
of Buyer and Xxxxxx and certain stockholders of Xxxxxx), to the effect that the
Merger will be treated for federal income tax purposes as a tax-free
reorganization qualifying under the provisions of Sections 368(a) of the Code,
which opinion shall not have been withdrawn or modified in any material respect.
(d) From the date of this Agreement through the Effective
Time, there shall not have occurred any change concerning Xxxxxx or any of the
Xxxxxx Subsidiaries, that has had or could be reasonably likely to have a Xxxxxx
Material Adverse Effect and Buyer shall have received a certificate, dated the
Closing Date, signed on behalf of Xxxxxx by the President of Xxxxxx to the
foregoing effect.
(e) The Board of Directors of Xxxxxx shall have amended the
Rights Agreement so that neither the execution nor the delivery of this
Agreement will trigger or otherwise affect any rights or obligations under the
Rights Agreement, including causing the occurrence of a "Distribution Date" or a
"Stock Acquisition Date," as defined in the Rights Agreement, and shall redeem
all outstanding Rights.
ARTICLE 9.TERMINATION
9.1 TERMINATION. This Agreement may be terminated and abandoned at any
time prior to the Effective Time, whether before or after approval and adoption
of this Agreement by the stockholders of Xxxxxx and Buyer:
(a) by mutual written consent of Buyer and Xxxxxx; or
(b) by either Buyer or Xxxxxx if any United States
federal or state court of
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competent jurisdiction or other governmental entity shall have issued an order,
decree or ruling or taken any other action permanently restraining, enjoining or
otherwise prohibiting the Merger and such order, decree, ruling or other action
shall have become final and non-appealable, provided that the party seeking to
terminate shall have used its best efforts to appeal such order, decree, ruling
or other action; or
(c) by Buyer upon a breach of any representation, warranty,
covenant or agreement on the part of Xxxxxx set forth in this Agreement, or if
any representation or warranty of Xxxxxx shall have become untrue, in either
case such that the conditions set forth in Section 8.3(a) or Section 8.3(b), as
the case may be, would be incapable of being satisfied by September 1, 1996;
PROVIDED, HOWEVER, that, in any case, a willful breach shall be deemed to cause
such conditions to be incapable of being satisfied for purposes of this Section
9.1(c);
(d) by Xxxxxx upon a breach of any representation, warranty,
covenant or agreement on the part of Buyer set forth in this Agreement, or if
any representation or warranty of Buyer shall have become untrue, in either case
such that the conditions set forth in Section 8.2(a) or Section 8.2(b), as the
case may be, would be incapable of being satisfied by September 1, 1996;
PROVIDED, HOWEVER, that, in any case, a willful breach shall be deemed to cause
such conditions to be incapable of being satisfied for purposes of this Section
9.1(d);
(e) by Buyer if (i) the Board of Directors of Xxxxxx shall
have withdrawn, amended, modified or changed its approval or recommendation of
this Agreement or any of the transactions contemplated hereby; (ii) Xxxxxx shall
have failed as soon as practicable to mail the Form S-4 to its stockholders or
to include the recommendation of its Board of Directors of this Agreement and
the transactions contemplated hereby in the Form S-4; or (iii) the Board of
Directors of Xxxxxx shall have recommended that stockholders of Xxxxxx accept or
approve an Acquisition Proposal by a person other than Buyer (or Xxxxxx or its
Board shall have resolved to do such);
(f) by Xxxxxx, if (i) the Board of Directors of Xxxxxx
recommends to Xxxxxx'x stockholders approval or acceptance of an Acquisition
Proposal by a person other than Buyer, but only in the event that the Board of
Directors of Xxxxxx, after consultation with and based upon the advice of
Xxxxxxx Procter & Hoar, Hale and Xxxx or another nationally recognized law firm
selected by the Board of Directors of Xxxxxx, has determined in good faith that
such action is necessary for the Board of Directors of Xxxxxx to comply with its
fiduciary duties to its stockholders under applicable law, (ii) if Buyer shall
have failed as soon as practicable to mail the Form S-4 to its stockholders or
to include the recommendation of its Board of Trustees of this Agreement and the
transactions contemplated hereby in the Form S-4 or (iii) if the average closing
sales prices of Buyer Stock on the New York Stock Exchange on each of the twenty
(20) trading days immediately preceding the fifth trading day prior to either
(A) the date on which the Form S-4 is declared effective by the SEC or (B) the
date on which the meeting of Xxxxxx stockholders is to be convened pursuant to
Section 7.3 hereof, is equal to or less than $18.25 without any liability on the
part of Xxxxxx;
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(g) by either Buyer or Xxxxxx if this Agreement and the
transactions contemplated hereby shall have failed to receive the requisite vote
for approval and adoption by the stockholders of Buyer or Xxxxxx upon the
holding of a duly convened stockholder meeting;
(h) by either Buyer or Xxxxxx, if the Merger shall not have
been consummated on or before September 1, 1996 (other than due to the failure
of the party seeking to terminate this Agreement to perform its obligations
under this Agreement required to be performed by it at or prior to the Effective
Time).
