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EXHIBIT 2.1
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
between
XXXXXXX REAL ESTATE, INC.
and
MID-AMERICA REALTY INVESTMENTS, INC.
Dated as of May 30, 1998
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TABLE OF CONTENTS
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1. The Merger...................................................................1
1.1 The Merger..........................................................1
1.2 The Closing.........................................................1
1.3 Effective Time......................................................2
1.4 Amendments of Governing Documents of the MDI Subsidiaries...........2
1.5 Severance Pay Agreements............................................2
2. Charter and Bylaws of the Surviving Corporation..............................2
2.1 Charter.............................................................3
2.2 Bylaws..............................................................3
3. Directors and Officers of the Surviving Corporation..........................3
3.1 Directors...........................................................3
3.2 Officers............................................................3
4. MDI Stock....................................................................3
4.1 Conversion of the MDI Stock.........................................3
4.2 Exchange of Certificates Representing MDI Common Stock..............5
4.3 Return of Exchange Fund.............................................6
5. Representations and Warranties of MDI........................................7
5.1 Existence; Good Standing; Authority; Compliance With Law............7
5.2 Authorization, Validity and Effect of Agreements....................8
5.3 Capitalization......................................................9
5.4 Subsidiaries.......................................................10
5.5 Other Interests....................................................10
5.6 No Violation.......................................................11
5.7 SEC Documents......................................................11
5.8 Litigation.........................................................12
5.9 Absence of Certain Changes or Events. ............................13
5.10 Taxes..............................................................13
5.11 Books and Records..................................................15
5.12 Properties.........................................................15
5.13 Leases.............................................................17
5.14 Rents..............................................................18
5.15 Environmental Matters..............................................18
5.16 Employee Benefit Plans.............................................19
5.17 Labor Matters......................................................20
5.18 No Brokers.........................................................20
(i)
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5.19 Opinion of Financial Advisor.......................................21
5.20 Xxxxxxx Share Ownership............................................21
5.21 Related Party Transactions.........................................21
5.22 Contracts and Commitments..........................................21
5.23 Development Rights.................................................22
5.24 Certain Payments Resulting From Transactions.......................22
5.25 Tenant Improvements................................................22
5.26 Status of Options to Purchase Real Property........................23
5.27 Related Parties....................................................23
5.28 Definition of MDI's Knowledge......................................23
5.29 Disclosure.........................................................23
6. Representations and Warranties of Xxxxxxx...................................23
6.1 Existence; Good Standing; Authority; Compliance With Law...........23
6.2 Authorization, Validity and Effect of Agreements...................24
6.3 Capitalization.....................................................25
6.4 Subsidiaries.......................................................26
6.5 Other Interests....................................................26
6.6 No Violation.......................................................26
6.7 SEC Documents......................................................27
6.8 Litigation. ......................................................28
6.9 Absence of Certain Changes.........................................28
6.10 Taxes..............................................................29
6.11 Books and Records..................................................30
6.12 Employee Benefit Plans.............................................30
6.13 Labor Matters......................................................31
6.14 No Brokers.........................................................31
6.15 MDI Stock Ownership................................................31
6.16 Definition of Xxxxxxx'x Knowledge..................................31
6.17 Environmental Matters..............................................32
6.18 Disclosure.........................................................32
7. Covenants...................................................................32
7.1 Acquisition Proposals..............................................32
7.2 Conduct of Businesses..............................................33
7.3 Meeting of Stockholders............................................36
7.4 Filings; Other ....................................................38
7.5 Inspection of Records..............................................39
7.6 Publicity..........................................................39
7.7 Initial Listing Application........................................39
7.8 Further Action.....................................................39
7.9 Affiliates of MDI..................................................40
7.10 Expenses...........................................................40
7.11 Indemnification....................................................41
(ii)
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7.12 Reorganization.....................................................43
7.13 Certain Benefits...................................................43
7.14 Dividends..........................................................43
7.15 Environmental Matters..............................................44
8. Conditions..................................................................44
8.1 Conditions to Each Party's Obligation to Effect the Merger.........44
8.2 Conditions to Obligations of MDI to Effect the Merger..............45
8.3 Conditions to Obligation of Xxxxxxx to Effect the Merger...........46
9. Termination.................................................................47
9.1 Termination........................................................47
9.2 Effect of Termination..............................................49
9.3 Payment of Termination Amount or Expenses..........................51
9.4 Extension; Waiver..................................................52
10. General Provisions..........................................................53
10.1 Nonsurvival of Representations, Warranties and Agreements..........53
10.2 Notices............................................................53
10.3 Assignment; Binding Effect; Benefit................................54
10.4 Entire Agreement...................................................54
10.5 Confidentiality....................................................54
10.6 Amendment..........................................................55
10.7 Governing Law; Jurisdiction and Venue..............................56
10.8 Counterparts.......................................................56
10.9 Headings...........................................................56
10.10 Interpretation.....................................................56
10.11 Waivers............................................................56
10.12 Incorporation......................................................56
10.13 Severability.......................................................57
10.14 Enforcement of Agreement...........................................57
10.15 Certain Definitions................................................57
(iii)
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EXHIBITS
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EXHIBIT A - Acknowledgment of Severance Obligation
EXHIBIT B - Form of Articles Supplementary Establishing and Fixing
the Rights and Preferences of a Series of Shares of
Preferred Stock for the 8.4% Convertible Preferred Stock
of Xxxxxxx
EXHIBIT C - Form of Option Termination Agreement
EXHIBIT D - Form of Affiliate Letter
EXHIBIT E - Form of Opinion of Deloitte & Touche LLP
EXHIBIT F - Form of Estoppel Certificate
SCHEDULES
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Schedule 8.3(f) Leases and REA Agreements Requiring Estoppel Certificates
Schedule 8.3(g) Required Consents
(iv)
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of May 30, 1998, between Xxxxxxx Real Estate, Inc., a Maryland
corporation ("Xxxxxxx"), and Mid-America Realty Investments, Inc., a Maryland
corporation ("MDI").
RECITALS
A. The Board of Directors of Xxxxxxx and the Board of Directors of MDI
each have determined that a business combination between Xxxxxxx and MDI 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. For federal income tax purposes, it is intended that the merger
provided for herein shall qualify as a tax-free reorganization under Section 368
of the Internal Revenue Code of 1986, as amended (the "Code"), and that this
Agreement shall constitute a plan of reorganization under Section 368 of the
Code.
C. Each of Xxxxxxx and MDI has received a fairness opinion from its
financial advisor relating to the transactions contemplated hereby as more fully
described herein.
X. Xxxxxxx and MDI desire to make certain representations, warranties
and agreements in connection with the merger.
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
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), MDI shall
be merged with and into Xxxxxxx in accordance with this Agreement and the
separate corporate existence of MDI shall thereupon cease (the "Merger").
Xxxxxxx 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 3-114 of the Maryland General Corporation Law (the "MGCL").
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 Xxxxxxx, Procter & Xxxx
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LLP, Exchange Place, 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 to
be properly executed, verified and delivered for filing in accordance with the
MGCL 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 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").
1.4 AMENDMENTS OF GOVERNING DOCUMENTS OF THE MDI SUBSIDIARIES. In
connection with the Closing, the Articles of Incorporation, Bylaws, partnership
agreements and equivalent documents for the MDI Subsidiaries (as defined in
Section 5.1 hereof) will be amended to make certain changes to such documents in
order to reflect the Merger and the transactions contemplated by this Agreement.
MDI and the MDI Subsidiaries will take all actions which are necessary to
effectuate such amendments and will use their best efforts to cause all of the
stockholders in any MDI Subsidiary and all of the partners in any MDI Subsidiary
to approve such amendments and, if necessary, the transactions contemplated by
this Agreement and to take such other actions to effectuate such amendments and
the transactions contemplated by this Agreement as may be reasonably requested
by Xxxxxxx.
1.5 SEVERANCE PAY AGREEMENTS. Xxxxxxx agrees that after the
Effective Time, it will assume and be bound by the terms of the severance
agreements (the "Severance Agreements") entered into by MDI with each of Xxxxxx
Xxxxxxxxx and Xxxxxx X. Xxxxxxxx. Prior to the Effective Time, and as soon as
practicable after this Agreement is signed, MDI shall supply Xxxxxxx with the
calculation of the actual severance payments that would be payable pursuant to
the Severance Agreements. In addition, MDI agrees to obtain acknowledgments in
the form attached as EXHIBIT A hereto (an "Acknowledgment of Severance
Obligation") from each of Xxxxxx Xxxxxxxxx and Xxxxxx X. Xxxxxxxx that such
individual is not, and will not be, entitled to receive any amounts from MDI
pursuant to its Severance Pay Policy.
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ARTICLE 2
2. CHARTER AND BYLAWS OF THE SURVIVING CORPORATION.
2.1 CHARTER. The Charter (as defined in the MGCL) of Xxxxxxx in
effect immediately prior to the Effective Time shall be the Charter of the
Surviving Corporation, until duly amended in accordance with applicable law.
2.2 BYLAWS. The Bylaws of Xxxxxxx in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation, until duly
amended in accordance with applicable law.
ARTICLE 3
3. DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION.
3.1 DIRECTORS. The directors of Xxxxxxx immediately prior to the
Effective Time shall be the directors of the Surviving Corporation as of the
Effective Time.
3.2 OFFICERS. The officers of Xxxxxxx immediately prior to the
Effective Time shall be the officers of the Surviving Corporation as of the
Effective Time.
ARTICLE 4
4. MDI STOCK.
4.1 CONVERSION OF THE MDI STOCK.
(a) At the Effective Time, each share of the common stock,
$.01 par value per share, of Xxxxxxx ("Xxxxxxx Common Stock") outstanding
immediately prior to the Effective Time shall remain outstanding and shall
represent one share of the Common Stock, $.01 par value per share, of the
Surviving Corporation.
(b) At the Effective Time, each share of common stock, par
value $.01 per share, of MDI (the "MDI Common Stock") issued and outstanding
immediately prior to the Effective Time (other than those shares of MDI Common
Stock to be canceled pursuant to Section 4.1(d)) shall, by virtue of the Merger
and without any action on the part of MDI, Xxxxxxx or the holders of any of the
securities of any of these corporations, be converted into the right to receive
0.42 (the "Exchange Ratio") of a share of Series A 8.4% Convertible Preferred
Stock of Xxxxxxx ("Xxxxxxx Preferred Stock"), the terms of which are
substantially in the form set forth in the Articles Supplementary Establishing
and Fixing the Rights and Preferences of a Series of Shares of Preferred Stock
(the "Articles Supplementary") attached
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hereto as EXHIBIT B; PROVIDED, HOWEVER, that if between the date of this
Agreement and the Effective Time the outstanding shares of Xxxxxxx Common Stock
shall have been changed into a different number of shares or a different class
or series, by reason of any stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares, the Exchange Ratio
shall be correspondingly adjusted to reflect such stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares.
(c) As a result of the Merger and without any action on the
part of the holder thereof, at the Effective Time, all shares of MDI Common
Stock shall cease to be outstanding, shall be canceled and retired and shall
cease to exist and each holder of a certificate representing any shares of MDI
Common Stock (a "Certificate") shall thereafter cease to have any rights with
respect to such shares of MDI Common Stock, except the right to receive, without
interest, shares of Xxxxxxx Preferred Stock and cash in lieu of fractional
shares of Xxxxxxx Preferred Stock in accordance with Section 4.2(d) (the "Merger
Consideration") upon the surrender of such Certificate.
(d) Each share of MDI Common Stock issued and held in MDI's
treasury at 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.
(e) Each outstanding stock option to purchase a share of MDI
Common Stock (an "Existing MDI Option") granted under MDI's Amended and Restated
1994 Stock Option Plan or MDI's 1995 Stock Option Plan (together, the "MDI Stock
Option Plans") which has not been exercised by the Effective Time shall, at the
Effective Time, be canceled and upon the surrender and cancellation of the
option agreement representing such option and delivery of an Option Termination
(defined below), the holders of such options shall be entitled to receive, as
consideration therefor, an amount in cash equal to the excess, if any, of the
Option Consideration (defined below) over the per share exercise price of such
stock option, without interest thereon. For the purposes of this section,
"Option Consideration" shall mean the average last sale price (or bid price for
days on which there were no sales) per share of MDI Common Stock on the New York
Stock Exchange ("NYSE") for the ten trading days preceding the fifth day prior
to the Closing Date. MDI shall take all actions necessary to ensure that (i) all
Existing MDI Options, to the extent not exercised prior to the Effective Time,
shall terminate and be canceled as of the Effective Time and thereafter shall be
of no further force or effect, (ii) no Existing MDI Options are granted after
the date hereof, and (iii) the MDI Stock Option Plans and any and all other
outstanding option arrangements or plans of MDI shall terminate as of the
Effective Time. MDI hereby represents that immediately after the Effective Time,
no Existing MDI Option holder or other participant in MDI Stock Option Plans
shall have any right to acquire equity securities of MDI, Xxxxxxx, the Surviving
Corporation or any subsidiary or affiliate thereof. MDI shall obtain, prior to
the Closing, the consent, in the form attached as EXHIBIT C hereto, from each
holder of an Existing MDI Option to the termination of such Existing MDI Option
and the release of any and all rights such holder had or may have in such
Existing MDI Option as contemplated by this Section 4.1(c)
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and a representation of such holder as to his or her title to such stock option
and agreement to the payment terms hereof (each such document, an "Option
Termination").
4.2 EXCHANGE OF CERTIFICATES REPRESENTING MDI COMMON STOCK.
(a) As of the Effective Time, Xxxxxxx shall deposit, or shall
cause to be deposited, with an exchange agent selected by Xxxxxxx on or prior to
the Effective Time (the "Exchange Agent"), for the benefit of the holders of
shares of MDI Common Stock, for exchange in accordance with this Article 4,
certificates representing the shares of Xxxxxxx Preferred Stock and the cash in
lieu of fractional shares (such cash and certificates for shares of Xxxxxxx
Preferred 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 in exchange
for outstanding shares of MDI Common Stock.
(b) Promptly after the Effective Time, Xxxxxxx 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 Xxxxxxx may reasonably specify and (ii) instructions for use
in effecting the surrender of the Certificates in exchange for certificates
representing shares of Xxxxxxx Preferred 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 Xxxxxxx Preferred 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 MDI Common Stock
which is not registered in the transfer records of MDI, a Certificate
representing the proper number of shares of Xxxxxxx Preferred 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 MDI Common Stock is presented to the
Exchange Agent, accompanied by all documents required to evidence and effect
such transfer and to evidence that any applicable stock transfer taxes have been
paid.
(c) Notwithstanding any other provisions of this Agreement, no
dividends or other distributions on Xxxxxxx Preferred Stock paid with respect to
any shares of MDI Common Stock represented by a Certificate shall be delivered
to the holder of such Certificate until such Certificate is surrendered for
exchange as provided herein and until such time, the Exchange Agent shall hold
the amount of such dividends or distributions as a part of the
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Exchange Fund (subject to returns as provided in Section 4.3 hereof); PROVIDED,
HOWEVER, that, subject to the effect of applicable laws, following surrender of
any such Certificate, there shall be paid to the holder of the certificates
representing the whole shares of Xxxxxxx Preferred 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 Xxxxxxx Preferred Stock
and not paid, less the amount of any withholding or other applicable 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 Xxxxxxx Preferred Stock, less the amount of any
withholding or other applicable taxes which may be required thereon.
(d) At and after the Effective Time, there shall be no
transfers on the stock transfer books of MDI of the shares of MDI Common 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 Xxxxxxx Preferred
Stock 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 MDI 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 Xxxxxxx has received an Affiliate Letter in the form of EXHIBIT
D attached hereto (an "Affiliate Letter"), from such Person as provided in
Section 7.9.
(e) No fractional shares of Xxxxxxx Preferred Stock shall be
issued pursuant hereto. In lieu of the issuance of any fractional share of
Xxxxxxx Preferred Stock pursuant to Section 4.1(b), each holder of MDI Common
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 fraction of a share of Xxxxxxx Preferred Stock which such holder would
otherwise be entitled to receive under this Article 4 by (ii) $25.00.
4.3 RETURN OF EXCHANGE FUND. Any portion of the Exchange Fund
(including the proceeds of any investments thereof and any shares of Xxxxxxx
Preferred Stock and any dividends or distributions paid with respect thereto)
that remains unclaimed by the former stockholders of MDI one year after the
Effective Time shall be delivered to the Surviving Corporation. Any former
stockholders of MDI who have not theretofore complied with this Article 4 shall
thereafter look only to the Surviving Corporation for payment of their shares of
Xxxxxxx Preferred 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
Xxxxxxx, MDI, the Exchange Agent or any other Person shall be liable to any
former holder of shares of MDI Common 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
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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 Xxxxxxx
Preferred Stock and cash in lieu of fractional shares (plus, to the extent
applicable, dividends and distributions payable pursuant to Section 4.2(c)).
