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Exhibit 99.3
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AGREEMENT AND PLAN OF MERGER
Among
VORNADO REALTY TRUST
TREES ACQUISITION SUBSIDIARY, INC.
and
ARBOR PROPERTY TRUST
Dated as of August 22, 1997
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter called this "Agreement"),
dated as of August 22, 1997, among ARBOR PROPERTY TRUST, a Delaware business
trust (the "Company"), VORNADO REALTY TRUST, a Maryland real estate investment
trust ("Parent"), and TREES ACQUISITION SUBSIDIARY, INC., a Delaware corporation
wholly-owned by Parent ("Merger Sub"; the Company and Merger Sub sometimes being
hereinafter collectively referred to as the "Constituent Entities").
RECITALS
WHEREAS, the respective boards of trustees of each of Parent and the
Company and the board of directors of Merger Sub have approved the merger of the
Company with and into Merger Sub (the "Merger") upon the terms and subject to
the conditions set forth in this Agreement;
WHEREAS, it is intended that, for federal income tax purposes, the
Merger shall qualify as a reorganization under the provisions of Section 368(a)
of the Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder (the "Code");
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, as a condition and inducement to Parent's and Merger Sub's
willingness to enter into this Agreement, Xx. Xxxxx X. Xxxxxxxxx has entered
into a stock voting agreement with Parent (the "Stock Voting Agreement"),
pursuant to which, among other things, Xx. Xxxxxxxxx has agreed to deliver to
Parent a proxy to vote his Shares in favor of the Merger; and
WHEREAS, the Company, Parent and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement.
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
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ARTICLE I
The Merger; Closing; Effective Time
1.1. The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, at the Effective Time (as defined in Section 1.3) the
Company shall be merged with and into Merger Sub and the separate existence of
the Company shall thereupon cease. Merger Sub shall be the surviving entity in
the Merger (sometimes hereinafter referred to as the "Surviving Entity"), and
the separate existence of Merger Sub with all its rights, privileges,
immunities, powers and franchises shall continue unaffected by the Merger. The
Merger shall be accomplished in accordance with, and shall have the effects
specified in (a) Chapter 38 of Title 12 of the Delaware Code, as amended
("Delaware Code Title 12") and (b) the Delaware General Corporation Law, as
amended ("DGCL").
1.2. Closing. The closing of the Merger (the "Closing") shall take
place (i) at the offices of Xxxxxxxx & Xxxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx at 9:00 A.M. on the first business day on which the last to be fulfilled or
waived of the conditions set forth in Article VII (other than those conditions
that by their nature are to be satisfied at the Closing, but subject to the
fulfillment or waiver of those conditions) shall be satisfied or waived in
accordance with this Agreement or (ii) at such other place and time and/or on
such other date as the Company and Parent may agree in writing (the "Closing
Date").
1.3. Effective Time. As soon as practicable following the Closing,
the Company and Parent will cause a Certificate of Merger (the "Delaware
Certificate of Merger") to be executed and filed with the Secretary of State of
Delaware as provided in Section 3815 of Delaware Code Title 12 and in the DGCL.
The Merger shall become effective at the time when the Delaware Certificate of
Merger has been duly filed with the Secretary of State of Delaware (the
"Effective Time").
1.4. Simultaneous Transactions. At the Effective Time, Parent and
the Company shall effect such transactions as are necessary in order that the
real property assets owned directly or indirectly by the Company immediately
prior to the Effective Time shall be owned directly or indirectly by Vornado
Realty L.P.
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ARTICLE II
Certificate of Incorporation and By-Laws
of the Surviving Entity
2.1. Declaration of Trust. The certificate of incorporation of
Merger Sub as in effect immediately prior to the Effective Time shall be the
certificate of incorporation of the Surviving Entity (the "Charter"), until duly
amended as provided therein or by applicable law.
2.2. The By-Laws. The by-laws of Merger Sub in effect at the
Effective Time shall be the by-laws of the Surviving Entity (the "By-Laws"),
until thereafter amended as provided therein or by applicable law.
ARTICLE III
Directors and Officers of the Surviving Entity
3.1. Directors. The directors of Merger Sub at the Effective Time
shall, from and after the Effective Time, be the directors of the Surviving
Entity until their successors have been duly elected or appointed and qualified
or until their earlier death, resignation or removal in accordance with the
Charter and the By-Laws.
3.2. Officers. The officers of the Merger Sub at the Effective Time
shall, from and after the Effective Time, be the officers of the Surviving
Entity until their successors have been duly elected or appointed and qualified
or until their earlier death, resignation or removal in accordance with the
Charter and the By-Laws.
ARTICLE IV
Effect of the Merger on Beneficial Interests;
Exchange of Certificates
4.1. Effect on Beneficial Interests. At the Effective Time, as a
result of the Merger and without any action on the part of the holder of any
shares of beneficial interests in the Company:
(a) Merger Consideration. Each common share of beneficial interest,
no par value, of the Company (a "Share" or, collectively, the "Shares") issued
and outstanding immediately prior to the Effective Time (other than Shares owned
by Parent, Merger Sub or any other direct or indirect
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subsidiary of Parent (collectively, the "Parent Companies") or Shares that are
owned by the Company or any direct or indirect subsidiary of the Company and in
each case not held on behalf of third parties (collectively, "Excluded Shares"))
shall be, subject to the ownership restrictions set forth in Article VI of the
Amended and Restated Declaration of Trust of Parent, converted into, and become
exchangeable for, 0.121905 common shares of beneficial interest (the "Common
Consideration"), par value $0.04 per share ("Parent Common Stock") or, at the
election of the holder thereof, 0.153846 preferred shares of beneficial interest
(the "Preferred Consideration"), no par value, designated as Series A
Convertible Preferred Shares of Beneficial Interest, liquidation preference $50
per share (the "Parent Preferred Stock"), of Parent (the Common Consideration
and the Preferred Consideration being, collectively, the "Merger
Consideration").
(b) Cancellation of Shares. At the Effective Time, all Shares shall
no longer be outstanding and shall be canceled and retired and shall cease to
exist, and each certificate (a "Certificate") formerly representing any of such
Shares (other than Excluded Shares) shall thereafter represent only the right to
the Merger Consideration and the right, if any, to receive pursuant to Section
4.2(e) cash in lieu of fractional shares into which such Shares have been
converted pursuant to this Section 4.1(a) and any distribution or dividend
pursuant to Section 4.2(c). Each Excluded Share issued and outstanding
immediately prior to the Effective Time shall, by virtue of the Merger and
without any action on the part of the holder thereof, cease to be outstanding,
shall be canceled and retired without payment of any consideration therefor and
shall cease to exist.
(c) Merger Sub. At the Effective Time, each share of common stock
par value $.01 per share, of Merger Sub issued and outstanding immediately prior
to the Effective Time shall remain outstanding and each certificate therefor
shall continue to evidence one share of common stock of the Surviving Entity.
4.2. Exchange of Certificates for Shares.
(a) Exchange Agent. As of the Effective Time, Parent shall deposit,
or shall cause to be deposited, with an exchange agent selected by Parent with
the Company's consent, which shall not be unreasonably withheld (the "Exchange
Agent"), for the benefit of the holders of Shares immediately prior to the
Effective Time (excluding holders of Excluded Shares), certificates representing
the shares of
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Parent Common Stock and Parent Preferred Stock (collectively, the "Parent
Stock") and, after the Effective Time, if applicable, any cash, dividends or
other distributions with respect to the Parent Stock to be issued or paid
pursuant to the last sentence of Section 4.1(a) in exchange for Shares
outstanding immediately prior to the Effective Time upon due surrender of the
Certificates (or affidavits of loss in lieu thereof) pursuant to the provisions
of this Article IV (such cash in lieu of fractional shares, and certificates for
shares of Parent Stock, together with the amount of any dividends or other
distributions payable with respect thereto, being hereinafter referred to as the
"Exchange Fund").
(b) Election Procedures. (i) Each record holder of Shares (other
than Excluded Shares) issued and outstanding immediately prior to the Election
Deadline (as defined below) shall be entitled to elect to receive in respect of
each such Share (x) Common Consideration (a "Common Election") or (y) Preferred
Consideration (a "Preferred Election"). Shares in respect of which no election
is made including shares not voted or voted against approval by the Merger
(collectively, "Non-Election Shares") shall be deemed to be Shares in respect of
which Common Elections have been made.