The right of any party hereto to terminate this Agreement pursuant to
this Section 9.1 shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of any party hereto, any person
controlling any such party or any of their respective employees, officers,
trustees, directors, agents, representatives or advisors, whether prior to or
after the execution of this Agreement.
9.2 EFFECT OF TERMINATION.
(a) In the event of the termination and abandonment of this
Agreement pursuant to Section 9.1 hereof, this Agreement shall forthwith become
void and have no effect, without any liability on the part of any party hereto
or its affiliates, trustees, directors, officers or stockholders and all rights
and obligations of any party hereto shall cease except for the agreements
contained in Section 10.5; PROVIDED, HOWEVER, that nothing contained in this
Section 9.2 shall relieve any party from liability for any breach of this
Agreement or shall relieve Xxxxxx from any liability under this Article 9.
(b) If (x) Buyer terminates this Agreement pursuant to Section
9.1(e)(iii) or pursuant to 9.1(c) as a result of a willful breach by Xxxxxx or
(y) if Xxxxxx terminates this Agreement pursuant to Section 9.1(f)(i) then
Xxxxxx shall pay to Buyer an amount (the "Termination Amount") in cash equal to
the sum of (i) $1,500,000, plus (ii) Buyer's out-of-pocket costs and expenses in
connection with this Agreement and the transactions contemplated hereby,
evidenced by documentation reasonably acceptable to Xxxxxx, up to a maximum of
$375,000 in accordance with the provisions of Section 9.3.
(c) If Buyer terminates this Agreement pursuant to Section
9.1(e)(i), 9.1(e)(ii) or 9.1(c) (except for a termination because of a willful
breach by Xxxxxx in which case, the provisions of Section 9.2(b) will apply),
Xxxxxx shall pay all of Buyer's out-of-pocket costs and expenses in connection
with this Agreement and the transactions contemplated thereby, evidenced by
documentation reasonably acceptable to Xxxxxx, up to a maximum of $375,000
("Expenses").
(d) The parties acknowledge and agree that the provisions for
payment of Expenses or the Termination Amount are included herein in order to
induce Buyer to enter into this Agreement and to reimburse Buyer for incurring
the costs and expenses related to
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entering into this Agreement and consummating the transactions contemplated by
this Agreement. The parties hereto agree that the payment of Expenses or the
Termination Amount by Xxxxxx to Buyer shall constitute liquidated damages with
respect to any claim for damages which would otherwise be entitled to assert
against Xxxxxx with respect to this Agreement and the transactions contemplated
hereby and shall constitute the only remedy to which Buyer shall be entitled in
connection therewith.
9.3 PAYMENT OF TERMINATION AMOUNT OR EXPENSES.
(a) In the event that Xxxxxx is obligated to pay Buyer the
Termination Amount or Expenses pursuant to Section 9.2 (the "Section 9.2
Amount"), Xxxxxx (or any other person to the extent provided by Section 9.2(d))
shall pay to Buyer from the applicable Section 9.2 Amount deposited into escrow
in accordance with the next sentence, an amount equal to the lesser of (m) the
Section 9.2 Amount and (n) the sum of (1) the maximum amount that can be paid to
Buyer without causing Buyer to fail to meet the requirements of Sections
856(c)(2) and (3) of the Code determined as if the payment of such amount did
not constitute income described in Sections 856(c)(2)(A)-(H) or 856(c)(3)(A)-(I)
of the Code ("Qualifying Income"), as determined by Buyer's certified public
accountants, plus (2) in the event Buyer receives either (X) a letter from
Buyer's counsel indicating that Buyer has received a ruling from the IRS
described in Section 9.3(b)(ii) or (Y) an opinion from Buyer's counsel as
described in Section 9.3(b)(ii), an amount equal to the Section 9.2 Amount less
the amount payable under clause (1) above. To secure Xxxxxx'x obligation to pay
these amounts, Xxxxxx shall deposit into escrow an amount in cash equal to the
Section 9.2 Amount with an escrow agent selected by Buyer and on such terms
(subject to Section 9.3(b)) as shall be agreed upon by Buyer and the escrow
agent. The payment or deposit into escrow of the Section 9.2 Amount pursuant to
this Section 9.3(a) shall be made within three days of the event which gives
rise to the payment of the Section 9.2 Amount by wire transfer or bank check.