ARTICLE 5
5. REPRESENTATIONS AND WARRANTIES OF MDI.
Except as set forth in the disclosure letter delivered at or prior to
the execution hereof to Xxxxxxx, which shall refer to the relevant Sections of
this Agreement (the "MDI Disclosure Letter"), MDI represents and warrants to
Xxxxxxx as follows:
5.1 EXISTENCE; GOOD STANDING; AUTHORITY; COMPLIANCE WITH LAW. MDI
is a corporation duly incorporated, validly existing and in good standing under
the laws of the State of Maryland. MDI 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, which states are listed in Section 5.1 of MDI
Disclosure Letter; PROVIDED, HOWEVER, that if MDI has prepared Section 5.1 of
the MDI Disclosure Letter in good faith, Xxxxxxx hereby covenants not to
exercise any right that it may have to terminate this agreement pursuant to
Section 9.1(c) based solely on any breach of the representation of MDI contained
in this sentence; PROVIDED FURTHER, HOWEVER, that nothing contained in this
Section 5.1 shall affect Xxxxxxx'x right to terminate this Agreement pursuant to
Section 9.1(c) with respect to any matter described in this sentence that occurs
or arises after the date hereof. MDI has all requisite corporate power and
authority to own, operate, lease and encumber its properties and carry on its
business as now conducted. Each of the MDI Subsidiaries (as defined below) 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, which states are listed in Section 5.4 of the MDI Disclosure
Letter; PROVIDED, HOWEVER, that if MDI has prepared Section 5.1 of the MDI
Disclosure Letter in good faith, Xxxxxxx hereby covenants not to exercise any
right that it may have to terminate this agreement pursuant to Section 9.1(c)
based solely on any breach of the representation of MDI contained in this
sentence; PROVIDED FURTHER, HOWEVER, that nothing contained in this Section 5.1
shall affect Xxxxxxx'x right to terminate this Agreement pursuant to Section
9.1(c) with respect to any matter described in this sentence that occurs or
arises after the date hereof. Neither MDI nor any of the MDI Subsidiaries is in
violation of any order of any court, governmental authority or arbitration board
or tribunal, or any law, ordinance, governmental
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rule or regulation to which MDI or any MDI Subsidiary or any of their respective
properties or assets is subject, except where such violation would not have a
material adverse effect on the business, results of operations, properties or
financial condition of MDI and the MDI Subsidiaries taken as a whole (a "MDI
Material Adverse Effect"). MDI and the MDI Subsidiaries have obtained all
licenses, permits and other authorizations and have taken all actions required
by applicable law or governmental regulations in connection with their business
as now conducted, except where the failure to obtain any such license, permit or
authorization or to take any such action would not have a MDI Material Adverse
Effect. Copies of the Charter or other equivalent documents, Bylaws,
organizational documents and partnership and joint venture agreements (and in
each such case, all amendments thereto) of MDI and each of the MDI Subsidiaries
are listed in Section 5.1 of MDI Disclosure Letter, and the copies of such
documents, which have previously been delivered or made available to Xxxxxxx and
its counsel, are true and correct. For the purposes of this Agreement, the term
"MDI Subsidiary" shall include any of the entities listed under such heading in
Section 5.4 of the MDI Disclosure Letter.
5.2 AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS. Each of MDI
and the MDI 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 MDI has, by resolutions duly adopted by unanimous vote,
approved this Agreement, the Merger and the transactions contemplated by this
Agreement and has agreed to recommend that the holders of MDI Common Stock adopt
and approve this Agreement, the Merger and the transactions contemplated by this
Agreement at the MDI stockholders' meeting which will be held in accordance with
the provisions of Section 7.3. In connection with the foregoing, the Board of
Directors of MDI has taken such actions and votes as are necessary on its part
to render the provisions of the Control Share Acquisition Statute (Title 3,
Subtitle 7), the Business Combination Statute (Title 3, Subtitle 6) and all
other applicable takeover statutes of the MGCL and any other applicable takeover
statutes of any other state, 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 MDI have indicated that they presently
intend to vote all shares of MDI Common Stock which they own to approve this
Agreement, the Merger, and the transactions contemplated by this Agreement at
the MDI 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 two-thirds of the
outstanding shares of MDI Common Stock, the execution by MDI and the MDI
Subsidiaries of this Agreement, the ancillary agreements to which they are
parties and the consummation of the transactions contemplated by this Agreement
and the ancillary agreements has been duly authorized by all requisite corporate
or partnership action on the part of such entities, including, without
limitation, the consent of the Class B Partner of MAB (as defined in Section
5.3(b) below). This Agreement constitutes, and the ancillary agreements to which
they are parties (when executed and delivered pursuant hereto) will constitute,
the valid and legally binding obligations of MDI and the MDI Subsidiaries,
enforceable against MDI and each of the MDI Subsidiaries in accordance with
their respective terms, subject to applicable
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bankruptcy, insolvency, moratorium or other similar laws relating to creditors'
rights and general principles of equity.
5.3 CAPITALIZATION.
(a) The authorized capital stock of MDI consists of 25,000,000
shares of MDI Common Stock of which 8,285,715 shares are issued and outstanding.
All such issued and outstanding shares of MDI Common Stock are duly authorized,
validly issued, fully paid, nonassessable and free of preemptive rights. MDI 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 MDI on any matter.
Except for the Existing MDI Options (all of which have been issued under the MDI
Stock Option Plans), 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 MDI to issue, transfer or sell
any shares of capital stock of MDI. Section 5.3(a) of the MDI Disclosure Letter
sets forth a full list of the Existing MDI Options, including the name of the
person to whom such stock options have been granted, the number of shares
subject to each option, the per share exercise price for each option, the
vesting schedule for each option and the termination date for each option. There
are no agreements or understandings to which MDI or any MDI Subsidiary is a
party with respect to the voting of any shares of MDI Common Stock or which
restrict the transfer of any such shares, nor does MDI 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. There are no outstanding
contractual obligations of MDI or any MDI Subsidiary to repurchase, redeem or
otherwise acquire any shares of capital stock, partnership interests or any
other securities of MDI or any MDI Subsidiary. All dividends which have been
declared with respect to MDI Common Stock have been paid in full. Neither MDI
nor any MDI Subsidiary is under any obligation, contingent or otherwise, by
reason of any agreement to register any of their securities under the Securities
Act. After the Effective Time the Surviving Corporation will have no obligation
to issue, transfer or sell any shares of capital stock or other equity interest
of MDI or the Surviving Corporation pursuant to any MDI Stock Option Plan or any
other MDI Benefit Plan (as defined in Section 5.16 hereof).
(b) The sole general partner of Mid-America Bethal Limited
Partnership, a Nebraska limited partnership ("MAB"), is MDI. As of the date
hereof, MDI owns a 50% partnership interest in MAB and is the Class A Partner,
as defined in the Amended and Restated Limited Partnership Agreement of MAB (the
"MAB Partnership Agreement") and the Class B Partner, as defined in the
Partnership Agreement, owns a 50% partnership interest in MAB as set forth in
Section 5.4 of the MDI Disclosure Letter. All such issued and outstanding
partnership interests are duly authorized, validly issued, fully paid, and free
of preemptive rights. 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 MAB to issue, transfer or sell
any partnership interests of MAB. There are no outstanding contractual
obligations of MAB to repurchase, redeem or otherwise acquire any
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partnership interests of MAB. The partnership interests owned by MDI and, to the
best knowledge of MDI, the partnership interests owned by the Class B Partner,
are subject only to the restrictions on transfer set forth in the MAB
Partnership Agreement and those imposed by applicable securities laws. MAB has
not issued or granted, and is not a party to, any commitments of any kind
relating to, or any agreements or understandings with respect to, partnership
interests or any other interest in MAB or any securities convertible into
partnership interests or such other interests and neither the Class B Partner
nor MDI has offered to purchase the other's partnership interest or has notified
the other of an offer by a third party to purchase its partnership interest. All
material notices, consents and other written communications in the last two
years between MAB and either the Class B Partner or MDI or between the Class B
Partner and MDI are listed in Section 5.3 of the MDI Disclosure Letter. Prior to
the date hereof, the Class B Partner of MAB has consented in writing to the
consummation of the transactions contemplated in this Agreement and the
resulting transfer of partnership interests of MAB held by MDI to Xxxxxxx.
5.4 SUBSIDIARIES. Except as set forth in Section 5.4 of the MDI
Disclosure Letter, MDI owns directly all of the outstanding shares of capital
stock or all of the partnership or other equity interests of each of the MDI
Subsidiaries. Each of the outstanding shares of capital stock in each of the MDI
Subsidiaries having corporate form is duly authorized, validly issued, fully
paid and nonassessable. Except as set forth in Section 5.4 of the MDI Disclosure
Letter, each of the outstanding shares of capital stock of, or partnership or
other equity interests in, each of the MDI Subsidiaries is owned, directly or
indirectly, by MDI free and clear of all liens, pledges, security interests,
claims or other encumbrances. The following information for each the MDI
Subsidiary is set forth in Section 5.4 of the MDI Disclosure Letter: (i) its
name and jurisdiction of incorporation or organization; (ii) the jurisdictions
in which such entity is qualified to conduct business; (iii) its authorized
capital stock or share capital or partnership or other interests; (iv) 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 (v) the name of
the general partners, if applicable. Mid-America Centers Corp. is the only MDI
Subsidiary which is a "qualified REIT subsidiary" as such term is defined under
Section 856(i) of the Code.
5.5 OTHER INTERESTS. Except for interests in the MDI Subsidiaries
as set forth in Section 5.4 of the MDI Disclosure Letter, neither MDI nor any
MDI Subsidiary owns directly or indirectly any interest or investment (whether
equity or debt) in any corporation, partnership, joint venture, trust or other
entity (other than investments in short-term investment securities). With
respect to the interests set forth in Section 5.4 of the MDI Disclosure Letter,
MDI or the applicable MDI Subsidiary, as the case may be, is a partner or
stockholder in good standing, owns such interests free and clear of all liens,
pledges, security interests, claims, options or other encumbrances, is not in
breach of any provision of any agreement, document or contract governing such
entity's rights in or to the interests owned or held, all of which agreements,
documents and contracts are set forth in Section 5.4 of the MDI Disclosure
Letter, and have not been modified or amended since their description therein,
and are in full force
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and effect and, to the best of the knowledge of MDI, the other parties to such
agreements, documents or contracts are not in breach of any of their respective
obligations under such agreements, documents or contracts, and to the best of
the knowledge of MDI, if such other entities were included within the definition
of MDI Subsidiaries for purposes of this Agreement, there would be no exceptions
or breaches to the representations and warranties made in this Article for the
MDI Subsidiaries.
5.6 NO VIOLATION. Neither the execution and delivery by MDI and
the MDI Subsidiaries of this Agreement or the ancillary agreements nor the
consummation by MDI and the MDI Subsidiaries of the transactions contemplated by
this Agreement and the ancillary agreements in accordance with their terms,
will: (i) conflict with or result in a breach of any provisions of the Charter,
Bylaws, organizational documents, partnership agreements, or joint venture
agreements of MDI or any MDI 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, the MDI Stock Option
Plans, or any grant or award made thereunder; (iii) except as set forth in
Section 5.6 of the MDI Disclosure Letter, 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 MDI or
the MDI 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 MDI or any of the MDI Subsidiaries is a party, or by which MDI or any
of the MDI Subsidiaries or any of their properties is bound or affected, which
would have a material adverse effect on any of the MDI Properties (as defined in
Section 5.12 hereof), individually or in the aggregate; or (iv) other than the
filings provided for in Article 1 of this Agreement, or 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 MDI Material Adverse Effect.
5.7 SEC DOCUMENTS. A complete list of filings by MDI with the
United States Securities and Exchange Commission ("SEC") filings and each (A)
registration statement, (B) annual report on Form 10-K, (C) quarterly report on
Form 10-Q, (D) current report on Form 8-K, (E) proxy statement or information
statement, and (F) other reports filed with the SEC pursuant to the requirements
of the Exchange Act or the Securities Act (in all such cases, including all
exhibits, amendments and supplements thereto), prepared by MDI or any of the MDI
Subsidiaries or relating to properties of MDI or the MDI Subsidiaries since
January 1, 1994, is set forth in Section 5.7 of the MDI Disclosure Letter, and
copies of such documents,
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in the form (including exhibits and any amendments thereto) filed with the SEC,
have previously been provided or made available to Xxxxxxx or its counsel
(collectively, the "MDI Reports"). The MDI Reports were filed with the SEC in a
timely manner and constitute all forms, reports and documents required to be
filed by MDI under the Securities Act, the Exchange Act and the rules and
regulations promulgated thereunder (the "Securities Laws") since January 1,
1994. As of their respective dates, the MDI 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 MDI included in
or incorporated by reference into the MDI Reports (including the related notes
and schedules) fairly presents the consolidated financial position of MDI and
the MDI Subsidiaries as of its date and each of the consolidated statements of
income, retained earnings and cash flows of MDI included in or incorporated by
reference into the MDI Reports (including any related notes and schedules)
fairly presents the results of operations, retained earnings or cash flows, as
the case may be, of MDI and the MDI 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 of the SEC. Except
as and to the extent set forth on the consolidated balance sheet of MDI and the
MDI Subsidiaries at December 31, 1997, including all notes thereto, neither MDI
nor any of the MDI Subsidiaries has any material liabilities or obligations of
any nature (whether accrued, absolute, contingent or otherwise) that would be
required to be reflected on, or reserved against in, a balance sheet of MDI or
in the notes thereto, prepared in accordance with generally accepted accounting
principles consistently applied, except liabilities arising in the ordinary
course of business since such date and liabilities for expenses of attorneys,
accountants and investment bankers incurred in connection with the Merger. MDI
represents and warrants that, as of the date hereof, it is eligible under the
regulations promulgated under the Securities Act to register the primary
issuance of its securities on Form S-3.
5.8 LITIGATION. Except as disclosed in Section 5.8 of the MDI
Disclosure Letter, and other than personal injury and other routine tort
litigation arising from the ordinary course of operations of MDI and the MDI
Subsidiaries (a) which are covered by adequate insurance or (b) for which all
material costs and liabilities arising therefrom are reimbursable pursuant to
common area maintenance or similar agreements, there is no suit, action or
proceeding pending (in which service of process has been received by an employee
of MDI or a MDI Subsidiary) or, to the best knowledge of MDI, threatened in
writing against or affecting MDI or any MDI Subsidiary or any of their
respective assets or properties nor is there any judgment, decree, injunction,
rule or order of any court, administrative or regulatory agency or commission or
other governmental authority or agency, domestic or foreign ("Governmental
Entity") or arbitrator outstanding against or affecting MDI or any MDI
Subsidiary or any of their respective assets or properties (any such proceeding
hereinafter
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referred to as "Litigation"); PROVIDED, HOWEVER, that if MDI has prepared
Section 5.8 of the MDI Disclosure Letter in good faith, Xxxxxxx hereby covenants
not to exercise any right that it may have to terminate this agreement pursuant
to Section 9.1(c) based solely on any breach of the representation of MDI
contained in this sentence; PROVIDED FURTHER, HOWEVER, that nothing contained in
this Section 5.8 shall affect Xxxxxxx'x right to terminate this Agreement
pursuant to Section 9.1(c) with respect to any matter described in this sentence
that occurs or arises after the date hereof.
5.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
Section 5.9 of the MDI Disclosure Letter, since the date of the most recent
audited financial statements included in MDI Reports (the "MDI Financial
Statement Date"), MDI and the MDI Subsidiaries have conducted their business
only in the ordinary course and there has not been (a) any change which has had
a MDI Material Adverse Effect, nor has there been any occurrence or circumstance
that with the passage of time would reasonably be expected to result in a MDI
Material Adverse Effect, (b) except for regular quarterly distributions not in
excess of $.22 per share of MDI Common Stock, respectively (or, with respect to
the period commencing on the date hereof and ending on the Closing Date,
distributions as necessary to maintain REIT status), in each case with customary
record and payment dates, any authorization, declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock or
property) with respect to the MDI Common Stock, (c) any split, combination or
reclassification of the MDI Common Stock or any issuance or the authorization of
any issuance of any other securities in respect of, in lieu of or in
substitution for, or giving the right to acquire by exchange or exercise, shares
of capital stock of MDI or partnership interests in MAB or any issuance of an
ownership interest in, any MDI Subsidiary, (d) any damage, destruction or loss,
whether or not covered by insurance, that has or might reasonably be expected to
have a MDI Material Adverse Effect, (e) any change in accounting methods,
principles or practices by MDI or any MDI Subsidiary materially affecting its
assets, liabilities or business, except insofar as may have been required by a
change in generally accepted accounting principles ("GAAP"), or (f) any
amendment of any employment, consulting, severance, retention or any other
agreement between MDI or any Second Party Subsidiary and any officer or director
of MDI or any MDI Subsidiary.
5.10 TAXES.
(a) MDI and each of the MDI Subsidiaries has paid or caused to
be paid 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,
environmental taxes and property 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"), owed by it through the date hereof.
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(b) MDI and each of the MDI Subsidiaries has timely filed, or
requested extensions to file, all federal, state, local and foreign tax returns
required to be filed by any of them through the date hereof, and all such
returns are complete and accurate. Attached as Section 5.10 to the MDI
Disclosure Letter is a list all written requests for extension of filing
obligations which MDI has submitted to the IRS and a summary of the current
status of the filing.