(ii) Elections shall be made on a form and with such other
provisions to be reasonably agreed upon by the Company and Parent (a "Form of
Election") to be provided by the Exchange Agent for that purpose to holders of
record of Shares (other than holders of Excluded Shares), together with
appropriate transmittal materials, at the time of mailing to holders of record
of Shares of the Prospectus/Proxy Statement (as defined in Section 6.3) in
connection with the shareholders meeting referred to in Section 6.4. Elections
shall be made by mailing to the Exchange Agent a duly completed Form of
Election. To be effective, a Form of Election must be (x) properly completed,
signed and submitted to the Exchange Agent at its designated office, by 5:00
p.m., on the business day that is two trading days prior to the Closing Date
(which date shall be publicly announced by Parent as soon as practicable but in
no event less than five trading days prior to the Closing Date) (the "Election
Deadline") and (y) accompanied by the Certificate(s) representing the Shares as
to which the election is being made (or by an appropriate guarantee of delivery
of such Certificate(s) by a commercial bank or trust company in the United
States or a member of a registered national security exchange or of the National
Association of Securities Dealers, Inc., provided that such Certificates are in
fact delivered to the Exchange Agent
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within three trading days after the date of execution of such guarantee of
delivery). The Company shall use its best efforts to make a Form of Election
available to all Persons who become holders of record of Shares (other than
Excluded Shares) between the date of mailing described in the first sentence of
this Section 4.2(b)(ii) and the Election Deadline. Parent shall determine, in
its sole and absolute discretion, which authority it may delegate in whole or in
part to the Exchange Agent and whether Forms of Election have been properly
completed, signed and submitted or revoked. The decision of Parent (or the
Exchange Agent, as the case may be) in such matters shall be conclusive and
binding. Neither Parent nor the Exchange Agent will be under any obligation to
notify any Person of any defect in a Form of Election submitted to the Exchange
Agent. A holder of Shares that does not submit an effective Form of Election
prior to the Election Deadline shall be deemed to have made a Non-Election.
For the purposes of this Agreement, the term "Person" shall mean any
individual, corporation (including not-for-profit), general or limited
partnership, limited liability company, joint venture, estate, trust,
association, organization, Governmental Entity (as defined in Section 5.1(d)) or
other entity of any kind or nature.
(iii) An election may be revoked, but only by written notice
received by the Exchange Agent prior to the Election Deadline. Any
Certificate(s) representing Shares that have been submitted to the Exchange
Agent in connection with an election shall be returned without charge to the
holder thereof in the event such election is revoked as aforesaid and such
holder requests in writing the return of such Certificate(s). Upon any such
revocation, unless a duly completed Form of Election is thereafter submitted in
accordance with paragraph 4.2(b)(ii), such Shares shall be Non-Election Shares.
In the event that this Agreement is terminated pursuant to the provisions hereof
and any Shares have been transmitted to the Exchange Agent pursuant to the
provisions hereof, such Shares shall promptly be returned without charge to the
Person submitting the same.
(c) Distributions with Respect to Unexchanged Shares; Voting. All
shares of Parent Stock to be issued pursuant to the Merger shall be deemed
issued and outstanding as of the Effective Time and whenever a dividend or other
distribution is declared by Parent in respect of the Parent Stock, the record
date for which is at or after the Effective Time, that declaration shall include
dividends or other distributions in respect of all shares of Parent Stock
issuable pursuant to this Agreement. No dividends or
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other distributions in respect of the Parent Stock shall be paid to any holder
of any unsurrendered Certificate until such Certificate is surrendered for
exchange in accordance with this Article IV. Subject to the effect of applicable
laws, following surrender of any such Certificate, there shall be issued and/or
paid to the holder of the certificates representing whole shares of Parent Stock
issued in exchange therefor, without interest, (A) at the time of such
surrender, the dividends or other distributions with a record date at or after
the Effective Time theretofore payable with respect to such whole shares of
Parent Stock and not paid and (B) at the appropriate payment date, the dividends
or other distributions payable with respect to such whole shares of Parent Stock
with a record date at or after the Effective Time but with a payment date
subsequent to surrender.
(d) Transfers. After the Effective Time, there shall be no transfers
on the stock transfer books of the Company of the Shares that were outstanding
immediately prior to the Effective Time.
(e) Fractional Shares. Notwithstanding any other provision of this
Agreement, no fractional shares of Parent Stock will be issued and any holder of
Shares entitled to receive a fractional share of Parent Stock but for this
Section 4.2(e) shall be entitled to receive a cash payment in lieu thereof in an
amount based upon the average closing price on the New York Stock Exchange
("NYSE") of the applicable Parent Stock for the ten NYSE trading days ending
with the NYSE trading day immediately prior to the Closing Date.
(f) Termination of Exchange Fund. Any portion of the Exchange Fund
(including the proceeds of any investments thereof and any Parent Stock) that
remains unclaimed by the shareholders of the Company for one year after the
Effective Time shall be paid to Parent. Any shareholders of the Company who have
not theretofore complied with this Article IV shall thereafter look only to
Parent for payment of their shares of Parent Stock and any cash, dividends and
other distributions in respect thereof payable and/or issuable pursuant to
Section 4.1 and Section 4.2(c) upon due surrender of their Certificates (or
affidavits of loss in lieu thereof), in each case, without any interest thereon.
Notwithstanding the foregoing, none of Parent, the Surviving Entity, the
Exchange Agent or any other Person shall be liable to any former holder of
Shares for any amount properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
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(g) Lost, Stolen or Destroyed Certificates. In the event any
Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the Person claiming such Certificate to be lost,
stolen or destroyed and, if required by Parent, the posting by such Person of a
bond in customary amount as indemnity against any claim that may be made against
it with respect to such Certificate, the Exchange Agent will issue in exchange
for such lost, stolen or destroyed Certificate the shares of Parent Stock and
any cash payable and any unpaid dividends or other distributions in respect
thereof pursuant to Section 4.2(c) upon due surrender of and deliverable in
respect of the Shares represented by such Certificate pursuant to this
Agreement.
(h) Affiliates. Notwithstanding anything herein to the contrary,
Certificates surrendered for exchange by any "affiliate" (as reasonably
determined by Parent without reference to the procedures otherwise provided for
in Section 6.8) of the Company shall not be exchanged until Parent has received
a written agreement from such Person of the type referred to in Section 6.8.
4.3. Dissenters' Rights. No appraisal rights shall be available to
holders of Shares in connection with the Merger.
4.4. Adjustments to Prevent Dilution. In the event that the Company
changes the number of Shares or securities convertible or exchangeable into or
exercisable for Shares, or Parent changes the number of shares of Parent Stock
or securities convertible or exchangeable into or exercisable for shares of
Parent Stock, issued and outstanding prior to the Effective Time as a result of
a reclassification, stock split (including a reverse split), stock dividend or
distribution, recapitalization, merger, subdivision, issuer tender or exchange
offer, or other similar transaction, the Merger Consideration shall be equitably
adjusted.
ARTICLE V
Representations and Warranties
5.1. Representations and Warranties of the Company. Except as set
forth in the corresponding sections or subsections of the disclosure letter
delivered to Parent by the Company on or prior to entering into this Agreement
(the "Company Disclosure Letter"; references to Schedules in this Section 5.1
are to schedules to the Company Disclosure
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Letter), the Company hereby represents and warrants to Parent and Merger Sub
that:
(a) Organization, Good Standing and Qualification. Each of the
Company and its Subsidiaries is an entity duly organized, validly existing and
in good standing under the laws of its respective jurisdiction of organization
and has all requisite corporate or similar power and authority to own and
operate its properties and assets and to carry on its business as presently
conducted and is qualified to do business and is in good standing as a foreign
entity in each jurisdiction where the ownership or operation of its properties
or conduct of its business requires such qualification, except where the
failure to be so qualified or in good standing, when taken together with all
other such failures, is not reasonably likely to have a Company Material Adverse
Effect (as defined below). The Company has made available to Parent a complete
and correct copy of the Company's and its Subsidiaries' declarations of trust,
certificates of incorporation, certificates of partnership, partnership
agreements, limited liability company agreements and by-laws, or similar
documents each as amended to date. The Company's and its Subsidiaries' charter
documents and by-laws so delivered are in full force and effect. Section 5.1(a)
of the Company Disclosure Letter contains a correct and complete list of each
jurisdiction where the Company and each of its Subsidiaries is organized and
qualified to do business.
As used in this Agreement, the term (i) "Subsidiary" means, with
respect to the Company, Parent or Merger Sub, as the case may be, any entity,
whether incorporated or unincorporated, of which at least a majority of the
securities or ownership interests having by their terms ordinary voting power to
elect a majority of the board of trustees or other persons performing similar
functions is directly or indirectly owned or controlled by such party or by one
or more of its respective Subsidiaries or by such party and any one or more of
its respective Subsidiaries and (ii) "Company Material Adverse Effect" means a
material adverse effect on the financial condition, properties, prospects,
business or results of operations of the Company and its Subsidiaries taken as a
whole.