(b) The escrow agreement shall provide that the Section 9.2
Amount in escrow or any portion thereof shall not be released to Buyer unless
the escrow agent receives any one or combination of the following: (i) a letter
from Buyer's certified public accountants indicating the maximum amount that can
be paid by the escrow agent to Buyer without causing Buyer to fail to meet the
requirements of Sections 856(c)(2) and (3) of the Code determined as if the
payment of such amount did not constitute Qualifying Income or a subsequent
letter from Buyer's accountants revising that amount, in which case the escrow
agent shall release such amount to Buyer, or (ii) a letter from Buyer's counsel
indicating that Buyer received a ruling from the IRS holding that the receipt by
Buyer of the Section 9.2 Amount would either constitute Qualifying Income or
would be excluded from gross income within the meaning of Sections 856(c)(2) and
(3) of the Code (or alternatively, Buyer's legal counsel has rendered a legal
opinion to the effect that the receipt by Buyer of the Section 9.2 Amount would
either constitute Qualifying Income or would be excluded from gross income
within the meaning of Sections 856(c)(2) and (3) of the Code), in which case the
escrow agent shall release the remainder of the Section 9.2 Amount to Buyer. The
escrow agreement shall also provide that any portion of the Section 9.2 Amount
held in escrow for five years shall be released by the
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escrow agent to Xxxxxx. Xxxxxx shall not be a party to such escrow agreement and
shall not bear any cost of or have liability resulting from the escrow
agreement.
(c) Notwithstanding anything to the contrary set forth in this
Agreement, in the event Buyer is required to file suit to seek all or a portion
of the Termination Amount and/or the Expenses and Buyer prevails in such
litigation, it shall be entitled to all expenses, including attorneys' fees and
expenses, which it has incurred in enforcing its rights hereunder; provided that
payment of such expenses shall be subject to the limitations of Section 9.3(a)
(determined as if such expenses were included in the Section 9.2 Amount).
9.4 EXTENSION; WAIVER. At any time prior to the Effective Time, any
party hereto, by action taken by its Board of Trustees or Board of Directors,
may, to the extent legally allowed, (a) extend the time for the performance of
any of the obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties made to such party contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions for the benefit of such party contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
ARTICLE 10. GENERAL PROVISIONS
10.1 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. All
representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement, including, without limitation,
the certificates described in Sections 8.2(a), 8.2(b), 8.2(d), 8.3(a), 8.3(b)
and 8.3(d), shall terminate as of the Effective Time and shall not survive the
Merger, PROVIDED, HOWEVER, that the agreements contained in Article 4, the last
sentence of Section 7.4 and Sections 7.10, 7.12, 7.13 and 7.14 and this Article
10 shall survive the Merger.
10.2 NOTICES. Any notice required to be given hereunder shall be in
writing and shall be sent by facsimile transmission (confirmed by any of the
methods that follow), courier service (with proof of service), hand delivery or
certified or registered mail (return receipt requested and first-class postage
prepaid) and addressed as follows:
If to Buyer: EastGroup Properties
300 One Xxxxxxx Place
000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxx XX
Tel.: (000) 000-0000
Fax: (000) 000-0000
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With copies to: Xxxxxxx, Xxxxxxxxxxx & Mugel
000 Xxxxx Xxxx Xxxxxxxx
Xxxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Tel.: (000) 000-0000
Fax: (000) 000-0000
If to Xxxxxx: Xxxxxx Properties, Inc.
000 Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxx X. Xxxxx
Tel.: (000) 000-0000
Fax: (000) 000-0000
With copies to: Xxxx and Xxxx
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx, Esq. and
Xxxxxxx X. X'Xxxxxx, Xx., Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
And
Xxxxxxx, Procter & Xxxx
Exchange Place, 00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxx X. Floor, P.C. and
Xxxxxx X. Xxxxxxx III, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
delivered.
10.3 ASSIGNMENT; BINDING EFFECT; BENEFIT. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by any
of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties. Subject to the preceding sentence,
this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns. Notwithstanding
anything contained in this Agreement to the contrary, except for the provisions
of Article 4 and Sections 7.10, 7.12, 7.13 and 7.14, nothing in this Agreement,
expressed or implied, is intended to confer on any person other than the parties
hereto or their
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respective heirs, successors, executors, administrators and assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
10.4 ENTIRE AGREEMENT. This Agreement, the Exhibits, the Xxxxxx
Disclosure Letter, the Buyer Disclosure Letter and any documents delivered by
the parties in connection herewith constitute the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings among the partes with respect thereto except that
the Confidentiality Agreements (as hereinafter defined) shall remain in effect
and shall be binding upon Buyer and Xxxxxx in accordance with its terms. No
addition to or modification of any provision of this Agreement shall be binding
upon any party hereto unless made in writing and signed by all parties hereto.