(c) As of December 31, 1997 and March 31, 1998, MDI had a net
operating loss carry forward for federal income tax purposes of $1,072,921 and
$1,072,921, respectively.
(d) Neither the Internal Revenue Service ("IRS") nor any other
governmental authority is now asserting by written notice to MDI or any MDI
Subsidiary or, to the knowledge of MDI or the MDI Subsidiaries, threatening to
assert against MDI or any MDI Subsidiary any deficiency or claim for additional
Taxes. There is no dispute or claim concerning any Tax liability of MDI or any
MDI Subsidiary, either claimed or raised by any governmental authority, or as to
which any officer of MDI or any MDI Subsidiary has reason to believe may be
claimed or raised by any federal or state governmental authority. No claim has
ever been made by a taxing authority in a jurisdiction where MDI or any MDI
Subsidiary does not file reports and returns that MDI or any MDI Subsidiary is
or may be subject to taxation by that jurisdiction. There are no security
interests on any of the assets of MDI or any MDI Subsidiary that arose in
connection with any failure (or alleged failure) to pay any Taxes. Neither MDI
nor any of the MDI Subsidiaries has ever entered into a closing agreement
pursuant to Section 7121 of the Code.
(e) Neither MDI nor any of the MDI Subsidiaries has received
written notice of any audit of any tax return filed by MDI or any MDI
Subsidiary, and neither MDI nor any of the MDI Subsidiaries has been notified by
any tax authority that any such audit is contemplated or pending. Except as set
forth in Section 5.10 of the MDI Disclosure Letter, neither MDI nor any of the
MDI 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 MDI or any MDI
Subsidiary is in force. True, correct and complete copies of all federal, state
and local income or franchise tax returns filed by MDI and each of the MDI
Subsidiaries and all communications relating thereto have been delivered to
Xxxxxxx or made available to representatives of Xxxxxxx.
(f) MDI and each MDI 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.
(g) Each of the MDI Subsidiaries of which all the outstanding
capital stock is owned solely by MDI is a Qualified REIT Subsidiary as defined
in Section 856(i) of the Code. MAB and each of the other MDI Subsidiaries listed
as a partnership or limited liability
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company in Section 5.4 of the MDI Disclosure Letter are, and have been at all
times, properly classified as partnerships for federal income tax purposes and
not as publicly-traded partnerships.
(h) For all tax years of MDI, MDI has qualified as a real
estate investment trust ("REIT") within the meaning of Sections 856-860 of the
Code, including, without limitation, the requirements of Sections 856 and 857 of
the Code. For the periods described in the preceding sentence, MDI has met all
requirements necessary to be treated as a REIT for purposes of the income tax
provisions of those states in which MDI is subject to income tax and which
provide for the taxation of REITs in a manner similar to the treatment of REITs
under Sections 856-860 of the Code. For the short period ended with the date
hereof, MDI has operated in a manner that will allow it to qualify as a REIT for
the period January 1, 1998 through the Closing Date.
5.11 BOOKS AND RECORDS.
(a) The books of account and other financial records of MDI
and each of the MDI 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 MDI Reports.
(b) The minute books and other records of MDI and each of the
MDI Subsidiaries have been made available to Xxxxxxx, 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 MDI and each of the MDI Subsidiaries and
all actions of the partners of each of the MDI Subsidiaries.
5.12 PROPERTIES. All of the real estate properties owned by MDI and
each of the MDI Subsidiaries are set forth in Section 5.12 of the MDI Disclosure
Letter. Except as set forth in Section 5.12 of the MDI Disclosure Letter, MDI
and each MDI Subsidiary owns fee simple title to each of the real properties
identified in the MDI Disclosure Letter (the "MDI Properties"), free and clear
of liens, mortgages or deeds of trust, claims against title, charges which are
liens, security interests or other encumbrances on title (collectively,
"Encumbrances") and the MDI Properties are not subject to any rights of way,
written agreements, laws, ordinances and regulations affecting building use or
occupancy, or reservations of an interest in title (collectively, "Property
Restrictions"), except for (x) Property Restrictions imposed or promulgated by
law or any governmental body or authority with respect to real property,
including zoning regulations, that do not adversely affect the current use of
the property, materially detract from the value of or materially interfere with
the present use of the property, (y) Encumbrances and Property Restrictions
disclosed on existing title reports or current surveys (in either case copies of
which title reports and surveys have been delivered or made available to Xxxxxxx
and are listed in Section 5.12 of the MDI Disclosure Letter), and (z)
mechanics', carriers', workmen's or repairmen's liens and other Encumbrances,
Property Restrictions and other limitations of any kind, if any, which,
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individually or in the aggregate, are not material in amount, do not materially
detract from the value of or materially interfere with the present use of any of
the MDI Properties subject thereto or affected thereby, and do not otherwise
materially impair business operations conducted by MDI and the MDI Subsidiaries
and which have arisen or been incurred only in the ordinary course of business.
Valid policies of title insurance have been issued insuring MDI's or the
applicable MDI Subsidiary's fee simple title to each of the MDI Properties in
amounts at least equal to the purchase price thereof, and such policies are, at
the date hereof, in full force and effect and no claim has been made against any
such policy and MDI has no knowledge of any facts or circumstances which would
constitute the basis for such a claim. To the best knowledge of MDI, (i) no
certificate, permit or license from any governmental authority having
jurisdiction over any of the MDI Properties or any agreement, easement or other
right which is necessary to permit the lawful use and operation of the buildings
and improvements on any of the MDI Properties or which is 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 MDI Properties (a "REA Agreement") has not
been obtained and is not in full force and effect, and there is no pending
threat of modification or cancellation of any of the same nor is MDI nor any MDI
Subsidiary currently in default under any REA Agreement and the MDI Properties
are in full compliance with all governmental permits, licenses and certificates,
except for any of the foregoing matters which would have a material adverse
effect on any of the MDI Properties, individually or in the aggregate; (ii) 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
MDI Properties has been issued by any governmental authority and none of the MDI
Properties are in violation of any such federal, state or municipal law, order,
ordinance, regulation or requirement, including, without limitation, the
Americans with Disabilities Act, except for such violations that would not have
a material adverse effect on any of the MDI Properties, individually or in the
aggregate; (iii) there are no material structural defects relating to any of the
MDI Properties; (iv) there is no MDI Property whose building systems are not in
working order in any material respect; (v) there is no physical damage to any
MDI Property in excess of $10,000 for which there is no insurance in effect
covering the full cost of the restoration; or (vi) there is no current
renovation or restoration or tenant improvements to any MDI Property or any
portion thereof, the cost of which exceeds $10,000, except in each instance as
set forth in Section 5.12 of the MDI Disclosure Letter. The use and occupancy of
each of the MDI Properties complies in all material respects with all applicable
codes and zoning laws and regulations, and MDI 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 MDI
Properties, with such exceptions as are not material and do not interfere with
the use made and proposed to be made of such MDI Properties. Neither MDI nor any
of the MDI Subsidiaries has received any 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 MDI 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 MDI Properties or by the continued
maintenance, operation or use of the parking areas. Except as set forth in
Section 5.12 of the
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MDI Disclosure Letter, to the best knowledge of MDI, there are no facts or
circumstances under which the owner of real estate (other than MDI) can cause
MDI to breach or be in default under any lease or REA Agreement. Section 5.12 of
MDI's Disclosure Letter sets forth all fire and extended coverage casualty
policies issued to MDI and the amounts of such coverage.
5.13 LEASES.
(a) Section 5.13 of the MDI Disclosure Letter sets forth a
true, accurate and complete rent roll for each of the MDI Properties (the "Rent
Roll") as of December 31, 1997. The Rent Roll includes, without limitation, the
name of the tenant, the space leased, the lease expiration date, security and
other deposits, prepaid rent (for more than 30 days), percentage rent, pro rata
share of operating expenses, taxes, charges and assessments. Section 5.13 of the
MDI Disclosure Letter contains a list of known defaults and a list of any
extraordinary clauses including, without limitation, any "kick-out" clauses,
cotenancy requirements or exclusions, exclusives, restrictions, "go-dark"
clauses, or clauses requiring any future funding of tenant improvements. Except
as noted in Section 5.13 of the MDI Disclosure Letter, to MDI's knowledge, there
is no violation of any cotenancy, exclusive or restriction listed in such
Section 5.13.
(b) As of the last day of the calendar month immediately
preceding the date hereof, (i) each of the leases and tenancies for all or any
portion of the MDI Properties (the "MDI Leases") is valid and subsisting and in
full force and effect, has not been amended, modified or supplemented; (ii) the
tenant under each of the MDI Leases is in actual possession of the leased
premises; (iii) no tenants are in arrears for the payment of rent for any month
preceding the month of the date of this Agreement or otherwise in default of
such tenant's lease obligations as to which MDI has given notice of default to
such tenant; and (iv) neither MDI nor any MDI Subsidiary has received any
written notice from any tenant of any intention to vacate. Neither MDI nor any
MDI Subsidiary has collected payment of rent (other than security deposits)
accruing for a period which is more than one month beyond the date of
collection.
(c) MDI has previously delivered or made available to Xxxxxxx
a true and correct copy of all MDI Leases.
(d) As of the last day of the calendar month immediately
preceding the date hereof, no tenant under any of the MDI Leases has asserted
any claim of which MDI or any MDI Subsidiary has received written notice which
would materially affect the collection of rent from such tenant and neither MDI
nor any MDI Subsidiary has received written notice of any material default or
breach on the part of MDI or any MDI Subsidiary under any of the MDI Leases
which has not been cured.
(e) Section 5.13 of the MDI Disclosure Letter sets forth a
complete and correct list, as of the date hereof, of all written or oral
commitments made by MDI or any
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MDI Subsidiary to lease any of the MDI Properties or any portion thereof which
has not yet been reduced to a written lease. MDI has provided true and correct
copies of all such written commitments to Xxxxxxx and Section 5.13 of the MDI
Disclosure Letter provides with respect to each such oral commitment the
principal terms of such commitment, including, if applicable, (i) the space to
be occupied, (ii) the name of the tenant, (iii) the length of the original term
thereof and any right or option to renew or extend the lease term, (iv) the
monthly minimum rental, (v) rental escalations, (vi) the terms with respect to
percentage rent or other overage rent, (vii) any provisions for tenant
allowances and tenant build-out and (viii) the right of any third-party broker
to any outstanding brokerage or other commission incidental thereto and all
other financial terms.
(f) All material leases pursuant to which MDI or any MDI
Subsidiary, as lessee, leases real or personal property are in good standing,
valid and effective in accordance with their respective terms, and there is not,
under any of such leases, any material existing default or any event which with
notice or lapse of time or both would constitute such a default, nor do any of
such leases contain any provision which would preclude the Surviving Corporation
from occupying and using the leased premises for the same purposes and upon
substantially the same rental and other terms as are applicable to the
occupation and use by MDI and the MDI Subsidiaries.
5.14 RENTS. The rents and other income and charges set forth in
Section 5.13 of the MDI Disclosure Letter are the actual rents, income and
charges presently being charged by MDI and the MDI Subsidiaries under the MDI
Leases. No space is occupied rent free or at a rental rate reduced from the rate
stated in Section 5.13 of the MDI Disclosure Letter. No tenant under any of the
MDI Leases is entitled to any purchase option, concessions, allowances,
abatements, set-offs, rebates or refunds or has prepaid any rents or other
charges for more than one month. None of the MDI Leases and none of the rents or
other amounts payable thereunder have been assigned, pledged or encumbered,
other than to lenders, as described in Section 5.22 of the MDI Disclosure
Letter. No brokerage or leasing commission or other compensation will be due or
payable to any Person, firm, corporation or other entity with respect to or on
account of any of the MDI Leases or any extensions or renewals thereof on and
after the Effective Time.
5.15 ENVIRONMENTAL MATTERS. None of MDI, any MDI Subsidiary or, to
the best knowledge of MDI, any other Person has caused or permitted (a) the
presence of any hazardous substances, hazardous materials, toxic substances or
waste materials (collectively, "Hazardous Materials") on any of the MDI
Properties, or (b) any spills, releases, discharges or disposal of Hazardous
Materials to have occurred or be presently occurring on or from any of the MDI
Properties as a result of any construction on or operation and use of such
properties, which presence or occurrence could, individually or in the
aggregate, have a MDI Material Adverse Effect; and in connection with the
construction on or operation and use of the MDI Properties, neither MDI nor any
of the MDI Subsidiaries has failed to comply, in any material respect, with any
applicable local, state or federal environmental law, regulation, ordinance or
administrative and judicial order relating to the generation, recycling, reuse,
sale,
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storage, handling, transport and disposal of any Hazardous Materials. In
addition, no lien has ever been imposed by any governmental agency on the MDI
Properties in connection with the presence of any Hazardous Materials and
neither MDI nor any MDI Subsidiary has ever entered into or been subject to any
judgment, consent decree, compliance order, or administrative order with respect
to any environmental or health and safety matter except for such judgments,
consent decrees, compliance orders or administrative orders that would not have
a material adverse effect on any of the MDI Properties, individually or in the
aggregate, or received any request for information, notice, demand letter,
administrative inquiry, or formal or informal complaint or claim with respect to
any environmental or health and safety matter within the last seven years. The
MDI has provided to Xxxxxxx copies of all documents, records, and information
available to MDI and any MDI Subsidiary concerning any environmental or health
and safety matter relevant to any MDI Properties, including, without limitation,
environmental risk assessments, site assessments, documentation regarding
off-site disposal of any Hazardous Materials, and reports, correspondence,
permits, licenses, approvals, consents, and other authorizations related to
environmental or health and safety matters issued by any governmental agency. In
addition, MDI has disclosed to Xxxxxxx all sites formerly or currently owned or
operated by MDI or any MDI Subsidiary.
5.16 EMPLOYEE BENEFIT PLANS.
(a) All employee benefits plans (within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) and other benefit arrangements covering employees of MDI and the MDI
Subsidiaries, other than any multiemployer plan (within the meaning of Section
3(37) of ERISA) (the "MDI Benefit Plans") are listed in Section 5.16(a) of the
MDI Disclosure Letter. True and complete copies of the MDI Benefit Plans have
been provided or made available to Xxxxxxx. To the extent applicable, the MDI
Benefit Plans have been administered in all material respects in accordance with
their terms and comply, in all material respects, with the applicable
requirements of ERISA and the Code. Any MDI Benefit Plan intended to be
qualified under Section 401(a) of the Code has received a favorable
determination letter from the IRS or a determination letter request has been
filed with the IRS with respect to any such plan and is still pending. No MDI
Benefit Plan is covered by Title IV of ERISA or Section 412 of the Code. No MDI
Benefit Plan nor MDI or any MDI Subsidiary has incurred any liability or penalty
under Section 4975 of the Code or Section 502(i) of ERISA. There are no pending
or anticipated claims against or otherwise involving any of the MDI Benefit
Plans and no suit, action or other litigation (excluding claims for benefits
incurred in the ordinary course of MDI Benefit Plan activities) has been brought
against or with respect to any such MDI Benefit Plan. All contributions required
to be made as of the date hereof to the MDI Benefit Plans have been made or
provided for. Except as otherwise required by Sections 601 through 608 of ERISA,
Section 4980B of the Code and applicable state laws, MDI does not maintain or
contribute to any plan or arrangement which provides or has any liability to
provide life insurance, medical or other employee welfare benefits to any
employee or former employee upon his retirement or termination of employment and
MDI has never represented, promised or contracted (whether in oral or written
form) to any employee or former employee that such benefits would be
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provided. Except as set forth in the Severance Agreements, the execution of, and
performance of the transactions contemplated in, this Agreement will not (either
alone or upon the occurrence of any additional subsequent events directly
related to the transaction contemplated herein) (i) constitute an event under
any MDI Benefit Plan that will or may result in any payment (whether of
severance pay or otherwise), acceleration, forgiveness of indebtedness, vesting,
distribution, increase in benefits or obligations to fund benefits with respect
to any employee, director or consultant of MDI or any MDI Subsidiary pursuant to
any MDI Benefit Plan or (ii) result in the triggering or imposition of any
restrictions or limitations on the right of MDI or Xxxxxxx to amend or terminate
any MDI Benefit Plan. No payment or benefit which will be required to be made
pursuant to the terms of any agreement, commitment or MDI Benefit Plan, as a
result of the transactions contemplated by this Agreement, to any officer,
director or employee of MDI or any of the MDI Subsidiaries, could be
characterized as an "excess parachute payment" within the meaning of Section
280G of the Code or non-deductible by virtue of Section 162(m) of the Code. MDI
represents and warrants that the Severance Pay Policy described in MDI's
employee handbook does not apply to either of Xxxxxx Xxxxxxxxx or Xxxxxx X.
Xxxxxxxx.
(b) Except as listed in Section 5.16(b) of the MDI Disclosure
Letter, neither MDI nor any MDI Subsidiary contributes to or has any liability
to contribute to a multiemployer plan. All contributions have been made as
required by the terms of each of the plans listed in Section 5.16(b) of the MDI
Disclosure Letter and the terms of any related collective bargaining agreements
and neither MDI nor any MDI Subsidiary has any knowledge or received any notice
that any such plan is in reorganization, that increased contributions are
required to avoid a reduction in plan benefits or the imposition of any excise
tax, that any such plan is or has been funded at a rate less than required under
Section 412 of the Code, or that any such plan is insolvent.