(b) Capital Structure. The authorized capital stock of the Company
consists of 45,000,000 Shares, of which 12,297,705 Shares were outstanding as of
the close of business on August 19, 1997, 5,000,000 preferred shares, no par
value (the "Preferred Shares"), of which no shares were outstanding as of the
close of business on August 19, 1997 and 50,000,000 excess shares, no par value
("Company Excess
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Shares"), of which no shares were outstanding as of the close of business on
August 19, 1997. All of the outstanding Shares have been duly authorized and
are validly issued, fully paid and nonassessable. The Company has no Shares or
Preferred Shares reserved for issuance, except that, as of August 19, 1997,
there were 837,500 Shares reserved for issuance pursuant to the Company's
employee stock options. The Company Disclosure Letter contains a correct and
complete list of each outstanding option to purchase Shares granted by the
Company (each a "Company Option"), including the holder, date of grant, exercise
price and number of Shares subject thereto. Except as set forth on Schedule
5.1(b), each of the outstanding shares of capital stock or other securities of
each of the Company's Subsidiaries is duly authorized, validly issued, fully
paid and nonassessable and owned by a direct or indirect wholly-owned subsidiary
of the Company, free and clear of any lien, pledge, security interest, claim or
other encumbrance. Except as set forth above, there are no preemptive or other
outstanding rights, options, warrants, conversion rights, stock appreciation
rights, redemption rights, repurchase rights, agreements, arrangements or
commitments to issue or sell any shares of capital stock or other securities of
the Company or any of its Subsidiaries or any securities or obligations
convertible or exchangeable into or exercisable for, or giving any Person a
right to subscribe for or acquire, any securities of the Company or any of its
Subsidiaries, and no securities or obligations evidencing such rights are
authorized, issued or outstanding. The Company does not have outstanding any
bonds, debentures, notes or other obligations the holders of which have the
right to vote (or convertible into or exercisable for securities having the
right to vote) with the shareholders of the Company on any matter ("Voting
Debt").
(c) Business Trust Authority; Approval and Fairness. (i) The Company
has all requisite business trust power and authority and has taken all business
trust action necessary in order to execute, deliver and perform its obligations
under this Agreement and to consummate, subject only to approval of this
Agreement by the holders of a majority of the outstanding Shares present in
person or by proxy at the meeting and entitled to vote thereon, provided that a
quorum is present (the "Company Requisite Vote"), the Merger. This Agreement is
a valid and binding agreement of the Company enforceable against the Company in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles (the
"Bankruptcy and Equity Exception").
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(ii) Board of Trustees of the Company (A) has unanimously approved
this Agreement and the Merger and the other transactions contemplated hereby and
(B) has received the opinion of its financial advisors, Xxxxxxx, Xxxxx & Co., to
the effect that the consideration to be received by the holders of the Shares in
the Merger is fair to such holders from a financial point of view (other than
Parent and its Affiliates (as defined in Rule 12b-2 under the Securities and
Exchange Act of 1934 (the Exchange Act"))), a copy of which opinion has been
delivered to Parent. It is agreed and understood that such opinion is for the
benefit of the Company's Board of Trustees and may not be relied on by Parent or
Merger Sub.
(d) Governmental Filings; No Violations. (i) Other than the filings
and/or notices (A) pursuant to Section 1.3, (B) under the Exchange Act and the
Securities Act of 1933, as amended (the "Securities Act"), (C) to comply with
state securities or "blue-sky" laws and (D) required to be made with the NYSE,
no notices, reports or other filings are required to be made by the Company
with, nor are any consents, registrations, approvals, permits or authorizations
required to be obtained by the Company from, any governmental or regulatory
authority, agency, commission, body or other governmental entity ("Governmental
Entity"), in connection with the execution and delivery of this Agreement by the
Company and the consummation by the Company of the Merger and the other
transactions contemplated hereby, except those that the failure to make or
obtain are not, individually or in the aggregate, reasonably likely to have a
Company Material Adverse Effect or prevent, materially delay or materially
impair the ability of the Company to consummate transactions contemplated by
this Agreement.
(ii) The execution, delivery and performance of this Agreement by
the Company do not, and the consummation by the Company of the Merger and the
other transactions contemplated hereby will not, constitute or result in (A) a
breach or violation of, or a default under, the declaration of trust or by-laws
of the Company or the comparable governing instruments of any of its
Subsidiaries, (B) a breach or violation of, or a default under, the acceleration
of any obligations or the creation of a lien, pledge, security interest or other
encumbrance on the assets of the Company or any of its Subsidiaries (with or
without notice, lapse of time or both) pursuant to, any agreement, lease,
contract, note, mortgage, indenture, arrangement or other obligation
("Contracts") binding upon the Company or any of its Subsidiaries or any Law (as
defined in Section 5.1(i)) or governmental or non-governmental permit or license
to
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which the Company or any of its Subsidiaries is subject or (C) any change in the
rights or obligations of any party under any of the Contracts, except, in the
case of clause (B) or (C) above, for any breach, violation, default,
acceleration, creation or change that, individually or in the aggregate, is not
reasonably likely to have a Company Material Adverse Effect or prevent,
materially delay or materially impair the ability of the Company to consummate
the transactions contemplated by this Agreement. Section 5.1(d) of the Company
Disclosure Letter sets forth a correct and complete list of material Contracts
of the Company and its Subsidiaries pursuant to which consents or waivers are or
may be required prior to consummation of the transactions contemplated by this
Agreement (whether or not subject to the exception set forth with respect to
clauses (B) and (C) above).
(e) Company Reports; Financial Statements. The Company has delivered
to Parent each registration statement, report, proxy statement or information
statement prepared by it since December 31, 1996 (the "Audit Date") and filed
with a Governmental Entity, including (i) the Company's Annual Report on Form
10-K for the year ended December 31, 1996 and (ii) the Company's Quarterly
Reports on Form 10-Q for the periods ended March 31, 1997, and June 30, 1997,
each in the form (including exhibits, annexes and any amendments thereto) filed
with the Securities and Exchange Commission (the "SEC") (collectively, including
any such reports filed subsequent to the date hereof, the "Company Reports"). As
of their respective dates, the Company Reports did not, and any Company Reports
filed with the SEC subsequent to the date hereof will 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 light of the
circumstances in which they were made, not misleading. Each of the consolidated
balance sheets included in or incorporated by reference into the Company Reports
(including the related notes and schedules) fairly presents, or will fairly
present, in all material respects, the consolidated financial position of the
Company and its Subsidiaries as of its date and each of the consolidated
statements of income and of changes in financial position included in or
incorporated by reference into the Company Reports (including any related notes
and schedules) fairly presents, or will fairly present, in all material
respects, the results of operations, retained earnings and changes in financial
position, as the case may be, of the Company and its Subsidiaries for the
periods set forth therein (subject, in the case of unaudited statements, to
notes and normal year-end audit adjustments that will not be material in amount
or effect), in each case in accordance
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with generally accepted accounting principles ("GAAP") consistently applied
during the periods involved, except as may be noted therein.
(f) Absence of Certain Changes. Except as disclosed in the Company
Reports filed prior to the date hereof, since the Audit Date the Company and its
Subsidiaries have conducted their respective businesses only in, and have not
engaged in any material transaction other than according to, the ordinary and
usual course of such businesses and there has not been (i) any change in the
financial condition, properties, business or results of operations of the
Company and its Subsidiaries or any development or combination of developments
of which the executive officers of the Company have knowledge that, individually
or in the aggregate, has had or is reasonably likely to have a Company Material
Adverse Effect; (ii) any material damage, destruction or other casualty loss
(which for purposes of this provision only shall mean damage, destruction or
other casualty loss with a cost of repair (excluding any portion of such cost
that is reimbursable by insurance or payable as common area maintenance or HVAC
payments by current tenants), as determined by an independent third party
selected by both Parent and the Company, in excess of $1,000,000) with respect
to any material asset or property owned, leased or otherwise used by the Company
or any of its Subsidiaries; (iii) any declaration, setting aside or payment of
any dividend or other distribution in respect of the capital stock of the
Company, except for dividends or other distributions on its capital stock
publicly announced prior to the date hereof (and except for dividends provided
for in Sections 6.1(b) or 6.14(b)); or (iv) any discretionary change by the
Company in accounting principles, practices or methods. Since the Audit Date,
except as provided for herein or as disclosed in the Company Reports filed prior
to the date hereof, there has not been any increase in the compensation payable
or that could become payable by the Company or any of its Subsidiaries to
officers or key employees or any amendment of any of the Compensation and
Benefit Plans other than increases or amendments in the ordinary course.
(g) Litigation and Liabilities. Except as disclosed in the Company
Reports filed prior to the date hereof, there are no (i) civil, criminal or
administrative actions, suits, claims, hearings, investigations or proceedings
pending or, to the knowledge of the executive officers of the Company,
threatened against the Company or any of its Affiliates or (ii) obligations or
liabilities, whether or not accrued, contingent or otherwise and whether or not
required to be disclosed, including those relating to
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matters involving any Environmental Law (as defined in Section 5.1(k)), or (iii)
any other facts or circumstances of which the executive officers of the Company
have knowledge that could result in any claims against, or obligations or
liabilities of, the Company or any of its Affiliates, except, in the case of
each of (i), (ii) and (iii), for those that are not, individually or in the
aggregate, reasonably likely to have a Company Material Adverse Effect or
prevent or materially burden or materially impair the ability of the Company to
consummate the transactions contemplated by this Agreement.
