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EXHIBIT 10.1
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
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In Re Commercial Assets, Inc. ) C.A. No. 17402
Shareholders Litigation )
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MEMORANDUM OF UNDERSTANDING
WHEREAS, plaintiffs in the above-referenced stockholder class actions
(the "Actions") have challenged the proposed merger (the "Merger") of Asset
Investors Corporation ("AIC") and Commercial Assets, Inc. ("CAX") pursuant to an
Agreement and Plan of Merger, dated as of August 31, 1999 (the "Merger
Agreement"); and
WHEREAS, pursuant to the agreed modifications to the Merger Agreement
set forth below, CAX common stockholders will receive the benefit of receiving
the option to elect to receive $5.75 in cash for each share, for up to 3,549,868
shares of their CAX common stock.
IT IS ▇▇▇▇▇▇ AGREED, between and among the parties hereto, that the
following sets forth the terms of their agreement to settle this matter:
1. The Merger Agreement shall be modified as follows:
a. In addition to the vote of CAX stockholders required
under Delaware law to approve the Merger Agreement,
the Merger Agreement will be amended to require for
its approval the affirmative vote of two-thirds of
the outstanding shares of CAX common stock.
b. The structure of the Merger will be changed to add a
cash-election feature in which holders of CAX's
outstanding common stock shall be entitled to elect
to receive for any or all of their shares of CAX
common stock $5.75 per share (the "Cash Amount") in
lieu of the basic per share merger consideration of
.4075
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shares of AIC common stock for each share of CAX
common stock (the "Stock Amount"); provided that (i)
the cash election shall not be available to (a) AIC
or its subsidiaries, or (b) directors or executive
officers of AIC or CAX, members of their immediate
families (i.e. spouses and children) and any entities
controlled by such officers or directors, and (ii)
the aggregate number of shares permitted to elect the
Cash Amount shall be limited to 3,549,868 shares. In
the event that holders of in excess of 3,549,868
shares of CAX common stock elect to receive the Cash
Amount, the aggregate cash consideration shall be pro
rated to all holders of CAX common stock that elected
to receive the Cash Amount (so that an aggregate of
3,549,868 shares receive the Cash Amount), and such
holders will receive the Stock Amount with respect to
the remainder of their holdings. No stockholder shall
be required to elect or accept anything other than
AIC common stock, and the cash election will be
available to CAX stockholders regardless of how they
vote on the merger.
c. Notwithstanding the foregoing, in the event that at
the effective time of the Merger, the aggregate cash
consideration to be paid to CAX common stockholders
is greater than 57.5% of the aggregate merger
consideration (by value based upon the average of the
high and low trading price of AIC's common stock on a
day on which the shares trade on the Effective Date
and including the value of any cash paid in lieu of
fractional shares and legal fees and expenses in the
amounts set forth in paragraph 4 hereof), the
aggregate amount of cash consideration will be
reduced to 57.5% of the aggregate merger
consideration, and such amount will be pro rated
among CAX common stockholders that elected to receive
the Cash Amount, with all shares not receiving cash
to receive AIC common stock.
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d. It is noted that, under Delaware law, no statutory
appraisal rights shall exist in connection with the
proposed merger.
e. Plaintiffs' counsel will review and comment upon the
disclosure in the draft proxy statement, including
any amendments and supplements thereto.
f. As a condition to the consummation of the Merger, the
Delaware Court of Chancery shall have approved a full
release of all defendants in the Litigation and shall
have approved a stipulation of settlement with terms
no less favorable to AIC than those contained in this
Memorandum of Understanding, and such order shall
have become final and nonappealable.
2. The Proxy Statement on Form 14A relating to the Merger shall
be amended to reflect the changes provided in this Agreement
after consultation with plaintiffs' counsel.
3. Plaintiffs may conduct such reasonable additional discovery as
the parties agree is appropriate and necessary to confirm the
fairness and reasonableness of the terms of this settlement.