5.17 LABOR MATTERS. Neither MDI nor any MDI Subsidiary is a party
to, or bound by, any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor union organization. There
is no unfair labor practice or labor arbitration proceeding pending or, to the
knowledge of MDI, threatened against MDI or any of the MDI Subsidiaries relating
to their business, except for any such proceeding which would not have a MDI
Material Adverse Effect. To the knowledge of MDI, there are no organizational
efforts with respect to the formation of a collective bargaining unit presently
being made or threatened involving employees of MDI or any of the MDI
Subsidiaries.
5.18 NO BROKERS. Neither MDI nor any of the MDI Subsidiaries has
entered into any contract, arrangement or understanding with any Person or firm
which may result in the obligation of such entity or Xxxxxxx 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 MDI has retained SBC Warburg
Xxxxxx Xxxx ("SBC") as its financial advisors, the arrangements with which have
been disclosed in writing to Xxxxxxx prior to the date hereof. Other than the
foregoing arrangements and Xxxxxxx'x arrangement with BT Alex. Xxxxx & Sons
Incorporated ("Alex.
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Xxxxx"), MDI 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.
5.19 OPINION OF FINANCIAL ADVISOR. MDI has received the opinion of
SBC, to the effect that, as of the date hereof, the Merger Consideration is fair
to the holders of MDI Common Stock from a financial point of view, and has
delivered a true and correct copy of such opinion to Xxxxxxx.
5.20 XXXXXXX SHARE OWNERSHIP. Neither MDI nor any of the MDI
Subsidiaries owns any shares of Xxxxxxx Common Stock or other securities
convertible into any shares of Xxxxxxx Common Stock.
5.21 RELATED PARTY TRANSACTIONS. Set forth in Section 5.21 of the
MDI Disclosure Letter is a list of all arrangements, agreements and contracts
entered into by MDI or any of the MDI Subsidiaries (which are or will be in
effect as of or after the date of this Agreement) with (i) any consultant, other
than investment bankers, accountants or lawyers retained in the ordinary course
of business or for the purposes of the transaction contemplated hereby (A)
involving payments in excess of $25,000 or (B) which may not be terminated at
will by MDI or the MDI Subsidiary which is a party thereto, (ii) any Person who
is an officer, director or affiliate of MDI or any of the MDI Subsidiaries, any
relative of any of the foregoing or any entity of which any of the foregoing is
an affiliate, except for MDI Benefit Plans of which such individuals are
participants or (iii) any Person who acquired MDI Common Stock in a private
placement. All such documents are listed in Section 5.21 of the MDI Disclosure
Letter and the copies of such documents, which have previously been provided or
made available to Xxxxxxx and its counsel, are true and correct copies. All of
the management, leasing or other contracts to which any of the MDI Subsidiaries
or any affiliate of MDI is a party, receives income from or has obligations or
liabilities arising out of are listed on Section 5.21 of the MDI Disclosure
Letter.
5.22 CONTRACTS AND COMMITMENTS. Section 5.22 of the MDI 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 MDI Properties or personal property of MDI and
each of the MDI Subsidiaries and (ii) each material commitment, contractual
obligation, borrowing, capital expenditure or transaction (each, a "Commitment")
entered into by MDI or any of the MDI Subsidiaries which may result in total
payments by or liability of MDI or any MDI Subsidiary in excess of $10,000.
Copies of the foregoing are listed in Section 5.22 of the MDI Disclosure Letter
and the copies of such documents, which have previously been provided or made
available to Xxxxxxx and its counsel, are true and correct. None of MDI or any
of the MDI Subsidiaries has received any 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 MDI Material Adverse Effect.
All joint venture agreements to which MDI or any of the MDI Subsidiaries is a
party are set forth in Section
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5.22 of the MDI Disclosure Letter and neither MDI nor any of the MDI
Subsidiaries is in default with respect to any obligations, which individually
or in the aggregate are material, thereunder.
5.23 DEVELOPMENT RIGHTS. Set forth in Section 5.23 of the MDI
Disclosure Letter is a list of all agreements entered into by MDI or any of the
MDI Subsidiaries relating to the development or construction of the MDI
Properties and a description of the current status of each such development. The
copies of such agreements are listed in Section 5.23 of the MDI Disclosure
Letter, and such copies, which have previously been provided to Xxxxxxx and its
counsel, are true and correct. All work to be performed, payments to be made and
actions to be taken by MDI or any of the MDI Subsidiaries prior to the date
hereof pursuant to any agreement entered into with a governmental body or
authority in connection with the development of the MDI Properties, including
any development agreement relating to a site approval, zoning reclassification
or other similar action (e.g., local improvement district, road improvement
district, environmental mitigation, etc.) has been performed, paid or taken, as
the case may be, and MDI is not aware of any planned or proposed work, payments
or actions that may be required after the date hereof pursuant to such
agreements.
5.24 CERTAIN PAYMENTS RESULTING FROM TRANSACTIONS. Except for the
vesting of options as set forth in Section 5.3 of the MDI Disclosure Letter and
except as set forth in Section 5.24 of the MDI Disclosure Letter, the execution
of, and performance of the transactions contemplated by, this Agreement will not
(either alone or upon the occurrence of any additional or subsequent events) (i)
constitute an event under any MDI Benefit Plan, policy, practice, agreement or
other arrangement or any trust or loan (the "Employee Arrangements") that will
or may result in any payment (whether of severance pay or otherwise),
acceleration, forgiveness of indebtedness, vesting, distribution, increase in
benefits or obligation to fund benefits with respect to any employee, director
or consultant of MDI or any of the MDI Subsidiaries, or (ii) result in the
triggering or imposition of any restrictions or limitations on the right of MDI
or Xxxxxxx to amend or terminate any Employee Arrangement and receive the full
amount of any excess assets remaining or resulting from such amendment or
termination, subject to applicable taxes. No payment or benefit which will be
required to be made pursuant to the terms of any agreement, commitment or MDI
Benefit Plan, as a result of the transactions contemplated by this Agreement, to
any officer, director or employee of MDI or any of the MDI Subsidiaries, could
be characterized as an "excess parachute payment" within the meaning of Section
280G of the Code.
5.25 TENANT IMPROVEMENTS. Section 5.25 of the MDI Disclosure Letter
contains (i) a list of any unfunded tenant improvements being conducted by MDI
or any MDI Subsidiary in excess of $10,000 and (ii) to the best knowledge of
MDI, the aggregate amount of all unfunded tenant improvements for all MDI
Properties. MDI and each MDI Subsidiary has delivered or made available true and
correct copies of any and all contracts, plans, specifications and agreements in
connection with all tenant improvements in excess of $10,000.
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5.26 STATUS OF OPTIONS TO PURCHASE REAL PROPERTY. All options of
MDI or any of the MDI Subsidiaries to purchase real property, including a
description of the current status, conditions and contingencies relating to each
of such options, are set forth in Section 5.26 of the MDI Disclosure Letter.
5.27 RELATED PARTIES. Except as set forth in Section 5.27 of the
MDI Disclosure Letter, (i) MDI does not have any outstanding agreements,
arrangements or understandings, including, without limitation, leases and
promissory notes, with any Person who is or was an officer or director of MDI at
any time in the last eight (8) years, including, without limitation, Xxxxxx X.
Day, Xxxxxxxxxxx X. Held, Xxxxx X. Xxxxxx and Xxxxxx X. Xxxxxx, or with any
Person that is owned in part or controlled by any such individual, and (ii)
there is no Litigation pending or, to the knowledge of MDI, threatened,
involving, relating to or affecting MDI and any Person who is or was an officer
or director of MDI at any time in the last eight (8) years, including, without
limitation, Xxxxxx X. Day, Xxxxxxxxxxx X. Held, Xxxxx X. Xxxxxx and Xxxxxx X.
Xxxxxx, or any Person that is owned in part or controlled by any such
individual.
5.28 DEFINITION OF MDI'S KNOWLEDGE. As used in this Agreement, the
phrase "to the knowledge of MDI" or "to the best knowledge of MDI" (or words of
similar import) means the knowledge or the best knowledge of those individuals
identified in Section 5.28 of the MDI Disclosure Letter, and includes any fact,
matter or circumstance which any of such individuals, as an ordinary and prudent
business person employed in the same capacity in the same type and size of
business as MDI, should have known.
5.29 DISCLOSURE. The representations, warranties and statements
made by MDI in this Agreement, the ancillary agreements and in the MDI
Disclosure Letter and in the certificates and other documents delivered pursuant
hereto do not contain any untrue statement of a material fact, and, when taken
together, do not omit to state any material fact necessary to make such
representations, warranties and statements, in light of the circumstances under
which they are made, not misleading.
ARTICLE 6
6. REPRESENTATIONS AND WARRANTIES OF XXXXXXX.
Except as set forth in the disclosure letter delivered at or prior to
the execution hereof to MDI, which shall refer to the relevant Sections of this
Agreement (the "Xxxxxxx Disclosure Letter"), Xxxxxxx represents and warrants to
MDI as follows:
6.1 EXISTENCE; GOOD STANDING; AUTHORITY; COMPLIANCE WITH LAW.
Xxxxxxx is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Maryland. Xxxxxxx 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
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such qualification necessary, which states are listed in Section 6.1 of the
Xxxxxxx Disclosure Letter; PROVIDED, HOWEVER, that if Xxxxxxx has prepared
Section 6.1 of the Xxxxxxx Disclosure Letter in good faith, MDI hereby covenants
not to exercise any right that it may have to terminate this agreement pursuant
to Section 9.1(d) based solely on any breach of the representation of Xxxxxxx
contained in this sentence; PROVIDED FURTHER, HOWEVER, that nothing contained in
this Section 6.1 shall affect MDI's right to terminate this Agreement pursuant
to Section 9.1(d) with respect to any matter described in this sentence that
occurs or arises after the date hereof. Xxxxxxx has all requisite corporate
power and authority to own, operate, lease and encumber its properties and carry
on its business as now conducted. Each of the Xxxxxxx 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, which states are listed in Section 6.4 of the Xxxxxxx Disclosure
Letter; PROVIDED, HOWEVER, that if Xxxxxxx has prepared Section 6.1 of the
Xxxxxxx Disclosure Letter in good faith, MDI hereby covenants not to exercise
any right that it may have to terminate this agreement pursuant to Section
9.1(d) based solely on any breach of the representation of Xxxxxxx contained in
this sentence; PROVIDED FURTHER, HOWEVER, that nothing contained in this Section
6.1 shall affect MDI's right to terminate this Agreement pursuant to Section
9.1(d) with respect to any matter described in this sentence that occurs or
arises after the date hereof. Neither Xxxxxxx nor any Xxxxxxx 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
Xxxxxxx or any Xxxxxxx Subsidiary or any of their respective properties or
assets is subject, except where such violation would not have a material adverse
effect on the business, results of operations, properties or financial condition
of Xxxxxxx and the Xxxxxxx Subsidiaries taken as a whole (a "Xxxxxxx Material
Adverse Effect"). Xxxxxxx and the Xxxxxxx Subsidiaries have obtained all
licenses, permits and other authorizations and have taken all actions required
by applicable law or governmental regulations in connection with their business
as now conducted, where the failure to obtain any such license, permit or
authorization or to take any such action would have a Xxxxxxx Material Adverse
Effect. Copies of the Charter and other equivalent documents and Bylaws (and all
amendments thereto) of Xxxxxxx and each of the Xxxxxxx Subsidiaries are listed
in Section 6.1 of the Xxxxxxx Disclosure Letter, and the copies of such
documents, which have previously been delivered or made available to MDI or its
counsel, are true and correct copies. For purposes of this Agreement, the term
"Xxxxxxx Subsidiary" shall include any of the entities set forth under such
heading in Section 6.4 of the Xxxxxxx Disclosure Letter.
6.2 AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS. Xxxxxxx has
the requisite corporate power and authority to enter into the transactions
contemplated hereby and to execute and deliver this Agreement and the ancillary
agreements to which it is a party. The Board of Directors of Xxxxxxx has, by
resolutions duly adopted by unanimous vote approved this Agreement, the Merger,
the issuance of the Xxxxxxx Preferred Stock and the other transactions
contemplated by this Agreement. In connection with the foregoing, the Board of
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Directors of Xxxxxxx 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 other state, inapplicable
to this Agreement, the Merger, and the transactions contemplated by this
Agreement. The execution by Xxxxxxx of this Agreement, the ancillary agreements
and the consummation of the transactions contemplated by this Agreement and the
ancillary agreements has been duly authorized by all requisite corporate action
on the part of Xxxxxxx. This Agreement constitutes, and the ancillary agreements
to which it will become a party (when executed and delivered pursuant hereto)
will constitute, the valid and legally binding obligations of Xxxxxxx,
enforceable against Xxxxxxx in accordance with their respective terms, subject
to applicable bankruptcy, insolvency, moratorium or other similar laws relating
to creditors' rights and general principles of equity.
6.3 CAPITALIZATION.
(a) The authorized capital stock of Xxxxxxx consists of
80,000,000 shares of Xxxxxxx Common Stock, of which 23,701,762 are issued and
outstanding, 20,000,000 shares of preferred stock, par value $.01 per share (the
"Xxxxxxx Preferred Stock"), of which none are issued and outstanding, and
50,000,000 shares of excess stock, par value $.01 per share ("Xxxxxxx Excess
Stock"), of which none are issued and outstanding. All such issued and
outstanding shares of Xxxxxxx Common Stock are duly authorized, validly issued,
fully paid, nonassessable and free of preemptive rights. Xxxxxxx 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 Xxxxxxx on any
matter. Except for the Xxxxxxx OP Units, as defined below, 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 Xxxxxxx to issue, transfer or sell any shares of Xxxxxxx Common Stock,
other than the issuance by Xxxxxxx of up to 385,550 shares of Xxxxxxx Common
Stock upon the exercise of stock options issued pursuant to Xxxxxxx'x stock
option plans. There are no agreements or understandings to which Xxxxxxx or any
Xxxxxxx Subsidiary is a party with respect to the voting of any shares of
Xxxxxxx Common Stock or which restrict the transfer of any such shares, nor does
Xxxxxxx 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.
Except for the Xxxxxxx OP Units, as defined below, there are no outstanding
contractual obligations of Xxxxxxx or any Xxxxxxx Subsidiary to repurchase,
redeem or otherwise acquire any shares of capital stock, partnership interests
or other securities of Xxxxxxx or any Xxxxxxx Subsidiary.
(b) The sole general partner of Xxxxxxx Operating Limited
Partnership, a Delaware limited partnership ("Xxxxxxx OP"), is Xxxxxxx. As of
the date hereof, there are issued and outstanding 25,083,004 units of
partnership interest in Xxxxxxx OP ("Xxxxxxx OP Units"), 23,701,262 of which are
owned by Xxxxxxx and the remainder of which are owned by the Persons (the
"Limited Partners") and in the amounts set forth in Section 6.3 of the Xxxxxxx
Disclosure Letter. All such issued and outstanding Xxxxxxx OP Units are duly
authorized,
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validly issued, fully paid, and free of preemptive rights. 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 Xxxxxxx OP to issue, transfer or sell any limited partnership interests
of Xxxxxxx OP. The Xxxxxxx OP Units owned by Xxxxxxx and, to the best knowledge
of Xxxxxxx, the Xxxxxxx OP Units owned by the Limited Partners, are subject only
to the restrictions on transfer set forth in the Limited Partnership Agreement
of Xxxxxxx OP (the "Xxxxxxx OP Partnership Agreement") and those imposed by
applicable securities laws. Except as set forth in Section 6.3 of the Xxxxxxx
Disclosure Letter, Xxxxxxx has not issued or granted, and is not a party to, any
commitments of any kind relating to, or any agreements or understandings with
respect to, Xxxxxxx OP Units or any other interest in Xxxxxxx or any securities
convertible into Xxxxxxx OP Units or such interests.
6.4 SUBSIDIARIES. Except as set forth in Section 6.4 of the
Xxxxxxx Disclosure Letter, Xxxxxxx owns directly or indirectly all of the
outstanding shares of capital stock or all of the partnership or other equity
interests of each of the Xxxxxxx Subsidiaries. Each of the outstanding shares of
capital stock of each of the Xxxxxxx Subsidiaries having corporate form is duly
authorized, validly issued, fully paid and nonassessable. Except as set forth in
Section 6.4 of the Xxxxxxx Disclosure Letter, each of the outstanding shares of
capital stock of, or partnership or other equity interests in, each of the
Xxxxxxx Subsidiaries is owned, directly or indirectly, by Xxxxxxx free and clear
of all liens, pledges, security interests, claims or other encumbrances. The
following information for each Xxxxxxx Subsidiary is set forth in Section 6.4 of
the Xxxxxxx Disclosure Letter: (i) its name and jurisdiction of incorporation or
organization; (ii) the jurisdictions in which such entity is qualified to
conduct business; (iii) its authorized capital stock or share capital, or
partnership or other interests; (iv) the name of each stockholder or owner of
capital stock or share capital or percentage ownership for non-corporate
entities held by it; and (v) the name of the general partners, if applicable.