(h) Employee Benefits. (i) A copy of each written, and a summary of
each unwritten, bonus, deferred compensation, pension, retirement,
profit-sharing, thrift, savings, employee stock ownership, stock bonus, stock
purchase, restricted stock, stock option, employment, termination, severance,
compensation, medical, health or other plan, agreement, policy or arrangement
that covers employees, trustees, former employees or former trustees of the
Company and its Subsidiaries (the "Compensation and Benefit Plans") and any
trust agreement or insurance contract forming a part of such Compensation and
Benefit Plans has been made available to Parent prior to the date hereof. The
Compensation and Benefit Plans are listed in Section 5.1(h) of the Company
Disclosure Letter and any "change of control" or similar provisions therein are
specifically identified in Section 5.1(h) of the Company Disclosure Letter.
(ii) All Compensation and Benefit Plans are in substantial
compliance with all applicable law, including the Code and the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). Each Compensation
and Benefit Plan that is an "employee pension benefit plan" within the meaning
of Section 3(2) of ERISA (a "Pension Plan") and that is intended to be qualified
under Section 401(a) of the Code has received a favorable determination letter
from the Internal Revenue Service (the "IRS"), and the Company is not aware of
any circumstances likely to result in revocation of any such favorable
determination letter. As of the date hereof, there is no pending or, to the
knowledge of the executive officers of the Company, threatened material
litigation relating to the Compensation and Benefit Plans. Neither the Company
nor any of its Subsidiaries has engaged in a transaction with respect to any
Compensation and Benefit Plan that, assuming the taxable period of such
transaction expired as of the date hereof, would subject the Company or any of
its Subsidiaries to a material tax or penalty imposed by either Section 4975 of
the Code or Section 502 of ERISA.
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(iii) As of the date hereof, no liability under Subtitle C or D of
Title IV of ERISA has been or is expected to be incurred by the Company or any
Subsidiary with respect to any ongoing, frozen or terminated "single-employer
plan", within the meaning of Section 4001(a)(15) of ERISA, currently or formerly
maintained by any of them, or the single-employer plan of any entity which is
considered one employer with the Company under Section 4001 of ERISA or Section
414 of the Code (an "ERISA Affiliate"). The Company and its Subsidiaries have
not incurred and do not expect to incur any withdrawal liability with respect to
a multi-employer plan under Subtitle E to Title IV of ERISA. The Company and its
Subsidiaries have not contributed, or been obligated to contribute, to a
multi-employer plan under Subtitle E of Title IV of ERISA at any time since
September 26, 1980. No notice of a "reportable event", within the meaning of
Section 4043 of ERISA for which the 30-day reporting requirement has not been
waived, has been required to be filed for any Pension Plan or by any ERISA
Affiliate within the 12-month period ending on the date hereof or will be
required to be filed in connection with the transactions contemplated by this
Agreement.
(iv) All contributions required to be made under the terms of any
Compensation and Benefit Plan as of the date hereof have been timely made or
have been reflected on the most recent consolidated balance sheet filed or
incorporated by reference in the Company Reports prior to the date hereof.
Neither any Pension Plan nor any single-employer plan of an ERISA Affiliate has
an "accumulated funding deficiency" (whether or not waived) within the meaning
of Section 412 of the Code or Section 302 of ERISA. Neither the Company nor its
Subsidiaries has provided, or is required to provide, security to any Pension
Plan or to any single-employer plan of an ERISA Affiliate pursuant to Section
401(a)(29) of the Code.
(v) Under each Pension Plan which is a single-employer plan, as of
the last day of the most recent plan year ended prior to the date hereof, the
actuarially deter mined present value of all "benefit liabilities", within the
meaning of Section 4001(a)(16) of ERISA (as determined on the basis of the
actuarial assumptions contained in the Pension Plan's most recent actuarial
valuation), did not exceed the then current value of the assets of such Pension
Plan, and there has been no material adverse change in the financial condition
of such Pension Plan since the last day of the most recent plan year.
(vi) Neither the Company nor its Subsidiaries have any obligations
for retiree health and life benefits
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17
under any Compensation and Benefit Plan, except as required under Section 4980B
of the Code and as set forth in the Company Disclosure Letter. The Company or
its Subsidiaries may amend or terminate any such plan under the terms of such
plan at any time without incurring any material liability thereunder.
(vii) Except as set forth on Schedule 5.1(h)(vii) the consummation
of the Merger and the other transactions contemplated by this Agreement will not
(x) entitle any employees of the Company or its Subsidiaries to severance pay,
(y) accelerate the time of payment or vesting or trigger any payment of
compensation or benefits under, increase the amount payable or trigger any other
material obligation pursuant to, any of the Compensation and Benefit Plans or
(z) result in any breach or violation of, or a default under, any of the
Compensation and Benefit Plans.
(i) Compliance with Laws; Permits. Except as set forth in the
Company Reports filed prior to the date hereof, the businesses of each of the
Company and its Subsidiaries have not been, and are not being, conducted in
violation of any federal, state, local or foreign law, statute, ordinance, rule,
regulation, judgment, order, injunction, decree, arbitration award, agency
requirement, license or permit of any Governmental Entity (collectively,
"Laws"), except for violations that individually or in the aggregate are not
reasonably likely to have a Company Material Adverse Effect or prevent or
materially burden or materially impair the ability of the Company to consummate
the transactions contemplated by this Agreement. Except as set forth in the
Company Reports filed prior to the date hereof, as of the date hereof no
investigation or review by any Governmental Entity with respect to the Company
or any of its Subsidiaries is pending or, to the knowledge of the executive
officers of the Company, threatened, nor has any Governmental Entity indicated
an intention to conduct the same. To the knowledge of the executive officers of
the Company, no material change is required in the Company's or any of its
Subsidiaries' processes, properties or procedures in connection with any such
Laws, and the Company has not received any notice or communication of any
material noncompliance with any such Laws that has not been cured as of the date
hereof. The Company and its Subsidiaries each has all permits, licenses,
trademarks, patents, trade names, copyrights, service marks, franchises,
variances, exemptions, orders and other governmental authorizations, consents
and approvals necessary to conduct its business as presently conducted except
those the absence of which are not, individually or in the aggregate, reasonably
likely to have a Company Material Adverse Effect or prevent or
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18
materially burden or materially impair the ability of the Company to consummate
the Merger and the other transactions contemplated by this Agreement.
(j) Takeover Statutes. Except for the ownership restrictions set
forth in Article V of the Company's Amended and Restated Declaration of Trust,
no "fair price," "moratorium," "control share acquisition" or other similar
anti-takeover statute or regulation (each a "Takeover Statute") or any
applicable anti-takeover provision in the Company's declaration of trust and
by-laws is, or at the Effective Time will be, applicable to the Company, the
Shares, the Merger or the other transactions contemplated by this Agreement.
(k) Environmental Matters. To the knowledge of the executive
officers of the Company (other than such knowledge arising solely from
information provided by Parent or Parent's agents, consultants or advisors)
there are no material Hazardous Substances on any properties currently or
formerly owned by the Company or any of its Subsidiaries nor are the Company or
any of its Subsidiaries subject to material liability for any Hazardous
Substance disposal or contamination on any third party property other than, in
any such case, as indicated in the Environmental Reports. To the knowledge of
the executive officers of the Company (other than such knowledge arising solely
from information provided by Parent or Parent's agents, consultants or
advisors), except as disclosed in Schedule 5.1(k) or as disclosed in the Company
Reports filed prior to the date hereof and except for such matters that, alone
or in the aggregate, are not reasonably likely to have a Company Material
Adverse Effect: (i) the Company and its Subsidiaries have complied at all times
with all applicable Environmental Laws; (ii) the properties currently or
formerly owned or operated by the Company or any of its Subsidiaries (including
soils, groundwater, surface water, buildings or other structures) are not
contaminated with any Hazardous Substances requiring remediation under
applicable Environmental Laws; (iii) neither the Company nor any of its
Subsidiaries is subject to liability for any Hazardous Substance disposal or
contamination on any third party property; (iv) neither the Company nor any of
its Subsidiaries has caused any release or threat of release of any Hazardous
Substance; (v) neither the Company nor any of its Subsidiaries has received any
notice, demand, letter, claim or request for information alleging that the
Company or any of its Subsidiaries may be in violation of or subject to
liability under any Environmental Law; (vi) neither the Company nor any of its
Subsidiaries is subject to any orders, decrees, injunctions or other
arrangements with any
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19
Governmental Entity or is subject to any indemnity or other agreement with any
third party relating to liability under any Environmental Law or relating to
Hazardous Substances; (vii) there are no other circumstances or conditions
involving the Company or any of its Subsidiaries that could reasonably be
expected to result in any claims, liability, investigations, costs or
restrictions on the ownership, use, or transfer of any property of the Company
pursuant to any Environmental Law; and (viii) the Company has delivered or made
available to Parent copies of all environmental reports, studies, sampling data,
permits, government filings and other environmental information in its
possession or reasonably available to it relating to Company or any of its
Subsidiaries or any of their current or former properties or operations, all of
such documents being listed on Schedule 5.1(k) (the "Environmental Reports").