10.5 CONFIDENTIALITY. Each of Buyer and Xxxxxx understands and agrees
that it is still bound by and subject to the terms of the Confidentiality
Agreements, dated as of October 18, 1995 and February 1, 1996, by and between
Buyer and Xxxxxx (the "Confidentiality Agreements").
10.6 AMENDMENT. This Agreement may be amended by the parties hereto, by
action taken by their respective Board of Trustees and Board of Directors, at
any time before or after approval of matters presented in connection with the
Merger by the stockholders of Xxxxxx and Buyer, but after any such stockholder
approval, no amendment shall be made which by law requires the further approval
of stockholders without obtaining such further approval. This Agreement may not
be amended except by an instrument in writing signed on behalf of each of the
parties hereto.
10.7 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware without regard to its rules
of conflict of laws. Each of Xxxxxx and Buyer hereby irrevocably and
unconditionally consents to submit to the exclusive jurisdiction of the courts
of the State of Delaware and of the United States of America located in the
State of Delaware (the "Delaware Courts") for any litigation arising out of or
relating to this Agreement and the transactions contemplated hereby (and agrees
not to commence any litigation relating thereto except in such courts), waives
any objection to the laying of venue of any such litigation in the Delaware
Courts and agrees not to plead or claim in any Delaware Court that such
litigation brought therein has been brought in any inconvenient forum.
10.8 COUNTERPARTS. This Agreement may be executed by the parties hereto
in separate counterparts, each of which so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument. Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by all of the parties hereto.
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10.9 HEADINGS. Headings of the Articles and Sections of this
Agreement are for the, convenience of the parties only, and shall be given no
substantive or interpretive effect whatsoever.
10.10 WAIVERS. Except as provided in this Agreement, no action taken
pursuant to this Agreement, including, without limitation, any investigation by
or on behalf of any party, shall be deemed to constitute a waiver by the party
taking such action of compliance with any representations, warranties, covenants
or agreements contained in this Agreement. The waiver by any party hereto of a
breach of any provision hereunder shall not operate or be construed as a waiver
of any prior or subsequent breach of the same or any other provision hereunder.
10.11 INCORPORATION. The Xxxxxx Disclosure Letter and the Buyer
Disclosure Letter and all Exhibits and Schedules attached hereto and thereto and
referred to herein and therein are hereby incorporated herein and made a part
hereof for all purposes as if fully set forth herein.
10.12 SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
10.13 INTERPRETATION AND CERTAIN DEFINITIONS.
(a) In this Agreement, unless the context otherwise requires,
words describing the singular number shall include the plural and vice versa,
and words denoting any gender shall include all genders.
(b) As used in this Agreement, the word "Subsidiary" or
"Subsidiaries" when used with respect to any party means any corporation,
partnership, joint venture, business trust or other entity, of which such party
directly or indirectly owns or controls at least a majority of the securities or
other interests having by their terms ordinary voting power to elect a majority
of the board of directors or others performing similar functions with respect to
such corporation or other organization.
(c) As used in this Agreement, the word "person" means an
individual, a corporation, a partnership, an association, a joint-stock company,
a trust, a limited liability company, any unincorporated organization or any
other entity.
(d) As used in this Agreement, the word "affiliate" shall have
the meaning set forth in Rule 12b-2 of the Exchange Act.
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10.14 SCHEDULES. Any fact or item disclosed in one section of any
Disclosure Letter or schedule hereto ("Schedule") shall be deemed to be
disclosed with respect to any other relevant section of such Disclosure Letter
or Schedule, whether or not an explicit cross-reference appears.
[END OF TEXT]
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IN WITNESS WHEREOF, the parties have executed this Agreement and caused
the same to be duly delivered on their behalf on the day and year first written
above.
XXXXXX PROPERTIES, INC.
ATTEST:
By:/S/Xxxxx X. Xxxxxxx By:/s/Xxxx X. Xxxxx
------------------- ------------------
Name: Xxxxx X. Xxxxxxx Name:Xxxx X. Xxxxx
Title: Secretary Title:Chief Operating Officer
EASTGROUP PROPERTIES
ATTEST:
By:/s/N. Xxxxx Xxxxx By:/s/Xxxxxx X. Speed
----------------- ------------------
Name: N. Xxxxx Xxxxx Name: Xxxxxx X. Speed
Title: CFO & Secretary Title: Chief Executive Officer
219588.c16
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