6.5 OTHER INTERESTS. Except for interests in the Xxxxxxx
Subsidiaries and the securities of other publicly traded REITs, neither Xxxxxxx
nor any Xxxxxxx Subsidiary owns directly or indirectly any interest or
investment (whether equity or debt) in any corporation, partnership, joint
venture, trust or other entity, other than investments in short-term investment
securities and other than disclosed in Section 6.5 of the Xxxxxxx Disclosure
Letter.
6.6 NO VIOLATION. Except as set forth in Section 6.6 of the
Xxxxxxx Disclosure Letter, neither the execution and delivery by Xxxxxxx of this
Agreement or the ancillary agreements nor the consummation by Xxxxxxx of the
transactions contemplated by this Agreement and the ancillary agreements in
accordance with their terms, will: (i) conflict with or result in a breach of
any provisions of the Articles of Amendment or Bylaws of Xxxxxxx; (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
Xxxxxxx'x 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
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creation of any lien, security interest, charge or encumbrance upon any of the
properties of Xxxxxxx or any of the Xxxxxxx 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 Xxxxxxx or any of the Xxxxxxx
Subsidiaries is a party, or by which Xxxxxxx or any of the Xxxxxxx 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 Xxxxxxx
Material 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
Xxxxxxx Material Adverse Effect.
6.7 SEC DOCUMENTS. A complete list of Xxxxxxx SEC filings, and
each (A) registration statement, (B) annual report on Form 10-K, (C) quarterly
report on Form 10-Q, (D) current report on Form 8-K, (E) proxy statement or
information statement, and (F) any other report filed with the SEC pursuant to
the Exchange Act or the Securities Act (in all such cases, including all
exhibits, amendments and supplements thereto) prepared by Xxxxxxx or relating to
either of their respective properties since January 1, 1994, are set forth in
Section 6.7 of the Xxxxxxx Disclosure Letter, and copies of which, in the form
(including exhibits and any amendments thereto) filed with the SEC, have
previously been provided or made available to MDI or its counsel (collectively,
the "Xxxxxxx Reports"). The Xxxxxxx Reports were filed with the SEC in a timely
manner and constitute all forms, reports and documents required to be filed by
Xxxxxxx under the Securities Laws subsequent to January 1, 1994. As of their
respective dates, the Xxxxxxx 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 Xxxxxxx included in or
incorporated by reference into the Xxxxxxx Reports (including the related notes
and schedules) fairly presents the consolidated financial position of Xxxxxxx
and the Xxxxxxx Subsidiaries as of its date and each of the consolidated
statements of income, retained earnings and cash flows of Xxxxxxx included in or
incorporated by reference into the Xxxxxxx Reports (including any related notes
and schedules) fairly presents the results of operations, retained earnings or
cash flows, as the case may be, of Xxxxxxx and the Xxxxxxx 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 of the SEC. Except as and to the extent set forth on the
consolidated balance sheet of Xxxxxxx and the Xxxxxxx Subsidiaries at December
31, 1997, including all notes thereto, or as set forth in the Xxxxxxx Reports,
neither Xxxxxxx nor any of the Xxxxxxx Subsidiaries has any material liabilities
or obligations of any nature (whether accrued, absolute, contingent or
otherwise) that would be required to be reflected on, or reserved against in, a
balance sheet of Xxxxxxx or in
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the notes thereto, prepared in accordance with generally accepted accounting
principles consistently applied, except liabilities arising in the ordinary
course of business since such date and liabilities for expenses of attorneys,
accountants and investment bankers incurred in connection with the Merger.
6.8 LITIGATION. Other than personal injury and other routine tort
litigation arising from the ordinary course of operations of Xxxxxxx and the
Xxxxxxx Subsidiaries (a) which are covered by adequate insurance or (b) for
which all material costs and liabilities arising therefrom are reimbursable
pursuant to common area maintenance or similar agreements, there is no suit,
action or proceeding pending (in which service of process has been received by
an employee of Xxxxxxx or a Xxxxxxx Subsidiary) or, to the best knowledge of
Xxxxxxx threatened in writing against or affecting Xxxxxxx or any Xxxxxxx
Subsidiary that, individually or in the aggregate, could reasonably be expected
to (i) have a Xxxxxxx Material Adverse Effect or (ii) prevent the consummation
of any of the transactions contemplated by this Agreement, nor is there any
judgment, decree, injunction, rule or order of any court of Governmental Entity
or arbitrator outstanding against Xxxxxxx or any of the Xxxxxxx Subsidiaries
having, or which, insofar as reasonably can be foreseen, in the future would
have, any such effect.
6.9 ABSENCE OF CERTAIN CHANGES. Since the date of the most recent
audited financial statements included in Xxxxxxx Reports (the "Xxxxxxx Financial
Statement Date"), Xxxxxxx and the Xxxxxxx Subsidiaries have conducted their
business only in the ordinary course and there has not been (a) any change which
has had a Xxxxxxx Material Adverse Effect, nor has there been any occurrence or
circumstance that with the passage of time would reasonably be expected to
result in a Xxxxxxx Material Adverse Effect, (b) except for regular quarterly
distributions not in excess of $.35 per share Xxxxxxx Common Stock or Xxxxxxx OP
Unit, respectively (or, with respect to the period commencing on the date hereof
and ending on the Closing Date, distributions as necessary to maintain REIT
status), in each case with customary record and payment dates, any
authorization, declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to the Xxxxxxx
Common Stock or Xxxxxxx OP Units, (c) any split, combination or reclassification
of the Xxxxxxx Common Stock or the Xxxxxxx OP Units or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for, or giving the right to acquire by exchange or exercise,
shares of stock of Xxxxxxx or partnership interests in Xxxxxxx OP or any
issuance of an ownership interest in, any Xxxxxxx Subsidiary, (d) any damage,
destruction or loss, whether or not covered by insurance, that has or might
reasonably be expected to have a Xxxxxxx Material Adverse Effect, or (e) any
change in accounting methods, principles or practices by Xxxxxxx or any Xxxxxxx
Subsidiary materially affecting its assets, liabilities or business, except
insofar as may have been disclosed in Xxxxxxx Reports or required by a change in
GAAP.
6.10 TAXES. Except as set forth in Section 6.10 of the Xxxxxxx
Disclosure Letter:
(a) Xxxxxxx and each of the Xxxxxxx Subsidiaries has paid or
caused to be paid all Taxes owed by it through the date hereof.
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(b) Xxxxxxx and each of the Xxxxxxx 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) Neither the IRS nor any other governmental authority is
now asserting by written notice to Xxxxxxx or any Xxxxxxx Subsidiary or, to the
knowledge of Xxxxxxx or the Xxxxxxx Subsidiaries, threatening to assert against
Xxxxxxx any deficiency or claim for additional Taxes. There is no dispute or
claim concerning any Tax liability of Xxxxxxx, either claimed or raised by any
governmental authority, or as to which any officer of Xxxxxxx has reason to
believe may be claimed or raised by any governmental authority. No claim has
ever been made by a taxing authority in a jurisdiction where Xxxxxxx does not
file reports and returns that Xxxxxxx is or may be subject to taxation by that
jurisdiction. There are no security interests on any of the assets of Xxxxxxx or
any Xxxxxxx Subsidiary that arose in connection with any failure (or alleged
failure) to pay any Taxes. Xxxxxxx has never entered into a closing agreement
pursuant to Section 7121 of the Code.
(d) Xxxxxxx has not received written notice of any audit of
any tax return filed by Xxxxxxx, no such audit is in progress, and Xxxxxxx has
not been notified by any tax authority that any such audit is contemplated or
pending. Neither Xxxxxxx nor any of the Xxxxxxx 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 Xxxxxxx is in force. True, correct and complete copies of all
federal, state and local income or franchise tax returns filed by Xxxxxxx and
each of the Xxxxxxx Subsidiaries and all communications relating thereto have
been delivered to MDI or made available to representatives of MDI.
(e) Xxxxxxx and each Xxxxxxx 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.
(f) Each of the Xxxxxxx Subsidiaries of which all the
outstanding capital stock is owned solely by Xxxxxxx is a Qualified REIT
Subsidiary as defined in Section 856(i) of the Code. Xxxxxxx OP and each of the
other Xxxxxxx Subsidiaries listed as a partnership or limited liability company
in Section 6.4 of the Xxxxxxx Disclosure Letter are, and have been at all times,
properly classified as partnerships for federal income tax purposes and not as
publicly-traded partnerships.
(g) For all applicable tax years as to which Xxxxxxx'x federal
income tax returns are subject to audit and Xxxxxxx is subject to assessment for
taxes reportable therein, and at all times thereafter up to and including the
date hereof, Xxxxxxx 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. For the periods described in
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the preceding sentence, Xxxxxxx has met all requirements necessary to be treated
as a REIT for purposes of the income tax provisions of each state in which
Xxxxxxx is subject to income tax and which provides for the taxation of REITs in
a manner similar to the treatment of REITs under Sections 856-860 of the Code,
but, with respect to each such state, only for such periods for which Xxxxxxx'x
income tax returns are subject to audit and Xxxxxxx is subject to assessment for
taxes reportable therein.
6.11 BOOKS AND RECORDS. The books of account and other financial
records of Xxxxxxx and each of the Xxxxxxx 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 Xxxxxxx Reports. The minute books and other
records of Xxxxxxx and each of the Xxxxxxx Subsidiaries have been made available
to MDI, 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
Xxxxxxx and each of the Xxxxxxx Subsidiaries.
6.12 EMPLOYEE BENEFIT PLANS. All employee benefits plans (within
the meaning of Section 3(3) of ERISA) and other benefit arrangements covering
employees of Xxxxxxx and the Xxxxxxx Subsidiaries (other than multiemployer
plans as defined in Sections 3(37) and 4001(a)(3) of ERISA) (the "Xxxxxxx
Benefit Plans") are listed in Section 6.12 of the Xxxxxxx Disclosure Letter.
True and complete copies of the Xxxxxxx Benefit Plans have been provided or made
available to MDI. To the extent applicable, the Xxxxxxx Benefit Plans have been
administered in all material respects in accordance with their terms and comply,
in all material respects, with the applicable requirements of ERISA and the
Code. Any Xxxxxxx Benefit Plan intended to be qualified under Section 401(a) of
the Code has received a favorable determination letter from the IRS or a
determination letter request has been filed with the IRS with respect to any
such plan and is still pending. No Xxxxxxx Benefit Plan is covered by Title IV
of ERISA or Section 412 of the Code. No Xxxxxxx Benefit Plan nor Xxxxxxx or any
of the Xxxxxxx Subsidiaries has incurred any liability or penalty under Section
4975 of the Code or Section 502(i) of ERISA. There are no pending or anticipated
claims against or otherwise involving any of the Xxxxxxx Benefit Plans and no
suit, action or other litigation (excluding claims for benefits incurred in the
ordinary course of Xxxxxxx Benefit Plan activities) has been brought against or
with respect to any such Xxxxxxx Benefit Plan. All material contributions
required to be made as of the date hereof to the Xxxxxxx Benefit Plans have been
made or provided for. Except as otherwise required by Sections 601 through 608
of ERISA, Section 4980B of the Code and applicable state laws, Bradley does not
maintain or contribute to any plan or arrangement which provides or has any
liability to provide life insurance, medical or other employee welfare benefits
to any employee or former employee upon his retirement or termination of
employment and Xxxxxxx has never represented, promised or contracted (whether in
oral or written form) to any employee or former employee that such benefits
would be provided. Except as disclosed in the Xxxxxxx Reports, the execution of,
and performance of the transactions contemplated in, this Agreement will not
(either alone or upon the occurrence of any additional subsequent events
directly related to the transaction contemplated herein)
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constitute an event under any Xxxxxxx Benefit Plan that will or may result in
any payment (whether of severance pay or otherwise), acceleration, forgiveness
of indebtedness, vesting, distribution, increase in benefits or obligations to
fund benefits with respect to any employee, director or consultant of Xxxxxxx or
any Xxxxxxx Subsidiary.
6.13 LABOR MATTERS. Except as listed in Section 6.13 of the Xxxxxxx
Disclosure Letter, neither Xxxxxxx nor any Xxxxxxx Subsidiary is a party to, or
bound by, any collective bargaining agreement, contract or other agreement or
understanding with a labor union or labor union organization. There is no unfair
labor practice or labor arbitration proceeding pending or, to the knowledge of
Xxxxxxx, threatened against Xxxxxxx or any of the Xxxxxxx Subsidiaries relating
to their business, except for any such proceeding which would not have a Xxxxxxx
Material Adverse Effect. To the knowledge of Xxxxxxx, there are no
organizational efforts with respect to the formation of a collective bargaining
unit presently being made or threatened involving employees of Xxxxxxx or any of
the Xxxxxxx Subsidiaries.
6.14 NO BROKERS. Neither Xxxxxxx nor any of the Xxxxxxx
Subsidiaries has entered into any contract, arrangement or understanding with
any Person or firm which may result in the obligation of such entity or MDI 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 Xxxxxxx has
retained Alex. Xxxxx as its financial advisor, the arrangements with which have
been disclosed in writing to MDI prior to the date hereof. Other than the
foregoing arrangements and MDI's arrangements set forth in Section 5.18 of this
Agreement, Xxxxxxx 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 MDI STOCK OWNERSHIP. Except as disclosed in Section 6.15 of
the Xxxxxxx Disclosure Letter, neither Xxxxxxx nor any of the Xxxxxxx
Subsidiaries owns any shares of capital stock of MDI or other securities
convertible into capital stock of MDI.
6.16 DEFINITION OF XXXXXXX'X KNOWLEDGE. As used in this Agreement,
the phrase "to the knowledge of Xxxxxxx" or "to the best knowledge of Xxxxxxx"
(or words of similar import) means the knowledge or the best knowledge of those
individuals identified in Section 6.16 of the Xxxxxxx Disclosure Letter, and
includes any fact, matter or circumstance which any of such individuals, as an
ordinary and prudent business person employed in the same capacity in the same
type and size of business as Xxxxxxx, should have known.
6.17 ENVIRONMENTAL MATTERS. Except as disclosed in Section 6.17 of
the Xxxxxxx Disclosure Letter, none of Xxxxxxx, any Xxxxxxx Subsidiary or, to
the best knowledge of Xxxxxxx, any other Person has caused or permitted (a) the
unlawful presence of any Hazardous Materials on any of the real properties
identified in the Xxxxxxx Disclosure Letter (the "Xxxxxxx Properties"), or (b)
any unlawful spills, releases, discharges or disposal of Hazardous Materials to
have occurred or be presently occurring on or from any of the Xxxxxxx Properties
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as a result of any construction on or operation and use of such properties,
which presence or occurrence would, individually or in the aggregate, have a
Xxxxxxx Material Adverse Effect; and in connection with the construction on or
operation and use of the Xxxxxxx Properties, neither Xxxxxxx nor any of the
Xxxxxxx Subsidiaries has failed to comply, in any material respect, with any
applicable local, state or federal environmental law, regulation, ordinance or
administrative and judicial order relating to the generation, recycling, reuse,
sale, storage, handling, transport and disposal of any Hazardous Materials.
6.18 DISCLOSURE. The representations, warranties and statements
made by Xxxxxxx in this Agreement, the ancillary agreements and in the Xxxxxxx
Disclosure Letter and in the certificates and other documents, delivered
pursuant hereto do not contain any untrue statement of a material fact, and,
when taken together, do not omit to state any material fact necessary to make
such representations, warranties and statements, in light of the circumstances
under which they are made, not misleading.
ARTICLE 7
7. COVENANTS.
7.1 ACQUISITION PROPOSALS. Unless and until this Agreement shall
have been terminated in accordance with its terms, MDI agrees and covenants that
(a) neither it nor any MDI 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 MDI Subsidiaries)
not to, directly or indirectly, initiate, solicit or 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 of 10% or more of the assets or any equity securities
or partnership interests (including, without limitation, partnership interests
of MAB) of, MDI or any MDI 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) MDI 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) MDI will notify Xxxxxxx immediately if any such inquiries
or proposals are received by, any such information is requested from, or any
such negotiations or discussions are sought to be initiated or continued with,
it; PROVIDED, HOWEVER, that nothing contained in this Section 7.1 shall prohibit
the Board of Directors of MDI, from (i) furnishing information to or entering
into discussions or negotiations with, any Person or entity that makes an
unsolicited bona fide Acquisition Proposal, if, and only to the
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extent that, (A) the Board of Directors of MDI, after consultation with and
based upon the advice of XxXxxxx, North, Xxxxxx & Xxxxx, P.C., or another
nationally recognized law firm selected by MDI, 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, (B) prior to furnishing such
information to, or entering into discussions or negotiations with, such Person
or entity, MDI provides written notice to Xxxxxxx to the effect that it is
furnishing information to, or entering into discussions or negotiations with,
such Person or entity, and (C) MDI keeps Xxxxxxx informed of the status of any
such discussions or negotiations, including, without limitation, promptly
informing Xxxxxxx (in any case within 24 hours) of all material developments
relating thereto; and (ii) to the extent applicable, complying with Rule 14e-2
and Rule 14a-9 promulgated under the Exchange Act with regard to an Acquisition
Proposal. Notwithstanding anything to the contrary set forth herein, nothing in
this Section 7.1 shall (x) permit MDI to terminate this Agreement (except as
specifically provided in Article 9 hereof), (y) except as specifically provided
in Article 9 hereof, permit MDI or any MDI Subsidiary to enter into any
agreement with respect to an Acquisition Proposal during the term of this
Agreement (it being agreed that during the term of this Agreement, neither MDI
nor any MDI Subsidiary shall enter into any agreement with any Person that
provides for, or in any way facilitates, an Acquisition Proposal), or (z) affect
any other obligation of any party under this Agreement.