As used herein, the term "Environmental Law" means any federal,
state, local or foreign law, statute, ordinance, regulation, judgment, order,
decree, arbitration award, agency requirement, license, permit, authorization or
common law, relating to: (A) the protection, investigation or restoration of the
environment, health and safety, or natural resources, (B) the handling, use,
presence, disposal, release or threatened release of any Hazardous Substance or
(C) noise, odor, wetlands, pollution, contamination or any injury or threat of
injury to persons or property.
As used herein, the term "Hazardous Substance" means any substance
that is: (A) listed, classified or regulated pursuant to any Environmental Law;
(B) any petroleum product or by-product, asbestos-containing material,
lead-containing paint or plumbing, polychlorinated biphenyls, radioactive
materials or radon; or (C) any other substance which may be the subject of
regulatory action by any Government Authority pursuant to any Environmental Law.
(l) Tax Matters. As of the date hereof, neither the Company nor any
of its Affiliates has taken or agreed to take any action not described in this
Agreement or the Recitals to this Agreement that would prevent the business
combination to be effected by the Merger as the Merger and the other
transactions contemplated by this Agreement from qualifying as a
"reorganization" within the meaning of Section 368(a) of the Code.
(m) Taxes. (i) (A) Except as set forth on Schedule 5.1(m), the
Company and each of its Subsidiaries has prepared in good faith and duly and
timely filed all Tax Returns (as defined below) required to be filed by or with
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20
respect to the Company or its Subsidiaries on or before the date hereof and all
Tax Returns required to be filed by or with respect to the Company or its
Subsidiaries after the date hereof and on or before the Effective Time shall be
prepared and timely filed in a manner consistent with prior years and applicable
law, except, in either case, for such Tax Returns the failure to file of which
will not, in the aggregate, have a Company Material Adverse Effect. No penalties
or other charges are or will become due with respect to the late filing of any
Tax Return of the Company or any of its Subsidiaries. (B) All Taxes (as defined
below) required to be paid on or before the date hereof by or with respect to
the Company and its subsidiaries have been timely paid, and any Taxes required
to be paid by or with respect to the Company and its Subsidiaries (or any of
them) after the date hereof and on or before the Effective Time shall be timely
paid, except for such Taxes as do not and will not, in the aggregate, have a
Company Material Adverse Effect. Except as set forth on Schedule 5.1(m), no
penalties or other charges are or will become due with respect to the payment of
any Tax of the Company or its Subsidiaries required to be paid on or before the
Effective Time. (C) With respect to all Tax Returns filed by or with respect to
the Company and any of its Subsidiaries, no audit is in progress and no waiver
or agreement for an extension of time has been executed with respect to any date
on which any Tax Return was or is to be filed and no waiver or agreement has
been executed for the extension of time for the assessment or payment of any
Tax. (D) There are no liens for Taxes upon the assets of the Company or its
Subsidiaries except liens for current Taxes not yet delinquent. (E) Except as
set forth on Schedule 5.1(m), as of the date hereof, there are not pending or,
to the knowledge of the executive officers of the Company threatened in writing,
any audits, examinations, investigations or other proceedings in respect of
Taxes or Tax matters. There are not, to the knowledge of the executive officers
of the Company, any unresolved questions or claims concerning the Company's or
any of its Subsidiaries' Tax liability that are reasonably likely to have a
Company Material Adverse Effect. The Company has made available to Purchaser
true and correct copies of the United States federal income Tax Returns filed by
the Company and its Subsidiaries for each of the fiscal years ended December 31,
1994 and 1995. Neither the Company nor any of its Subsidiaries has any liability
with respect to income, franchise or similar Taxes that accrued on or before
June 30, 1997 in excess of the amounts accrued with respect thereto that are
reflected in the financial statements included in the Company Reports filed on
or prior to the date hereof.
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21
(ii) For all taxable years commencing with its taxable year ending
December 31, 1994 and continuing through its taxable year ending on the most
recent December 31, the Company has been subject to taxation as a "real estate
investment trust" (a "REIT") under Subchapter M of the Code and has satisfied
all requirements to qualify as a REIT for such years. In addition, assuming
hypothetically that the Company's taxable year in which the Merger occurs were
to close immediately prior to the Closing then, without giving effect to the
Merger, the Company will be for such hypothetical short year subject to taxation
as a REIT under Subchapter M of the Code and will satisfy all requirements to
qualify as a REIT for such year. The Company is not aware of any fact or
circumstance that could reasonably be expected to prevent it from continuing to
so qualify until the time immediately prior to the Closing (without giving
effect to the Merger).
(iii) The Company does not own, directly or through one or more
tiers of partnerships, limited liability companies or "qualified REIT
subsidiaries", any REMIC residual interests (as defined in Section 860G(a)(2) of
the Code).
(iv) The Company has no earnings and profits (as determined for
federal income tax purposes) attributable to non-REIT years.
(v) The Company does not own, directly or through one or more tiers
of partnerships, limited liability companies or "qualified REIT subsidiaries",
equity interests in any issuer other than a qualified REIT subsidiary or an
entity that is either disregarded or treated as a partnership for federal income
tax purposes. The Company's qualified REIT subsidiaries are listed on Schedule
5.01(m).
As used in this Agreement, (i) the term "Tax" (including, with
correlative meaning, the terms "Taxes", and "Taxable") includes all federal,
state, local and foreign income, profits, franchise, gross receipts,
environmental, customs duty, capital stock, severances, stamp, payroll, sales,
employment, unemployment, disability, use, property, withholding, excise,
production, value added, occupancy and other taxes, duties or assessments of any
nature whatsoever, together with all interest, penalties and additions imposed
with respect to such amounts and any interest in respect of such penalties and
additions, (ii) the term "Tax Return" includes all returns and reports
(including elections, declarations, disclosures, schedules, estimates and
information returns) required to be supplied to a Tax authority relating to
Taxes and (iii) "qualified REIT subsidiary" has
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22
the meaning set forth in Section 856(i) of the Code as in effect prior to the
Taxpayer Relief Act of 1997.
(n) Labor Matters. Neither the Company nor any of its Subsidiaries
is a party to or otherwise bound by any collective bargaining agreement,
contract or other agreement or understanding with a labor union or labor
organization, nor is the Company or any of its Subsidiaries the subject of any
material proceeding asserting that the Company or any of its Subsidiaries has
committed an unfair labor practice or is seeking to compel it to bargain with
any labor union or labor organization nor is there pending or, to the knowledge
of the executive officers of the Company, threatened, nor has there been for the
past five years, any labor strike, dispute, walk-out, work stoppage, slow-down
or lockout involving the Company or any of its Subsidiaries.
(o) Insurance. Attached as Schedule 5.1(o) is a list of all material
fire and casualty, general liability, business interruption, product liability,
and sprinkler and water damage insurance policies maintained by the Company or
any of its Subsidiaries.
(p) Brokers and Finders. Neither the Company nor any of its
officers, trustees or employees has employed any broker or finder or incurred
any liability for any brokerage fees, commissions or finder's, fees in
connection with the Merger or the other transactions contemplated in this
Agreement except that the Company has employed Xxxxxxx, Xxxxx & Co. as its
financial advisor, the arrangements with which have been disclosed to Parent
prior to the date hereof.