4. Upon final approval of the settlement of the Actions
(including any appeals), CAX shall pay plaintiffs' counsel
$600,000 in fees, inclusive of expenses, subject to approval
of the Court of Chancery.
5. A Stipulation of Settlement of those Actions (the
"Stipulation") will be prepared, executed and submitted to the
Court of Chancery for approval at the earliest practicable
time. The Stipulation will expressly provide, among other
things that: (a) the defendants have denied, and continue to
deny, that they have committed any violation of law or engaged
in any of the wrongful acts alleged in the complaints; (b) the
defendants are entering into the Stipulation solely because
the proposed settlement would eliminate the burden and expense
of further litigation; and (c) plaintiffs' counsel, having
made a thorough
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investigation of the facts, believe that the proposed
settlement is fair, reasonable and adequate and in the best
interests of plaintiffs and the proposed class. The
Stipulation will further provide for, among other things, (a)
appropriate certification of the class described in the
complaint; (b) the entry of a judgment in appropriate form,
dismissing the actions with prejudice and barring any claims
known or unknown that have been, could have been, or in the
future can or might be asserted in the complaint, or in any
court, tribunal or proceeding, (including but not limited to
any claims arising under the federal, state or common law,
including federal securities law and any state disclosure law,
by or on behalf of any member of the class, whether
individual, class, derivative, representative, legal,
equitable, or any other type or in any other capacity against
defendants or any of their families, parent entities,
associates, affiliates or subsidiaries and each and all of
their respective past, present or future officers, directors,
stockholders, principals, representatives, employees,
attorneys, financial or investment advisors, consultants,
accountants, investment bankers, commercial bankers, advisors
or agents, heirs, executors, trustees, general or limited
partners or partnerships, personal representatives, estates,
administrators, predecessors, successors and assigns
(collectively, the "Released Persons") which have arisen,
arise now or hereafter may arise out of or relate in any
manner to the allegations, facts or any other matter
whatsoever set forth in or otherwise related, directly or
indirectly to the complaint or the proposed merger; (c) the
delivery of releases in an appropriate form releasing any
claims for violation of federal, state or common law.
It is the intention of the parties to extinguish all such
settled claims and consistent with such settled claims and
consistent with such intentions, the releasing parties waive
their rights to the extent permitted by law, to any benefits
of the provisions of section 1542 of the California Civil Code
or any other similar state law, federal law or principle of
common law, which may have the effect of limiting the release
set forth above.
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6. This Memorandum of Understanding and the proposed settlement
described herein shall not be legally binding upon any party
unless and until the Stipulation is executed. The settlement
described herein shall be subject to the approval of the Court
of Chancery. Should a Stipulation not be executed or not be
consummated in accordance with the terms described herein, the
proposed settlement shall be null and void and of no force and
effect, and shall not be deemed to prejudice in any way the
position of any party with respect to this litigation except
as set forth in paragraph 5 above. In such event, neither the
existence of this Memorandum of Understanding nor its contents
shall be admissible in evidence or shall be referred to for
any purpose in this litigation or in any other litigation or
proceeding.
7. The Merger is conditioned on consummation of the settlement.
8. This Memorandum of Understanding may be signed in
counterparts.
DATED: March 6, 2000
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
SKADDEN, ARPS, SLATE,
▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
One ▇▇▇▇▇▇ Square
P.O. Box 636
Wilmington, Delaware 19899-0636
(▇▇▇)▇▇▇-▇▇▇▇
Attorneys for Defendants
Asset Investors Corporation,
Commercial Assets, Inc. and
certain Individual Defendants
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/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & FINGER
One ▇▇▇▇▇▇ Square
P.O. Box 551
Wilmington, Delaware 19899
(▇▇▇)▇▇▇-▇▇▇▇
Attorneys for ▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, and
▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇
& ▇▇▇▇▇▇▇, P.A.
Mellon Bank Center
Suite ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
Attorneys for Plaintiffs and the Class
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