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, Xxxxxxx and MDI:
(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,
whether or not in the ordinary course of business;
(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) At all times from the execution of this Agreement
until the Effective Time, MDI:
(i) Shall, and shall cause each MDI 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)-(xv) below;
(ii) Shall not, and shall cause each MDI
Subsidiary not to, acquire, enter into an option to acquire or exercise an
option or contract to acquire, additional real property, incur additional
indebtedness (including, without limitation, refinancing any existing
indebtedness), encumber assets or commence construction of, or enter into any
agreement or commitment to develop or construct, shopping centers or any other
type of real estate projects (including, but not limited, to options to purchase
real property listed in Section 5.26 of the MDI Disclosure Letter); PROVIDED,
HOWEVER, that MDI shall be able (A) to engage in the construction of Imperial
Mall in accordance with the budget set forth in Section 7.2(b) of the MDI
Disclosure Letter; and (B) to borrow money under its existing lines of credit in
the ordinary course of business in accordance with the budget set forth in
Section 7.2(b) of the MDI Disclosure Letter; PROVIDED FURTHER that in no event
shall MDI or any MDI Subsidiary enter into any form of third party financing or
refinancing of existing indebtedness relating to Imperial Mall without the prior
written consent of Xxxxxxx.
(iii) Shall not amend its Charter or Bylaws, and
shall cause each MDI Subsidiary not to amend its Charter, Bylaws, joint venture
documents, partnership agreements or equivalent documents except as contemplated
by Section 1.4 of this Agreement;
(iv) Shall not (A) except pursuant to the
exercise of options, warrants, conversion rights and other contractual rights
existing on the date hereof and disclosed pursuant to this Agreement, issue any
shares of its capital stock, effect any stock split, reverse stock split, stock
dividend, recapitalization or other similar transaction, (B) grant, confer or
award any option, warrant, conversion right or other right 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 (A) declare, set aside or pay any
dividend or make any other distribution or payment with respect to any shares of
its capital stock, except in compliance with Section 7.14 of this Agreement, or
(B) directly or indirectly redeem, purchase or otherwise acquire any shares of
its capital stock or capital stock of any of the MDI Subsidiaries, or make any
commitment for any such action;
(vi) Shall not, and shall not permit any of the
MDI Subsidiaries to, sell, lease or otherwise dispose of (A) any MDI Properties
or any portion thereof or any of the
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capital stock of or partnership or other interests in any of the MDI
Subsidiaries or (B) except in the ordinary course of business, any of its other
assets; PROVIDED, HOWEVER, that, subject to the approval of a committee composed
of two individuals selected by Xxxxxxx and two individuals selected by MDI, MDI
may (A) lease any MDI Properties or any portion thereof in the ordinary course
of business (PROVIDED, HOWEVER, that approval of such committee shall not be
required for leases of less than 5,000 square feet, which are on market rates,
terms and conditions and do not violate any exclusives or restrictions) and (B)
solicit purchase bids for the properties located at Town West, Macon County and
Imperial Mall;
(vii) Shall not, and shall not permit any of the
MDI Subsidiaries to, make any loans, advances or capital contributions to, or
investments in, any other Person;
(viii) Shall not, and shall not permit any of the
MDI Subsidiaries to, pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the ordinary
course of business consistent with past practice or in accordance with their
terms, of liabilities reflected or reserved against in, or contemplated by, the
most recent consolidated financial statements (or the notes thereto) of MDI
included in the MDI Reports or incurred in the ordinary course of business
consistent with past practice;
(ix) Shall not, and shall not permit any of the
MDI Subsidiaries to, enter into any Commitment which may result in total
payments or liability by or to it in excess of $25,000, except for the renewal
of casualty and property insurance held by MDI in the ordinary course of
business (provided, however, that nothing contained in this clause (ix) shall
permit MDI or any MDI Subsidiary to take any action prohibited by the other
provisions of this Section 7.2);
(x) Shall not, and shall not permit any of the
MDI Subsidiaries to, enter into any Commitment with any officer, director,
consultant or affiliate of MDI or any of the MDI Subsidiaries;
(xi) Shall provide Xxxxxxx with a reasonable
opportunity to review and comment on any federal income tax returns filed by MDI
or any MDI Subsidiary prior to the Effective Time;
(xii) Shall not, without prior notification and
consultation with Xxxxxxx, terminate any employee under circumstances which
would result in severance payments to such employee or pay any severance
benefits to any employee on account of such employee's termination;
(xiii) Shall maintain the MDI Properties in
substantially the same condition as the same are in as of the date of this
Agreement, subject only to reasonable use and wear and casualty;
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(xiv) Shall maintain in full force and effect fire
and extended coverage casualty insurance on the MDI Properties as shown in
Section 5.12 of the MDI Disclosure Letter; and
(xv) Shall take all such actions necessary in
order to terminate the MDI's dividend reinvestment plan as soon as possible
following the execution of this Agreement but in any event prior to the
distribution of the Merger Dividend (as defined in Section 7.14 hereof).
(c) Notwithstanding anything to the contrary set forth in
this Agreement and without limiting any of the other rights of Xxxxxxx set forth
herein, between the date of this Agreement and the Effective Time, (i) Xxxxxxx
and the Xxxxxxx Subsidiaries may enter into leases with respect to all or any
portion of the Xxxxxxx Properties, acquire, lease, enter into an option to
acquire or lease, or exercise an option or contract to acquire or lease,
additional real property, incur additional indebtedness, encumber assets or
commence construction of, or enter into any agreement or commitment to develop,
construct or renovate, shopping centers or other real estate projects, (ii)
Xxxxxxx may issue directly or indirectly in a public or private transaction any
kind of securities, including without limitation shares of any class or series
of common, preferred or other type of capital stock, and may cause Xxxxxxx OP to
issue in a public or private transaction any kind of securities, including,
without limitation, partnership units or debt securities, (iii) Xxxxxxx may
acquire, or agree to acquire any business or any corporation, partnership,
limited liability company or other business organization by merger,
consolidation or by purchasing substantially all of the assets, capital stock or
partnership or membership interests of such entity, or by any other manner, (iv)
Xxxxxxx may sell or agree to sell all or substantially all of its assets or to
issue or sell any amount of its outstanding capital stock or Xxxxxxx OP Units to
a Person or group of Persons or an entity, and may merge or consolidate with
another entity regardless of whether Xxxxxxx is the surviving entity in such
transaction, (v) Xxxxxxx may amend and/or restate its Charter and Bylaws and
Xxxxxxx and the other partners of Xxxxxxx OP may amend and/or restate the
Xxxxxxx OP Partnership Agreement, and (vi) Xxxxxxx and the Xxxxxxx Subsidiaries
may take any action necessary or advisable to effectuate any of the foregoing
clauses.
7.3 MEETING OF STOCKHOLDERS.
(a) MDI will take all action necessary in accordance with
applicable law and its Charter and Bylaws to convene a meeting of its
stockholders (the "Stockholders' Meeting") as promptly as practicable to
consider and vote upon the approval of this Agreement and the transactions
contemplated hereby. The Board of Directors of MDI shall recommend and declare
advisable that its stockholders approve this Agreement and the transactions
contemplated hereby, and, prior to the Effective Time, neither the Board of
Directors of MDI nor any committee thereof shall withdraw or modify the approval
or recommendation by such Board of Directors. MDI shall use its best efforts to
timely mailing the proxy statement/prospectus contained in the Form S-4 (as
defined below) to MDI's stockholders and to take all such other actions
necessary or desirable to obtain such approval; PROVIDED,
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HOWEVER, that nothing contained in this Section 7.3(a) shall prohibit the Board
of Directors of MDI from failing to make such recommendation or using its best
efforts to obtain such approval if the Board of Directors of MDI has determined
in good faith after consultation with and based upon the advice of XxXxxxx,
North, Xxxxxx & Xxxxx, P.C. or another nationally recognized law firm selected
by MDI, that such action is necessary for the Board to comply with its fiduciary
duties to its stockholders under applicable law. Notwithstanding the foregoing,
MDI will immediately notify Xxxxxxx in writing if it takes any action set forth
in the prior sentence.
(b) Promptly following the execution of this agreement,
Xxxxxxx and MDI shall prepare and file a proxy statement/prospectus (the "Form
S-4") relating to the stockholder meeting of MDI and the registration of the
Xxxxxxx Preferred Stock and the Xxxxxxx Common Stock (the "Underlying Xxxxxxx
Common Stock") which will be issued upon conversion of the Xxxxxxx Preferred
Stock in accordance with the terms set forth in the Articles Supplementary. 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 Xxxxxxx and MDI shall furnish
all 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. Xxxxxxx shall use its
reasonable best efforts, and MDI will cooperate with Xxxxxxx, to have the Form
S-4 declared effective by the SEC as promptly as practicable. Xxxxxxx 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. Xxxxxxx agrees that the Form S-4 and each
amendment or supplement thereto at the time of mailing thereof and at the time
of the meeting of stockholders of MDI, 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 Xxxxxxx in reliance upon and in
conformity with information concerning MDI furnished to Xxxxxxx by MDI for use
in the Form S-4. MDI 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 meeting of stockholders of MDI, 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 MDI in
reliance upon and in conformity with information concerning Xxxxxxx furnished to
MDI by Xxxxxxx for use in the Form S-4. Xxxxxxx will advise and deliver copies
(if any) to MDI, 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 Xxxxxxx
Preferred Stock issuable in connection with the Merger for offering or sale in
any jurisdiction,
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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.
(c) It shall be a condition to the mailing of the proxy
statement/prospectus that (i) Xxxxxxx shall have received a "comfort" letter
from Deloitte & Touche LLP, independent public accountants for MDI, of the kind
contemplated by the Statement of Auditing Standards with respect to Letters to
Underwriters promulgated by the American Institute of Certified Public
Accountants (the "AICPA Statement"), dated as of the date on which the Form S-4
shall become effective, addressed to Xxxxxxx in form and substance reasonably
satisfactory to Xxxxxxx, concerning the procedures undertaken by Deloitte &
Touche LLP with respect to the financial statements and information of MDI and
the MDI Subsidiaries contained in the Form S-4 and the other matters
contemplated by the AICPA Statement and otherwise customary in scope and
substance for letters delivered by independent public accountants in connection
with transactions such as those contemplated by this Agreement and (ii) MDI
shall have received a "comfort" letter from KPMG Peat Marwick LLP, independent
public accountants for Xxxxxxx, of the kind contemplated by the AICPA Statement,
dated as of the date on which the Form S-4 shall become effective, addressed to
MDI, in form and substance reasonably satisfactory to MDI, concerning the
procedures undertaken by KPMG Peat Marwick LLP with respect to the financial
statements and information of Xxxxxxx and the Xxxxxxx Subsidiaries contained in
the Form S-4 and the other matters contemplated by the AICPA Statement and
otherwise customary in scope and substance for letters delivered by independent
public accountants in connection with transactions such as those contemplated by
this Agreement.
7.4 FILINGS; OTHER ACTION. Subject to the terms and conditions
herein provided, MDI and Xxxxxxx 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, and the ancillary
agreements and the consummation of the transactions contemplated by such
agreements 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
MDI and Xxxxxxx; and (d) use all reasonable best efforts to take, or cause to be
taken, all other action and do, or cause to be done, all other things necessary,
proper or appropriate to consummate and make effective the transactions
contemplated by this Agreement and the ancillary agreements. If, at any time
after the Effective Time, any further action is necessary or desirable to carry
out the purpose of this Agreement or the ancillary agreements, the proper
officers and directors of Xxxxxxx and MDI shall take all such necessary action.
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7.5 INSPECTION OF RECORDS. From the date hereof to the Effective
Time, each of MDI and Xxxxxxx 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 MDI and
Xxxxxxx and their respective subsidiaries.
7.6 PUBLICITY. Xxxxxxx and MDI 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 NYSE 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 INITIAL LISTING APPLICATION. Xxxxxxx shall promptly prepare
and submit to the NYSE an initial listing application covering the shares of
Xxxxxxx Preferred Stock issuable in the Merger and the Underlying Xxxxxxx Common
Stock issuable upon the conversion of Xxxxxxx Preferred Stock, and shall use its
best efforts to obtain, prior to the Effective Time, approval for the listing of
such Xxxxxxx Preferred Stock and Underlying Xxxxxxx Common Stock, subject to
official notice of issuance.
7.8 FURTHER ACTION.
(a) 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. Without limiting
the foregoing, at the Closing, MDI shall deliver, deeds, affidavits or other
documents necessary for Xxxxxxx to obtain endorsements to existing title
insurance policies or new title insurance policies which (i) insure that Xxxxxxx
(or its designee) is the record owner of the MDI Properties, subject only to the
Encumbrances, and (ii) contain a so-called "non-imputation" endorsement (such
non-imputation endorsement insuring that Xxxxxxx will not be charged with the
imputed knowledge of MDI, the MDI Subsidiaries and Affiliates thereof). In
connection with the Closing, MDI and each MDI Subsidiary shall use their
respective best efforts to deliver to Xxxxxxx such deeds, bills of sale,
assignments, certificates and affidavits as are required to effectuate the
consummation of the transactions described herein and as may be necessary to
effectuate the transfer of the MDI Properties to Xxxxxxx OP by Xxxxxxx
subsequent to the Closing.
(b) MDI shall have remedied any violations of any laws
applicable to the MDI Properties, including, without limitation, fire safety
standards, of which it has been notified by any governmental authority to the
satisfaction of and within the time periods required by such governmental
authority.
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(c) MDI shall obtain updated or new surveys of each to
the MDI Properties in accordance with the "Minimum Standard Detail Requirements
and Classifications for Land Title Surveys" jointly established by ALTA and ACSM
in 1992, which (i) include items 1-4 and 6-11 in Table A, (ii) meet the accuracy
requirements of an Urban Survey, as defined therein, and (iii) are certified to
Xxxxxxx and Xxxxxxx OP and the title insurance company specified by Xxxxxxx.
7.9 AFFILIATES OF MDI.
(a) At least 30 days prior to the Closing Date, MDI shall
deliver to Xxxxxxx a list of names and addresses of those Persons who were, in
MDI's reasonable judgment, at the record date for its stockholders' meeting to
approve the Merger, "affiliates" (each such Person, an "Affiliate") of MDI
within the meaning of Rule 145. MDI shall provide Xxxxxxx such information and
documents as Xxxxxxx shall reasonably request for purposes of reviewing such
list. MDI shall use its reasonable best efforts to deliver or cause to be
delivered to Xxxxxxx, prior to the Closing Date, from each of the Affiliates of
MDI identified in the foregoing list, an Affiliate Letter in the form attached
hereto as EXHIBIT X. Xxxxxxx shall be entitled to place legends as specified in
such Affiliate Letters on the certificates evidencing any shares of Xxxxxxx
Preferred 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 Xxxxxxx Preferred Stock, consistent with the terms of
such Affiliate Letters.
(b) Xxxxxxx 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 MDI may
reasonably request, all to the extent required from time to time to enable such
Affiliate to sell shares of Xxxxxxx Preferred 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.
7.10 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, except
that (a) the filing fee in connection with the HSR Act filing, if any, (b) the
filing fee in connection with the filing of the Form S-4 with the SEC and (c)
the expenses incurred for printing and mailing the Form S-4, shall be shared
equally by MDI and Xxxxxxx. 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.
7.11 INDEMNIFICATION.
(a) Xxxxxxx agrees that all rights to indemnification or
exculpation now existing in favor of the directors, officers, employees,
advisors and agents of MDI and the MDI Subsidiaries (including, without
limitation, MAB) as provided in their respective charters or By-Laws in effect
as of the date hereof with respect to matters occurring at or prior to the
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Effective Time shall survive the Merger and shall continue in full force and
effect. For a period of six years after the Effective Time, Xxxxxxx shall not
amend, repeal or otherwise modify the provisions in its Charter and Bylaws
providing for exculpation of director liability and indemnification in any
manner that would materially and adversely affect the rights thereunder of
individuals who at any time prior to the Effective Time were directors,
officers, employees, advisors or agents of MDI in respect of actions or
omissions occurring at or prior to the Effective Time (including, without
limitation, the transactions contemplated by this Agreement), unless such
modification is required by law; PROVIDED, HOWEVER, that in the event any claim
or claims are asserted or made either prior to the Effective Time or within such
six year period, all rights to indemnification in respect of any such claim or
claims shall continue until disposition of any and all such claims.