(q) Real Property. The Company or one of its Subsidiaries owns good
and marketable fee simple to title to each parcel of real property identified in
Part I of Schedule 5.1(q) (the "Fee Properties") and good and marketable
leasehold title to the parcel of real property identified in Part II of Schedule
5.1(q) (the "Leasehold Property") (the Fee Properties and the Leasehold Property
being collectively referred to as the "Real Property"), which are all of the
real properties owned or leased by them. The Real Property is owned free and
clear of rights of way, written agreements, liens, mortgages or deeds of trust,
claims against title, charges which are liens, security interests or other
encumbrances on title ("Encumbrances"), other than tenant leases referred to in
the rent roll for the Real Property (which rent roll has previously been
provided to Parent) and Encumbrances disclosed in that certain Mortgagee's Title
Insurance Policy No. GC921900N, issued by Commonwealth Land Title Insurance
Company, dated
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23
August 19, 1993 and that certain Easement and License Agreement, dated June 8,
1994 between Green Acres Mall Corp. and the Caldor Corporation and except for
such other Encumbrances which, individually or taken as a whole with respect to
the Real Property, are not reasonably likely to have a Company Material Adverse
Effect. Except as set forth in Schedule 5.1(q), (i) none of the executive
officers of the Company or any of its Subsidiaries has knowledge that any
certificate, permit or license from any Governmental Entity having jurisdiction
over the Real Property or any agreement, easement or other right that is
necessary to permit the lawful use and operation of the buildings and
improvements on any of the Real Property or that is necessary to permit the
lawful use and operation of all parking areas, driveways, roads and other means
of egress and ingress to and from any of the Real Property has not been obtained
and is not in full force and effect, or of any pending threat of modification or
cancellation of any of same that, in the case of any of the foregoing, has not
been cured, (ii) none of the executive officers of the Company or any of its
Subsidiaries has actual knowledge (without independent investigation) that of
any violation of any federal, state or municipal law, ordinance, order,
regulation or requirement affecting any portion of any of the Real Property that
has not been cured, or (iii) there is no physical damage to any portion of the
Real Property, except for the matters referred to in clauses (i), (ii) and (iii)
above that, individually or in the aggregate, are not likely to have a Company
Material Adverse Effect. Except as set forth in Schedule 5.1(q), none of the
executive officers of the Company or any of its Subsidiaries has knowledge of
(1) any condemnation or rezoning proceedings pending or threatened with respect
to any of the Real Property or (2) any zoning, building or similar law, code,
ordinance, order or regulation is or will be violated by the continued
maintenance, operation or use of the buildings and improvements on any of the
Real Property or by the continued maintenance, operation or use of the parking
areas, except for any matters referred to in (1) and (2) above that,
individually or in the aggregate, are not likely to have a Company Material
Adverse Effect. Except as set forth in Schedule 5.1(q), (A) all work to be
performed, payments to be made and actions to be taken by the Company or any of
its Subsidiaries prior to the date hereof pursuant to any agreement entered into
with a governmental body or authority in connection with site approval, zoning
classification or other similar action relating the Real Property has be
performed, paid or taken, as the case may be, and (B) to the knowledge of the
executive officers of the Company or any of its Subsidiaries, there are no
planned work, payments or actions that may be required after the date hereof
pursuant
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to such agreements, except for any such planned or proposed work, payments or
actions described in (A) or (B) that, individually or in the aggregate, if they
did not happen, would not reasonably be expected to have a Company Material
Adverse Effect. The leases set forth on Schedule 5.1(q) (the "Leases")
constitute all of the leases in effect with respect to the Real Property. Except
as set forth in Schedule 5.1(q), each of the Leases is in full force and effect,
has not been modified, supplemented or amended and, to the knowledge of the
executive officers of the Company or any of its subsidiaries there are no
unfulfilled landlord obligations with respect to the Leases, no material default
exists with respect to the Leases and there are no material pending claims
asserted by any of the tenants under any of the leases for offsets or abatements
against any rent or any sums due under the Leases.
5.2. Representations and Warranties of Parent and Merger Sub. Except
as set forth in the corresponding sections or subsections of the disclosure
letter delivered to the Company by Parent on or prior to entering into this
Agreement (the "Parent Disclosure Letter"), Parent and Merger Sub each hereby
represent and warrant to the Company that:
(a) Capitalization of Merger Sub. The authorized capital stock of
Merger Sub consists of 100 shares of common stock, par value $.01 per share, all
of which are validly issued and outstanding. All of the issued and outstanding
capital stock of Merger Sub is, and at the Effective Time will be, owned by
Parent, and there are (i) no other shares of capital stock or voting securities
of Merger Sub, (ii) no securities of Merger Sub convertible into or exchangeable
for shares of capital stock or voting securities of Merger Sub and (iii) no
options or other rights to acquire from Merger Sub, and no obligations of Merger
Sub to issue, any capital stock, voting securities or securities convertible
into or exchangeable for capital stock or voting securities of Merger Sub.
Merger Sub has not conducted any business prior to the date hereof and has no,
and prior to the Effective Time will have no, assets, liabilities or obligations
of any nature other than those incident to its formation and pursuant to this
Agreement and the Merger and the other transactions contemplated by this
Agreement.
(b) Organization, Good Standing and Qualification. Each of Parent
and its Subsidiaries is an entity duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of organization and has
all requisite corporate or similar power and authority to
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25
own and operate its properties and assets and to carry on its business as
presently conducted and is qualified to do business and is in good standing as a
foreign entity in each jurisdiction where the ownership or operation of its
properties or conduct of its business requires such qualification, except where
the failure to be so qualified or in such good standing, when taken together
with all other such failures, is not reasonably likely to have a Parent Material
Adverse Effect (as defined below). Parent has made available to the Company a
complete and correct copy of Parent's and its Subsidiaries' declarations of
trust, certificates of incorporation, certificates of partnership, partnership
agreements, limited liability company agreements and by-laws, each as amended to
the date hereof. Parent's and its Subsidiaries' charter documents and by-laws so
delivered are in full force and effect.
As used in this Agreement, the term "Parent Material Adverse Effect"
means a material adverse effect on the financial condition, properties, business
or results of operations of the Parent and its Subsidiaries taken as a whole;
(c) Capital Structure. The authorized shares of beneficial interest
of Parent consists of 70,000,000 shares of Parent Common Stock, of which
26,556,977 shares were outstanding as of the close of business on August 19,
1997, 20,000,000 preferred shares of beneficial interest, no par value (the
"Parent Preferred Shares"), of which 5,750,000 shares have been designated as
Parent Preferred Stock, 5,750,000 shares of such Parent Preferred Stock being
outstanding as of the close of business on August 19, 1997 and 90,000,000 shares
of excess stock, $0.04 par value ("Parent Excess Shares"). All of the
outstanding shares of Parent Stock have been duly authorized and are validly
issued, fully paid and nonassessable. Parent has no Parent Stock reserved for
issuance, except that, as of August 19, 1997, there were 6,442,462 shares of
Parent Common Stock reserved for issuance pursuant to the Omnibus Share Plan
(the "Parent Stock Plan"), 2,840,562 shares of Parent Common Stock reserved for
issuance upon the conversion of Vornado Realty L.P. units and 3,951,860 shares
of Parent Common Stock reserved for issuance upon the conversion of Parent
Preferred Stock. After the date hereof, Parent will designate as Parent
Preferred Stock an amount of Parent Preferred Shares sufficient to consummate
the Merger on the terms contained in this Agreement. Each of the outstanding
shares of capital stock of each of Parent's Subsidiaries is duly authorized,
validly issued, fully paid and nonassessable and owned by a direct or indirect
wholly-owned subsidiary of Parent, free and clear of any lien, pledge,
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26
security interest, claim or other encumbrance. Except as set forth above, there
are no preemptive or other out standing rights, options, warrants, conversion
rights, stock appreciation rights, redemption rights, repurchase rights,
agreements, arrangements or commitments to issue or to sell any shares of
capital stock or other securities of Parent or any of its Subsidiaries or any
securities or obligations convertible or exchangeable into or exercisable for,
or giving any Person a right to subscribe for or acquire, any securities of
Parent or any of its Subsidiaries, and no securities or obligation evidencing
such rights are authorized, issued or outstanding. Parent does not have
outstanding any bonds, debentures, notes or other obligations the holders of
which have the right to vote (or convertible into or exercisable for securities
having the right to vote) with the shareholders of Parent on any matter ("Parent
Voting Debt").
(d) Corporate Authority. (i) Each of the Parent (for itself and as
sole stockholder of Merger Sub) and Merger Sub has all requisite trust or
corporate power and authority and has taken all corporate action necessary in
order to execute, deliver and perform its obligations under this Agreement and
to consummate the Merger. This Agreement is a valid and binding agreement of
Parent and Merger Sub, enforceable against each of Parent and Merger Sub in
accordance with its terms, subject to the Bankruptcy and Equity Exception.
(ii) Prior to the Effective Time, Parent will have taken all
necessary action to permit it to issue the number of shares of Parent Stock
required to be issued pursuant to Article IV. The Parent Stock, when issued,
will be validly issued, fully paid and nonassessable, and no shareholder of
Parent will have any preemptive right of subscription or purchase in respect
thereof. The distribution of the Parent Stock pursuant to this Agreement will be
registered under the Securities Act and registered or exempt from registration
under any applicable state securities or "blue sky" laws. The Parent Stock
required to be issued under this Agreement will be registered under the Exchange
Act when issued.
(e) Governmental Filings; No Violations. (i) Other than the filings
and/or notices (A) pursuant to Section 1.3, (B) under the Securities Act and the
Exchange Act, (C) to comply with state securities or "blue sky" laws and (D)
required to be made with the NYSE and no notices, reports or other filings are
required to be made by Parent or Merger Sub with, nor are any consents,
registrations, approvals, permits or authorizations required to be obtained
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27
by Parent or Merger Sub from, any Governmental Entity, in connection with the
execution and delivery of this Agreement by Parent and Merger Sub and the
consummation by Parent and Merger Sub of the Merger and the other transactions
contemplated hereby, except those that the failure to make or obtain are not,
individually or in the aggregate, reason ably likely to have a Parent Material
Adverse Effect or prevent, materially delay or materially impair the ability of
Parent or Merger Sub to consummate the transactions contemplated by this
Agreement.
(ii) The execution, delivery and performance of this Agreement by
Parent and Merger Sub do not, and the consummation by Parent and Merger Sub of
the Merger and the other transactions contemplated hereby will not, constitute
or result in (A) a breach or violation of, or a default under, the declaration
of trust or by-laws of Parent and Merger Sub or the comparable governing
instruments of any of its Subsidiaries, (B) a breach or violation of, or a
default under, the acceleration of any obligations or the creation of a lien,
pledge, security interest or other encumbrance on the assets of Parent or any of
its Subsidiaries (with or without notice, lapse of time or both) pursuant to,
any material Contracts binding upon Parent or any of its Subsidiaries or any
Law or governmental or non-governmental permit or license to which Parent or any
of its Subsidiaries is subject or (C) any change in the rights or obligations of
any party under any of the material Contracts, except, in the case of clause (B)
or (C) above, for breach, violation, default, acceleration, creation or change
that, individually or in the aggregate, is not reasonably likely to have a
Parent Material Adverse Effect or prevent, materially delay or materially impair
the ability of Parent or Merger Sub to consummate the transactions contemplated
by this Agreement.
(f) Parent Reports; Financial Statements. Parent has delivered to
the Company each registration statement, report, proxy statement or information
statement prepared by it since December 31, 1996 (the "Parent Audit Date") and
filed with a Governmental Entity, including (i) Parent's Annual Report on Form
10-K for the year ended December 31, 1996 and (ii) Parent's Quarterly Reports on
Form 10-Q for the periods ended March 31, 1997, and June 30, 1997, each in the
form (including exhibits, annexes and any amendments thereto) filed with the SEC
(collectively, including any such reports filed subsequent to the date hereof,
the "Parent Reports"). As of their respective dates, the Parent Reports did not,
and any Parent Reports filed with the SEC subsequent to the date hereof will
not, contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or
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necessary to make the statements made therein, in light of the circumstances in
which they were made, not misleading. Each of the consolidated balance sheets
included in or incorporated by reference into the Parent Reports (including the
related notes and schedules) fairly presents, or will fairly present, in all
material respects, the consolidated financial position of Parent and its
Subsidiaries as of its date and each of the consolidated statements of income
and of changes in financial position included in or incorporated by reference
into the Parent Reports (including any related notes and schedules) fairly
presents, or will fairly present, in all material respects, the results of
operations, retained earnings and changes in financial position, as the case may
be, of Parent and its Subsidiaries for the periods set forth therein (subject,
in the case of unaudited statements, to notes and normal year-end audit
adjustments that will not be material in amount or effect), in each case in
accordance with GAAP consistently applied during the periods involved, except as
may be noted therein.
(g) Absence of Certain Changes. Except as disclosed in the Parent
Reports filed prior to the date hereof and except for the acquisition of title
to 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, since the Parent Audit Date Parent and
its Subsidiaries have conducted their respective businesses only in, and have
not engaged in any material transaction other than according to, the ordinary
and usual course of such businesses and there has not been (i) any change in the
financial condition, properties, business or results of operations of Parent and
its Subsidiaries or any development or combination of developments of which the
executive officers of Parent has knowledge that, individually or in the
aggregate, has had or is reasonably likely to result in a Parent Material
Adverse Effect; (ii) any material damage, destruction or other casualty loss
with respect to any material asset or property owned, leased or otherwise used
by Parent or any of its Subsidiaries, whether or not covered by insurance; or
(iii) any material change by Parent in accounting principles, practices or
methods.
(h) Litigation and Liabilities. Except as disclosed in the Parent
Reports filed prior to the date hereof, there are no (i) civil, criminal or
administrative actions, suits, claims, hearings, investigations or proceedings
pending or, to the knowledge of the executive officers of Parent, threatened
against Parent or any of its Affiliates or (ii) obligations or liabilities,
whether or not accrued, contingent or otherwise and whether or not required to
be disclosed, including those relating to matters involving any Environmental
Law, or any other facts or circumstances of
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which the executive officers of Parent has knowledge that could result in any
claims against, or obligations or liabilities of, Parent or any of its
Affiliates, except for those that are not, individually or in the aggregate,
reasonably likely to have a Parent Material Adverse Effect or prevent or
materially burden or materially impair the ability of Parent or Merger Sub to
consummate the transactions contemplated by this Agreement.
(i) Employee Benefits. (i) A copy of each written, and a summary of
each unwritten, bonus, deferred compensation, pension, retirement,
profit-sharing, thrift, savings, employee stock ownership, stock bonus, stock
purchase, restricted stock, stock option, employment, termination, severance,
compensation, medical, health or other plan, agreement, policy or arrangement
that covers employees, trustees, former employees or former trustees of Parent
and its Subsidiaries (the "Parent Compensation and Benefit Plans") and any trust
arrangement or insurance contract forming a part of such Parent Compensation and
Benefits Plans has been made available to the Company prior to the date hereof.
The Parent Compensation and Benefit Plans are listed in Section 5.2(i) of the
Parent Disclosure Letter and any "change of control" or similar provision
therein are specifically identified in Section 5.2.(i) of the Parent Disclosure
Letter.
(ii) All Parent Compensation and Benefit Plans are in substantial
compliance with all applicable law, including the Code and ERISA. Each Parent
Compensation and Benefit Plan that is an "employee pension benefit plan" within
the meaning of Section 3(2) of ERISA (a "Parent Pension Plan") and that is
intended to be qualified under Section 401(a) of the Code has received a
favorable determination letter from the IRS, and Parent is not aware of any
circumstances likely to result in revocation of any such favorable determination
letter. There is no pending or, to the knowledge of the executive officers of
Parent, threatened material litigation relating to the Parent Compensation and
Benefit Plans. Neither Parent nor any of its Subsidiaries has engaged in a
transaction with respect to any Parent Compensation and Benefit Plan that,
assuming the taxable period of such transaction expired as of the date hereof,
would subject Parent or any of its Subsidiaries to a material tax or penalty
imposed by either Section 4975 of the Code or Section 502 of ERISA.
(iii) As of the date hereof, no liability under Subtitle C or D of
Title IV of ERISA has been or is expected to be incurred by Parent or any
Subsidiary with respect to any ongoing, frozen or terminated "single-employer
plan",
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within the meaning of Section 4001(a)(15) of ERISA, currently or formerly
maintained by any of them, or the single-employer plan of any entity which is
considered an ERISA Affiliate of Parent. Parent and its Subsidiaries have not
incurred and do not expect to incur any withdrawal liability with respect to a
multi-employer plan under Sub title E to Title IV of ERISA. Parent and its
Subsidiaries have not contributed, or been obligated to contribute, to a
multi-employer plan under Subtitle E of Title IV of ERISA at any time since
September 26, 1980. No notice of a "reportable event", within the meaning of
Section 4043 of ERISA for which the 30-day reporting requirement has not been
waived, has been required to be filed for any Parent Pension Plan or by any
ERISA Affiliate within the 12-month period ending on the date hereof or will be
required to be filed in connection with the transactions contemplated by this
Agreement.
(iv) All contributions required to be made under the terms of any
Parent Compensation and Benefit Plan or of the date hereof have been timely made
or have been reflected on the most recent consolidated balance sheet filed or
incorporated by reference in the Parent Reports prior to the date hereof.
Neither any Parent Pension Plan nor any single-employer plan of an ERISA
Affiliate has an "accumulated funding deficiency" (whether or not waived) within
the meaning of Section 412 of the Code or Section 302 of ERISA. Neither Parent
nor its Subsidiaries has provided, or is required to provide, security to any
Parent Pension Plan or to any single-employer plan of an ERISA Affiliate
pursuant to Section 401(a)(29) of the Code.
(v) Except as disclosed in the Parent Reports, under each Parent
Pension Plan which is a single-employer plan, as of the last day of the most
recent plan year ended prior to the date hereof, the actuarially determined
present value of all "benefit liabilities", within the meaning of Section
4001(a)(16) of ERISA (as determined on the basis of the actuarial assumptions
contained in the Parent Pension Plan's most recent actuarial valuation), did not
exceed the then current value of the assets of such Parent Pension Plan, and
there has been no material adverse change in the financial condition of such
Parent Pension Plan since the last day of the most recent plan year.
(vi) Neither Parent nor its Subsidiaries have any obligations for
retiree health and life benefits under any Parent Compensation and Benefit Plan,
except as required under Section 4980B of the Code and as set forth in the
Parent Disclosure Letter. Parent or its Subsidiaries may amend or terminate any
such plan under the terms of such
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plan at any time without incurring any material liability thereunder.
(vii) The consummation of the Merger and the other transactions
contemplated by this Agreement will not (x) entitle any employees of Parent or
its Subsidiaries to severance pay, (y) accelerate the time of payment or vesting
or trigger any payment of compensation or benefits under, increase the amount
payable or trigger any other material obligation pursuant to, any of the Parent
Compensation and Benefit Plans or (z) result in any breach or violation of, or
default under, any of the Parent Compensation and Benefit Plans.