(b) In addition to the rights provided in Section 7.11(a)
above, in the event of any threatened or actual claim, action, suit, proceeding
or investigation, whether civil, criminal or administrative, including, without
limitation, any action by or on behalf of any or all security holders of MDI or
Xxxxxxx or by or in the right of MDI or Xxxxxxx or any 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 of MDI (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 is or was a director of MDI or any of the MDI
Subsidiaries (including, without limitation, MAB) or any action or omission by
such Person in his capacity as a director, or (ii) this Agreement or the
transactions contemplated by this Agreement, whether in any case asserted or
arising before or after the Effective Time, Xxxxxxx on one hand and the
Indemnified Parties on the other hand, hereto agree to cooperate and use their
reasonable best efforts to defend against and respond thereto. It is understood
and agreed that, after the Effective Time, Xxxxxxx shall indemnify and hold
harmless, as and to the full extent permitted by applicable law, each
Indemnified Party against any losses, claims, liabilities, expenses (including
reasonable attorneys' fees and expenses), judgments, fines and amounts paid in
settlement in connection with any such threatened or actual claim, action, suit,
proceeding or investigation. In addition, after the Effective Time, in the event
of any such threatened or actual claim, action, suit, proceeding or
investigation, Xxxxxxx shall promptly pay and advance expenses and costs
incurred by each Indemnified Person as they become due and payable in advance of
the final disposition of any claim, action, suit, proceeding or investigation to
the fullest extent and in the manner permitted by law. Notwithstanding the
foregoing, Xxxxxxx shall pay for only one counsel and one local counsel for all
Indemnified Parties unless the use of one such counsel and one local counsel for
such Indemnified Parties would present such counsel with a conflict of interest,
in which case Xxxxxxx shall employ other counsel to the extent necessary to
avoid a conflict of interest with any counsel or party involved in the matter.
Notwithstanding anything to the contrary set forth in this Agreement, Xxxxxxx
(i) shall not be liable for any settlement effected without its prior written
consent, and (ii) shall not have any obligation hereunder to any Indemnified
Party if a court of competent jurisdiction shall determine in a final and
non-appealable order that indemnification of such Indemnified Party in the
manner contemplated hereby is prohibited by applicable law. In the event of such
a final and non-appealable determination by a court that
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such indemnification is prohibited by applicable law, the Indemnified Person
shall promptly refund to Xxxxxxx the amount of all expenses theretofore advanced
pursuant hereto. Any Indemnified Party wishing to claim indemnification under
this Section, upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify Xxxxxxx of such claim and the relevant
facts and circumstances with respect thereto, provided that the failure to
provide such notice shall not affect the obligations of Xxxxxxx except to the
extent such failure to notify materially prejudices Xxxxxxx'x ability to defend
such claim, action, suit, proceeding or investigation.
(c) At or prior to the Effective Time, Xxxxxxx shall
purchase directors' and executive officers' liability insurance policy coverage
for MDI's directors and executive officers for a period of six years following
the Effective Time, which will provide the directors and executive officers with
coverage on substantially similar terms as currently provided by MDI to such
directors and executive officers. In fulfilling its obligations under the
preceding sentence, Xxxxxxx shall not be required to pay more than $50,000 in
the aggregate (provided that if the premium of such coverage exceeds such
amount, Xxxxxxx shall be obligated to obtain a policy with the greatest dollar
amount of coverage available for costs not exceeding such amount). MDI shall
have the right to reasonably review and approve any such policy, which approval
shall not be unreasonably withheld.
(d) This Section 7.11 is intended for the irrevocable
benefit of, and to grant third party rights to, the Indemnified Parties and
their successors, assigns and heirs and shall be binding on all successors and
assigns of Xxxxxxx. Each of the Indemnified Parties shall be entitled to enforce
the covenants contained in this Section 7.11 and Xxxxxxx 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.
(e) In the event that Xxxxxxx or any of its successors or
assigns (i) consolidates with or merges into any other Person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers or conveys all or substantially all of its properties
and assets to any Person, then, and in each such case, proper provision shall be
made so that the successors and assigns of Xxxxxxx assume the obligations set
forth in this Section.
7.12 REORGANIZATION. From and after the date hereof and until the
Effective Time, neither Xxxxxxx nor MDI nor 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, Xxxxxxx shall use its 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.
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7.13 CERTAIN BENEFITS. Except for normal increases in the ordinary
course of business that are consistent with past practices and cost increases of
third party providers necessary to maintain benefits at current levels that, in
the aggregate, do not result in a material increase in benefits or compensation
expense to MDI or any of the MDI Subsidiaries or as set forth in Section 5.16 of
the MDI Disclosure Letter, MDI will not, and will not permit any of the MDI
Subsidiaries to, adopt or amend (except as may be required by law) any bonus,
profit sharing, compensation, severance, termination, stock option, pension,
retirement, deferred compensation, employment or other employee benefit
agreements, trusts, plans, funds or other arrangements for the benefit or
welfare of any director, officer or employee that increase in any manner the
compensation, retirement, welfare or fringe benefits of any director, officer or
employee or pay any benefit not required by any existing plan or arrangement
(including without limitation the granting of stock options) or take any action
or grant any benefit not expressly required under the terms of any existing
agreements, trusts, plans, funds or other such arrangements or enter into any
contract, agreement, commitment or arrangement to any of the foregoing.
7.14 DIVIDENDS
(a) Prior to the Effective Time, MDI and Xxxxxxx shall
cooperate and coordinate with each other so that (i) the record date for regular
quarterly dividends and distributions with respect to the first quarter of 1998
and thereafter until the Effective Time shall occur on the same date, (ii) the
payment date for each such regular quarterly dividend and distribution shall be
on the last day of such applicable quarter, and (iii) the amount of each such
regular quarterly dividend and distribution shall not exceed $.22 per quarter
for MDI and $.35 per quarter for Xxxxxxx.
(b) For its taxable year ending at the Effective Time
(the "Short Taxable Year") MDI will not have any (i) "net income from
foreclosure property" as defined by Section 857(b)(4) of the Code or (ii) "net
income derived from prohibited transactions" as defined by Section 857(b)(6) of
the Code. Immediately prior to the Effective Time, MDI will cause to be
distributed a dividend (within the meaning of Section 316 of the Code) to its
stockholders (the "Merger Dividend") of an amount such that (i) MDI's "real
estate investment trust taxable income" as defined in Section 857(b)(2) of the
Code for the Short Taxable Year shall equal zero; (ii) MDI's current and
accumulated earnings and profits as described in Section 312 of the Code for the
Short Taxable Year shall equal zero; and (iii) MDI's "deduction for dividends
paid during the taxable year" (within the meaning of Sections 561 and 857(a)(1)
of the Code and determined without regard to "capital gain dividends" within the
meaning of Section 857(b) of the Code) for the Short Taxable Year will equal or
exceed the amount set forth in Section 857(a)(1)(A) and (B) of the Code.
(c) MDI will do all things necessary to ensure that it
continues to meet all of the requirements to be treated as a REIT for all
purposes under the Code and the tax provisions of the State of Nebraska (and any
other state in which MDI is subject to tax and which provides for the taxation
of REITs in a manner similar to the treatment of REITs under
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Sections 856-860 of the Code) and shall make any and all required filings in
connection therewith, including providing Xxxxxxx with all information,
documentation and assistance Xxxxxxx may reasonably request in order for Xxxxxxx
to mail the stockholder demand letters required by Treasury Regulation ss.
1.857-8 within 30 days after the Effective Time and to take any other actions
that may be necessary or appropriate for Xxxxxxx, as the Surviving Corporation,
to take in order to maintain MDI's status as a REIT through the Effective Time.
7.15 ENVIRONMENTAL MATTERS. MDI and Xxxxxxx shall cooperate and
keep each other informed in a timely manner regarding any communications to or
filings with any state environmental regulatory authorities regarding the MDI
Properties and MDI shall not submit any written communication or filing to any
such state environmental authority without the prior written consent of Xxxxxxx,
which consent shall not be unreasonably withheld.
ARTICLE 8
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 MDI.
(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
temporary restraining order, ruling or preliminary or permanent injunction or
other order of a court of competent jurisdiction or other legal restraint or
prohibition which prohibits the consummation of the transactions contemplated by
this Agreement. In the event any such order, ruling, injunction or other
prohibition shall have been issued, each party agrees to use its best efforts to
have any such order, ruling, injunction or other prohibition 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 Xxxxxxx or MDI,
threatened by the SEC.
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(e) Xxxxxxx shall have obtained the approval for the
listing of the shares of Xxxxxxx Preferred Stock issuable in the Merger on the
NYSE, subject to official notice of issuance.
(f) Xxxxxxx shall have received all state securities or
"blue sky" permits and other authorizations necessary to issue the Xxxxxxx
Preferred Stock as contemplated in this Agreement.
(g) Xxxxxxx and MDI shall have received the opinion of
Xxxxxxx, Procter & Xxxx LLP, or another nationally recognized law firm selected
by Xxxxxxx, dated not less than five business days prior to the date the Form
S-4 is declared effective by the SEC, reasonably acceptable to Xxxxxxx, and
subject to customary conditions and qualifications (including reliance, in part,
on representations of Xxxxxxx and MDI and certain stockholders of MDI), 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.
8.2 CONDITIONS TO OBLIGATIONS OF MDI TO EFFECT THE MERGER. The
obligation of MDI to effect the Merger shall be subject to the fulfillment at or
prior to the Closing Date of the following conditions, unless waived by MDI:
(a) Each of the representations and warranties of Xxxxxxx
contained in this Agreement qualified as to materiality or Xxxxxxx Material
Advance Effect shall be true and correct in all respects and the representations
and warranties of Xxxxxxx contained in this Agreement that are not so qualified
shall be true and correct in all material respects, in each case as of the date
of this Agreement and as of the Effective Time as though made on and as of the
Effective Time except to the extent any such representation or warranty is
expressly limited by its terms to another date or time, and MDI shall have
received a certificate, dated the Closing Date, signed on behalf of Xxxxxxx by
the President of Xxxxxxx to the foregoing effect.
(b) Xxxxxxx 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
MDI shall have received a certificate, dated the Closing Date, signed on behalf
of Xxxxxxx by the President of Xxxxxxx to the foregoing effect.
(c) From the date of this Agreement through the Effective
Time, there shall not have occurred any change concerning Xxxxxxx or any of the
Xxxxxxx Subsidiaries that has had or could be reasonably likely to have a
Xxxxxxx Material Adverse Effect and MDI shall have received a certificate, dated
the Closing Date, signed on behalf of Xxxxxxx by the President of Xxxxxxx to the
foregoing effect.
(d) 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 Xxxxxxx and
its subsidiaries and affiliated entities in
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connection with the execution, delivery and performance of this Agreement and
the ancillary agreements shall have been obtained or made, except where the
failure to have obtained or made any such consent, authorization, order,
approval, filing or registration, would not have Xxxxxxx Material Adverse
Effect.
8.3 CONDITIONS TO OBLIGATION OF XXXXXXX TO EFFECT THE MERGER. The
obligations of Xxxxxxx to effect the Merger shall be subject to the fulfillment
at or prior to the Closing Date of the following conditions, unless waived by
Xxxxxxx:
(a) Each of the representations and warranties of MDI
contained in this Agreement qualified as to materiality or MDI Material Adverse
Effect shall be true and correct in all respects and the representations and
warranties of MDI contained in this Agreement that are not so qualified shall be
true and correct in all material respects, in each case as of the date of this
Agreement and as of the Effective Time as though made on and as of the Effective
Time except to the extent any such representation or warranty is expressly
limited by its terms to another date or time, and Xxxxxxx shall have received a
certificate, dated the Closing Date, signed on behalf of MDI by the President of
MDI to the foregoing effect. Notwithstanding the foregoing, the occurrence of
any Litigation subsequent to the date hereof and prior to the Effective Time,
which could not reasonably be expected to have a MDI Material Adverse Effect
shall be deemed not to be a breach of the provisions of this Section 8.3(a).
(b) MDI 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 Xxxxxxx
shall have received a certificate, dated the Closing Date, signed on behalf of
MDI by the President of MDI to the foregoing effect.
(c) Xxxxxxx shall have received Option Terminations
relating to each of the Existing MDI Options, as required by Section 4.1(e) of
this Agreement and shall have received an Acknowledgment of Severance Obligation
from each of the applicable employees as required by Section 1.5 of this
Agreement.
(d) At closing, Xxxxxxx shall have received the opinion
of Deloitte & Touche LLP, in the form attached hereto as EXHIBIT E.
(e) From the date of this Agreement through the Effective
Time, there shall not have occurred any change concerning MDI or any of the MDI
Subsidiaries, that has had or could be reasonably likely to have a MDI Material
Adverse Effect and Xxxxxxx shall have received a certificate, dated the Closing
Date, signed on behalf of MDI by the President of MDI to the foregoing effect.
(f) MDI shall have obtained and delivered to Xxxxxxx
estoppel certificates dated no earlier than 60 days prior to the Effective Time
with respect to (x) leases and REA Agreements representing at least 90% of the
total rented space represented by the leases and REA Agreements set forth on
SCHEDULE 8.3(f) hereof and (y) leases representing a total of 50%
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of the total rented space of each MDI Property, other than rented space
represented by the leases listed on SCHEDULE 8.3(f) hereof. Such estoppel
certificates shall either be (x) substantially in the form of EXHIBIT F hereto
or (y) in the form required by the applicable lease.
(g) (i) The consents set forth in SCHEDULE 8.3(g) hereof
shall have been obtained, and (ii) all other 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
MDI and its subsidiaries and affiliated entities in connection with the
execution, delivery and performance of this Agreement and the ancillary
agreements shall have been obtained or made, except where the failure to have
obtained or made any such consent, authorization, order, approval, filing or
registration, would not have a MDI Material Adverse Effect.
ARTICLE 9
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 MDI and Xxxxxxx:
(a) by mutual written consent of Xxxxxxx and MDI;
(b) by either Xxxxxxx or MDI if any United States federal
or state court of 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;
(c) by Xxxxxxx upon a breach of any representation,
warranty, covenant or agreement on the part of MDI set forth in this Agreement,
or if any representation or warranty of MDI 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 30, 1998;
PROVIDED, HOWEVER, that, in any case, a willful breach of Sections 7.1, 7.2(b),
7.3(a), 7.9, 7.12 and 7.14(c) shall be deemed to cause such conditions to be
incapable of being satisfied for purposes of this Section 9.1(c);
(d) by MDI upon a breach of any representation, warranty,
covenant or agreement on the part of Xxxxxxx set forth in this Agreement, or if
any representation or warranty of Xxxxxxx 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
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by September 30, 1998; 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 Xxxxxxx if (i) the Board of Directors of MDI shall
have failed to make, or shall have withdrawn, amended, modified or changed its
approval or recommendation of this Agreement or any of the transactions
contemplated hereby; (ii) MDI shall have failed as soon as practicable to mail
the proxy/prospectus contained in 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 proxy/prospectus contained in the Form
S-4; (iii) the Board of Directors of MDI shall have recommended that
stockholders of MDI accept or approve an Acquisition Proposal by a Person other
than Xxxxxxx (or MDI or its Board shall have resolved to do such); or (iv) MDI
or its Board of Directors shall have resolved to do any of the foregoing;
(f) by MDI, if the Board of Directors of MDI recommends
to MDI's stockholders approval or acceptance of a Acquisition Proposal by a
Person other than Xxxxxxx, but only in the event that the Board of Directors of
MDI, after consultation with and based upon the advice of XxXxxxx, North, Xxxxxx
& Xxxxx, P.C. or another nationally recognized law firm, has determined in good
faith that such action is necessary for the Board of Directors of MDI to comply
with its fiduciary duties to its stockholders under applicable law;
(g) by either Xxxxxxx or MDI if this Agreement and the
transactions contemplated hereby shall have failed to receive the requisite vote
for approval and adoption by the stockholders of MDI upon the holding of a duly
convened stockholder meeting;
(h) by either Xxxxxxx or MDI, if the Merger shall not
have been consummated on or before September 30, 1998 (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); or
(i) by MDI if Xxxxxxx enters into a definitive agreement
pursuant to which Xxxxxxx agrees (A) to sell all or substantially all of its
assets or (B) to merge or consolidate with another Person if consummation of
such merger or consolidation would result in the voting securities of Xxxxxxx
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving Person) less than 50% of the combined voting power of the voting
securities of Xxxxxxx or such surviving Person outstanding immediately after
such merger or consolidation. MDI's right of termination under this Section
9.1(i) shall expire and become null and void on the seventh (7th) day after
receipt of notice by MDI that Xxxxxxx has entered into such definitive
agreement.
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
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employees, officers, 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, all rights and obligations of any party hereto
shall cease except for agreements contained in Section 10.5 and neither party
shall have any liability to the other party or any of its affiliates, directors,
officers or stockholders; PROVIDED, HOWEVER, that MDI shall be required to make
such payments to Xxxxxxx as are required pursuant to this Article 9.
(b) If (x) Xxxxxxx terminates this Agreement pursuant to
Section 9.1(e)(iii) or pursuant to 9.1(c) as a result of a willful breach by MDI
or (y) MDI terminates this Agreement pursuant to Section 9.1(f), then MDI shall
pay to Xxxxxxx an amount in cash equal to the sum of (i) $2,500,000, plus (ii)
Xxxxxxx'x out-of-pocket costs and expenses, in connection with this Agreement
and the transactions contemplated hereby, including, without limitation, fees
and disbursements of accountants, attorneys and investment bankers up to a
maximum of $875,000 (clauses (i) and (ii) collectively, the "Termination
Amount") in accordance with the provisions of Section 9.3.
(c) If Xxxxxxx terminates this Agreement pursuant to
Section 9.1(e)(i), 9.1(e)(ii), 9.1(e)(iv) or 9.1(c) (except for a termination
because of a willful breach by MDI in which case the provisions of Section
9.2(b) will apply), MDI shall pay all of Xxxxxxx'x out-of-pocket costs and
expenses, in connection with this Agreement and the transactions contemplated
hereby, including, without limitation, fees and disbursements of accountants,
attorneys and investment bankers (collectively, "Expenses") up to a maximum of
$875,000, in accordance with the provisions of Section 9.3.
(d) If this Agreement is terminated pursuant to Section
9.1(g), MDI shall pay all of Xxxxxxx'x Expenses up to a maximum of $500,000 in
accordance with the provisions of Section 9.3.
(e) If at any time prior to or within one year after
termination of this Agreement (unless such termination was pursuant to Section
9.1(a), (b), (d), (g) or (h)) MDI enters into an agreement relating to a PTAP
(as hereinafter defined) with a Person other than Xxxxxxx or MDI's Board of
Directors recommends or resolves to recommend to MDI's stockholders approval or
acceptance of a PTAP with a Person other than Xxxxxxx, then, upon the entry into
such agreement or the making of such recommendation or resolution, MDI shall pay
to Xxxxxxx the Termination Amount in accordance with the provisions of Section
9.3 which amount shall be reduced by any monies previously paid by MDI to
Xxxxxxx pursuant to Section 9.2(b) or Section 9.2(c). For purposes of this
Agreement, PTAP shall mean 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
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involving, or any purchase of, 20% or more of the assets or any equity
securities of, MDI or any MDI Subsidiary, other than the transactions
contemplated by this Agreement; provided, however, that PTAP shall not include
any transaction involving the partnership interests or assets of MAB.
(f) If (A) prior to MDI's Stockholders' Meeting, a PTAP
has been received by MDI or a Person has publicly disclosed a PTAP or an intent
to make a PTAP and (B) if at any time prior to or within one year after
termination of this Agreement pursuant to Section 9.1(g), MDI enters into an
agreement relating to a PTAP with a Person other than Xxxxxxx or MDI's Board of
Directors recommends or resolves to recommend to MDI's stockholders approval or
acceptance of a PTAP with a Person other than Xxxxxxx, then upon the entry into
such agreement or the making of such recommendation or resolution, MDI shall pay
to Xxxxxxx the Termination Amount in accordance with the provisions of Section
9.3 which amount shall be reduced by any monies previously paid by MDI to
Xxxxxxx pursuant to Section 9.2(d).
(g) At any time prior to or within one year after
termination of this Agreement, MDI shall not enter into any agreement relating
to a PTAP with a Person other than Xxxxxxx unless such agreement provides that
such Person shall, upon the execution of such agreement, pay any Termination
Amount due Xxxxxxx under this Section 9.2. All such amounts shall be paid in
accordance with the provisions of Section 9.3.
(h) The parties acknowledge and agree that the provisions
for payment of Expenses and/or the Termination Amount are included herein in
order to induce Xxxxxxx to enter into this Agreement and to reimburse Xxxxxxx
for incurring the costs and expenses related to entering into this Agreement and
consummating the transactions contemplated by this Agreement. Notwithstanding
anything to the contrary set forth in this Agreement, in the event Xxxxxxx is
required to file suit to seek all or a portion of Termination Amount and/or the
Expenses, Xxxxxxx shall be reimbursed by MDI for any and all expenses which it
has incurred in enforcing its rights hereunder, including, without limitation,
attorneys' fees and expenses. The parties further expressly acknowledge and
agree that (i) the payment of the Termination Amount shall constitute liquidated
damages with respect to any claim for damages or any other claim which Xxxxxxx
would otherwise be entitled to assert against MDI with respect to this Agreement
and the transactions contemplated hereby and shall constitute the sole and
exclusive remedy available to Xxxxxxx; and (ii) in light of the difficulty of
accurately determining actual damages with respect to the foregoing upon any
termination of this Agreement pursuant to Section 9.2 hereof, the Termination
Amount: (A) constitutes a reasonable estimate of the damages that will be
suffered by reason of any such proposed or actual termination of this Agreement
pursuant to Section 9.2 and (B) shall be in full and complete satisfaction of
any and all damages arising as a result of the foregoing. Notwithstanding the
foregoing, in the event there is a judicial determination that the Termination
Amount is invalid, illegal or unenforceable in any respect for any reason, in
whole or in part, or in the event that there is a judicial determination that
MDI's obligation to pay the Termination Amount is invalid, illegal or
unenforceable, in whole or in part, the validity, legality and enforceability of
this
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Agreement shall not in any way be impaired thereby and Xxxxxxx shall be entitled
to enforce all of its rights and privileges to the fullest extent of the law,
including without limitation its right to pursue a claim for monetary damages or
equitable relief against MDI; provided that in no circumstances will the amount
of monetary damages (exclusive of costs and expenses incurred in collecting such
amounts) exceed the sum of (i) $500,000 in connection with the termination of
the Agreement pursuant to Section 9.1(g), or $875,000 in connection with any
other expense award otherwise allowed under Section 9.2 for recovery of fees and
disbursements of accountants, attorneys and investment bankers, and (ii) $2.5
million for events for which a Termination Amount would otherwise be payable to
Xxxxxxx under Section 9.2.
(i) Notwithstanding any provision to the contrary herein,
the aggregate amount of the Termination Amount or Expenses, as the case may be,
payable to Xxxxxxx pursuant to this Section 9.2 shall be subject to the
limitations set forth in Section 9.3.
9.3 PAYMENT OF TERMINATION AMOUNT OR EXPENSES.
(a) In the event that MDI is obligated to pay Xxxxxxx the
Termination Amount and/or Expenses pursuant to Section 9.2 (the "Section 9.2
Amount"), MDI (or any other Person to the extent provided by Section 9.2(d))
shall pay to Xxxxxxx 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 Xxxxxxx without causing Xxxxxxx 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 Xxxxxxx'x
certified public accountants, plus (2) in the event Xxxxxxx receives either (X)
a letter from Xxxxxxx'x counsel indicating that Xxxxxxx has received a ruling
from the IRS described in Section 9.3(b)(ii) or (Y) an opinion from Xxxxxxx'x
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 MDI's
obligation to pay these amounts, MDI shall deposit into escrow an amount in cash
equal to the Section 9.2 Amount with an escrow agent selected by Xxxxxxx and on
such terms (subject to Section 9.3(b)) as shall be agreed upon by Xxxxxxx 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. Notwithstanding anything to the contrary in this Agreement, if MDI
shall not have paid the Section 9.2 Amount within the period set forth in the
preceding sentence, Xxxxxxx shall also be entitled to receive interest on such
Section 9.2 Amount, commencing on the date that the Section 9.2 Amount became
due, at a rate per annum equal to the rate of interest publicly announced by
CitiBank, N.A., from time to time, in the City of New York, as such Bank's prime
rate.
(b) The escrow agreement shall provide that the
Section 9.2 Amount in escrow or any portion thereof shall not be released to
Xxxxxxx unless the escrow agent receives any one or combination of the
following: (i) a letter from Xxxxxxx'x certified public accountants indicating
the maximum amount that can be paid by the escrow agent to Xxxxxxx
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without causing Xxxxxxx 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 Xxxxxxx'x accountants
revising that amount, in which case the escrow agent shall release such amount
to Xxxxxxx, or (ii) a letter from Xxxxxxx'x counsel indicating that Xxxxxxx
received a ruling from the IRS holding that the receipt by Xxxxxxx 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, Xxxxxxx'x legal counsel has rendered a legal opinion
to the effect that the receipt by Xxxxxxx 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 Xxxxxxx. MDI
agrees to amend this Section 9.3 at the request of Xxxxxxx in order to (x)
maximize the portion of the Section 9.2 Amount that may be distributed to
Xxxxxxx hereunder without causing Xxxxxxx to fail to meet the requirements of
Sections 856(c)(2) and (3) of the Code, (y) improve Xxxxxxx'x chances of
securing a favorable ruling described in this Section 9.3(b) or (z) assist
Xxxxxxx in obtaining a favorable legal opinion from its counsel as described in
this Section 9.3(b); provided that Xxxxxxx'x legal counsel has rendered a legal
opinion to Xxxxxxx to the effect that such amendment would not cause Xxxxxxx to
fail to meet the requirements of Section 856(c)(2) or (3) of the Code. 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 escrow agent to MDI. MDI
shall not be a party to such escrow agreement and shall not bear any cost of or
have liability resulting from the escrow agreement.
9.4 EXTENSION; WAIVER. At any time prior to the Effective Time,
any party hereto, by action taken by its 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
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 shall not survive the Merger,
PROVIDED, HOWEVER, that the agreements contained in Article 4, the last sentence
of Section 7.4, the last sentence of Section 7.8 and Sections 7.10, 7.12, 7.13
and 7.14 and this Article 10 shall survive the Merger.
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10.2 NOTICES. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be delivered
personally, sent by overnight courier (providing proof of delivery) to the
parties or sent by telecopy (providing confirmation of transmission) at the
following addresses or telecopy numbers (or at such other address or telecopy
number for a party as shall be specified by like notice):
If to Xxxxxxx: Xxxxxx X. D'Arcy
Xxxxxxx Real Estate, Inc.
00 Xxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Fax No. (000) 000-0000
With copies to: Xxxxxxx X. Xxxx, P.C.
Xxxxxxx, Procter & Xxxx XXX
Xxxxxxxx Xxxxx
Xxxxxx, XX 00000
Fax No. (000) 000-0000
If to MDI: Xxxxxx X. Xxxxxxxx
Mid-America Realty Investments, Inc.
00000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxxxxx 00000
Fax No. (000) 000-0000
With copies to: Xxxxx X. Xxxxxxxxxx
XxXxxxx, North, Xxxxxx & Xxxxx, X.X.
Xxxxx 0000, Xxx Xxxxxxx Xxxx Xxxxx
000 Xxxxx Xxxxxxxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Fax No. (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 7.9, 7.11, 7.12 and 7.13, nothing in this Agreement,
expressed or implied, is intended to confer on any Person other than the parties
hereto or their respective heirs, successors, executors, administrators and
assigns any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
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10.4 ENTIRE AGREEMENT. This Agreement, the Exhibits, the MDI
Disclosure Letter and the Xxxxxxx 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. 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.
(a) As used herein, "Confidential Material" means, with
respect to either party hereto (the "Providing Party"), all information, whether
oral, written or otherwise, furnished to the other party hereto (the "Receiving
Party") or such Receiving Party's directors, officers, partners, Affiliates (as
defined in Rule 12b-2 under the Exchange Act), employees, agents or
representatives (collectively, "Representatives"), by the Providing Party and
all reports, analyses, compilations, studies and other material prepared by the
Receiving Party or its Representatives (in whatever form maintained, whether
documentary, computer storage or otherwise) containing, reflecting or based
upon, in whole or in part, any such information. The term "Confidential
Material" does not include information which (i) is or becomes generally
available, to the public other than as a result of a disclosure by the Receiving
Party, its Representatives or anyone to whom the Receiving Party or any of its
Representatives transmit any Confidential Material in violation of this
Agreement, (ii) is or becomes known or available to the Receiving Party on a
non-confidential basis from a source (other than the Providing Party or one of
its Representatives) who is not, to the knowledge of the Receiving Party after
reasonable inquiry, prohibited from transmitting the information to the
Receiving Party or its Representatives by a contractual, legal, fiduciary or
other obligation or (iii) is contained in the Form S-4.
(b) Subject to paragraph (c) below or except as required
by law, the Confidential Material will be kept confidential and will not,
without the prior written consent of the Providing Party, be disclosed by the
Receiving Party or its Representatives, in whole or in part, and will not be
used by the Receiving Party or its Representatives, directly or indirectly, for
any purpose other than in connection with this Agreement, the Merger or the
evaluating, negotiating or advising with respect to a transaction contemplated
herein. Moreover, each Receiving Party agrees to transmit Confidential Material
to its Representatives only if and to the extent that such Representatives need
to know the Confidential Material for purposes of such transaction and are
informed by such Receiving Party of the confidential nature of the Confidential
Material and of the terms of this Section. In any event, each Receiving Party
will be responsible for any actions by its Representatives which are not in
accordance with the provisions hereof.
(c) In the event that either Receiving Party, its
Representatives or anyone to whom such Receiving Party or its Representatives
supply the Confidential Material, are requested (by oral questions,
interrogatories, requests for information or documents, subpoena, civil
investigative demand, any informal or formal investigation by any government or
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governmental agency or authority or otherwise in connection with legal process)
to disclose any Confidential Material, such Receiving Party agrees (i) to
immediately notify the Providing Party of the existence, terms and circumstances
surrounding such a request, (ii) to consult with the Providing Party on the
advisability of taking legal available steps to resist or narrow such request
and (iii) if disclosure of such information is required, to furnish only that
portion of the Confidential Material which, in the opinion of such Receiving
Party's counsel, such Receiving Party is legally compelled to disclose and to
cooperate with any action by the Providing Party to obtain an appropriate
protective order or other reliable assurance that confidential treatment will be
accorded the Confidential Material (it being agreed that the Providing Party
shall, reimburse the Receiving Party for all reasonable out-of-pocket expenses
incurred by the Receiving Party in connection with such cooperation).
(d) In the event of the termination of this Agreement in
accordance with its terms, promptly upon request from either Providing Party,
the Receiving Party shall, except to the extent prevented by law, redeliver to
the Providing Party or destroy all tangible Confidential Material and will not
retain any copies, extracts or other reproductions thereof in whole or in part.
Any such destruction shall be certified in writing to the Providing Party by an
authorized officer of the Receiving Party supervising the same. Notwithstanding
the foregoing, each Receiving Party and one Representative designated by each
Receiving Party shall be permitted to retain one permanent file copy of each
document constituting Confidential Material.
(e) MDI and Xxxxxxx agree that prior to and within one
year after the termination of this Agreement they shall not solicit for
employment, whether as an employee or independent contractor, any Person who is
(or has been within a period of one year) employed by the other, without the
written consent of the other.
10.6 AMENDMENT. This Agreement may be amended by the parties
hereto, by action taken by their respective Board of Directors, at any time
before or after approval of matters presented in connection with the Merger by
the stockholders of MDI and Xxxxxxx, 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; JURISDICTION AND VENUE. This Agreement shall be
governed by and construed in accordance with the laws of the State of Maryland
without regard to its rules of conflict of laws. Each of MDI and Xxxxxxx hereby
irrevocably and unconditionally consents to submit to the exclusive jurisdiction
of the courts of the State of Maryland and of the United States of America
located in the State of Maryland (the "Maryland 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 Maryland Courts and agrees not to plead or claim in any Maryland Court
that such litigation brought therein has been brought in any inconvenient forum.
Each of the parties hereto agrees, (a) to the extent such party is not
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otherwise subject to service of process in the State of Maryland, to appoint and
maintain an agent in the State of Maryland as such party's agent for acceptance
of legal process, and (b) that service of process may also be made on such party
by prepaid certified mail with a proof of mailing receipt validated by United
States Postal Service constituting evidence of valid service. Service made
pursuant to (a) or (b) above shall have the same legal force and effect as if
served upon such party personally with the State of Maryland. For purposes of
implementing the parties' agreement to appoint and maintain an agent for service
of process in the State of Maryland, each such party does hereby appoint The
Corporation Trust Company, 000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000,
as such agent.
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.
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 INTERPRETATION. In this Agreement, unless the context
otherwise requires, words describing the singular number shall include the
plural and vice versa, and words denoting any gender shall include all genders
and words denoting natural persons shall include corporations and partnerships
and vice versa.
10.11 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.
10.12 INCORPORATION. The MDI Disclosure Letter and the Xxxxxxx
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.
10.13 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.
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10.14 ENFORCEMENT OF AGREEMENT. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions thereof in any Maryland Court,
this being in addition to any other remedy to which they are entitled at law or
in equity.
10.15 CERTAIN DEFINITIONS.
(a) 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.
(b) 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.
(c) As used in this Agreement, the word "affiliate" shall
have the meaning set forth in Rule 12b-2 of the Exchange Act.
[Remainder of this page intentionally left blank.]
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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.
XXXXXXX REAL ESTATE, INC.
ATTEST:
By: /s/ Xxxxxxx X. Xxxx By: /s/ Xxxxxx X. D'Arcy
---------------------------------- ---------------------------------
Name: Xxxxxxx X. Xxxx Name: Xxxxxx X. D'Arcy
Title: Secretary Title: Chairman and Chief
Executive Officer
MID-AMERICA REALTY INVESTMENTS, INC.
ATTEST:
By: /s/ Xxxxxx X. Xxxxxxxxx By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------- ---------------------------------
Name: Xxxxxx X. Xxxxxxxxx Name: Xxxxxx X. Xxxxxxxx
Title: Secretary Title: President
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