(j) Compliance with Laws; Permits. Except as set forth in the Parent
Reports filed prior to the date hereof, the businesses of each of Parent and its
Subsidiaries have not been, and are not being, conducted in violation of any
Laws, except for violations or possible violations that, individually or in the
aggregate, are not reasonably likely to have a Parent Material Adverse Effect or
prevent or materially burden or materially impair the ability of Parent or
Merger Sub to consummate the transactions contemplated by this Agreement. Except
as set forth in the Parent Reports filed prior to the date hereof, no
investigation or review (other than review by the SEC of Parent's shelf
registration statement) by any Governmental Entity with respect to Parent or any
of its Subsidiaries is pending or, to the knowledge of the executive officers of
Parent, threatened, nor has any Governmental Entity indicated an intention to
conduct the same, except for those the outcome of which are not, individually or
in the aggregate, reasonably likely to have a Company Material Adverse Effect or
prevent or materially burden or materially impair the ability of Parent or
Merger Sub to consummate the transactions contemplated by this Agreement. To the
knowledge of the executive officers of Parent, no material change is required in
Parent's or any of its Subsidiaries' processes, properties or procedures in
connection with any such Laws, and Parent has not received any notice or
communication of any material noncompliance with any such Laws that has not been
cured as of the date hereof. Parent and its Subsidiaries each has all permits,
licenses, trademarks, patents, trade names, copyrights, service marks,
franchises, variances, exemptions, orders and other governmental authorizations,
consents and approvals necessary to conduct its business as presently conducted
except those the absence of which are not, individually or in the aggregate,
reasonably likely to have a Parent Material Adverse Effect or prevent or
materially burden or materially impair the ability of Parent or Merger Sub to
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consummate the Merger and the other transactions contemplated by this Agreement.
(k) Takeover Statutes. Except for the ownership restrictions set
forth in Article VI of the Amended and Restated Declaration of Trust of Parent,
no Takeover Statute or any applicable anti-takeover provision in the Parent's
declaration of trust and by-laws is, or at the Effective Time will be,
applicable to Parent, the Parent Common Stock, the Merger or the other
transactions contemplated by this Agreement.
(l) Environmental Matters. To the knowledge of the executive
officers of Parent, except as disclosed in the Parent Reports filed prior to the
date hereof and except for such matters that, alone or in the aggregate, are not
reasonably likely to have a Parent Material Adverse Effect: (i) Parent and its
Subsidiaries are in substantial compliance with all applicable Environmental
Laws; (ii) neither Parent nor any of its Subsidiaries has received any written
notice from any Governmental Entity or any third party indicating that Parent is
in violation of any Environmental Law; (iii) Parent and its Subsidiaries are not
subject to any court order, administrative order or decree arising under any
Environmental Law and (iv) no Hazardous Substance has been transported from any
of the properties owned or operated by Parent or one of its Subsidiaries, other
than as permitted under applicable Environmental Law.
(m) Tax Matters. As of the date hereof, neither Parent nor any of
its Affiliates has taken or agreed to take any action not described in this
Agreement or the Recitals to this Agreement that would prevent the Merger and
the other transactions contemplated by this Agreement from qualifying as a
"reorganization" within the meaning of Section 368(a) of the Code.
(n) Taxes. (i) (A) Parent and each of its Subsidiaries has prepared
in good faith and duly and timely filed all Tax Returns required to be filed by
or with respect to Parent or its Subsidiaries on or before the date hereof and
all Tax Returns required to be filed by or with respect to Parent or its
Subsidiaries after the date hereof and on or before the Effective Time shall be
prepared and timely filed in a manner consistent with prior years and applicable
law, except, in either case, for such Tax Returns the failure to file of which
will not, in the aggregate, have a Parent Material Adverse Effect. No penalties
or other charges are or will become due with respect to the late filing of any
Tax Return of Parent or any of its Subsidiaries. (B) All Taxes required to be
paid on or before
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the date hereof by or with respect to Parent and its Subsidiaries have been
timely paid, and any Taxes required to be paid by or with respect to Parent and
its Subsidiaries (or any of them) after the date hereof and on or before the
Effective Time shall be timely paid, except for such Taxes as do not and will
not, in the aggregate, have a Parent Material Adverse Effect. No penalties or
other charges are or will become due with respect to the payment of any Tax of
Parent or its Subsidiaries required to be paid on or before the Effective Time.
(C) With respect to all Tax Returns filed by or with respect to Parent and any
of its Subsidiaries, no audit is in progress and no waiver or agreement for an
extension of time has been executed with respect to any date on which any Tax
Return was or is to be filed and no waiver or agreement has been executed for
the extension of time for the assessment or payment of any Tax. (D) There are no
liens for Taxes upon the assets of Parent or its Subsidiaries except liens for
current Taxes not yet delinquent. (E) As of the date hereof, there are not
pending or, to the knowledge of the executive officers of Parent threatened in
writing, any audits, examinations, investigations or other proceedings in
respect of Taxes or Tax matters. There are not, to the knowledge of the
executive officers of Parent, any unresolved questions or claims concerning
Parent's or any of its Subsidiaries' Tax liability that are reasonably likely to
have a Parent Material Adverse Effect. Parent has made available to the Company
true and correct copies of the United States federal income Tax Returns filed by
Parent and its Subsidiaries for each of the fiscal years ended December 31,
1994, 1995 and 1996. Neither Parent nor any of its Subsidiaries has any
liability with respect to income, franchise or similar Taxes that accrued on or
before June 30, 1997 in excess of the amounts accrued with respect thereto that
are reflected in the financial statements included in the Parent Reports filed
on or prior to the date hereof.
(ii) For all taxable years commencing with its taxable year ending
December 31, 1994 and continuing through its taxable year ending on the most
recent December 31, Parent has been subject to taxation as a REIT under
Subchapter M of the Code and has satisfied all requirements to qualify as a REIT
for such years. Parent is not aware of any fact or circumstance that could
reasonably be expected to prevent it from continuing to so qualify until the
time immediately prior to the Closing (without giving effect to the Merger).
(o) Labor Matters. Neither Parent nor any of its Subsidiaries is a
party to or otherwise bound by any collective bargaining agreement, contract or
other agreement
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or understanding with a labor union or labor organization, nor is Parent or any
of its Subsidiaries the subject of any material proceeding asserting that Parent
or any of its Subsidiaries has committed an unfair labor practice or is seeking
to compel it to bargain with any labor union or labor organization nor is there
pending or, to the knowledge of the executive officers of Parent, threatened,
nor has there been for the past five years, any labor strike, dispute, walk-out,
work stoppage, slow-down or lockout involving Parent or any of its Subsidiaries.
(p) Insurance. All material fire and casualty, general liability,
business interruption, product liability, and sprinkler and water damage
insurance policies maintained by Parent or any of its Subsidiaries are with
reputable insurance carriers, provide full and adequate coverage for all normal
risks incident to the business of Parent and its Subsidiaries and their
respective properties and assets, and are in character and amount at least
equivalent to that carried by persons engaged in similar businesses and subject
to the same or similar perils or hazards, except for any such failures to
maintain insurance policies that, individually or in the aggregate, are not
reasonably likely to have a Parent Material Adverse Effect.
(q) Brokers and Finders. Neither the Parent nor any of its officers,
trustees or employees has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finder's, fees in connection
with the Merger or the other transactions contemplated in this Agreement.
ARTICLE VI
Covenants
6.1. Interim Operations. The Company covenants and agrees as to
itself and its Subsidiaries that, after the date hereof and prior to the
Effective Time (unless Parent shall otherwise approve in writing and except as
otherwise expressly contemplated by this Agreement):
(a) the business of it and its Subsidiaries shall be conducted in
the ordinary and usual course and, to the extent consistent therewith, it and
its Subsidiaries shall use their respective reasonable commercial efforts to
preserve its business organization intact and maintain its existing relations
and goodwill with customers, suppliers, distributors, creditors, lessors,
employees and business associates;
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(b) it shall not (i) issue, sell, pledge, dispose of or encumber any
capital stock or other equity interests owned by it in any of its Subsidiaries;
(ii) amend its declaration of trust or by-laws; (iii) split, combine or
reclassify its outstanding shares of capital stock; (iv) declare, set aside or
pay any dividend payable in cash, stock or property in respect of any capital
stock other than dividends from its direct or indirect wholly-owned Subsidiaries
and other than regular quarterly cash dividends not in excess of $0.175 per
Share except that the Company may make such additional distributions as may be
necessary to preserve its REIT status and avoid the imposition of any tax
imposed by Section 857 or 4981 of the Code; or (v) repurchase, redeem or
otherwise acquire, or permit any of its Subsidiaries to purchase or otherwise
acquire, any shares of its capital stock or any securities convertible into or
exchangeable or exercisable for any shares of its capital stock;
(c) neither it nor any of its Subsidiaries shall (i) issue, sell,
pledge, dispose of or encumber any shares of, or securities convertible into or
exchangeable or exercisable for, or options, warrants, calls, commitments or
rights of any kind to acquire, any shares of its capital stock of any class or
any other property or assets (other than Shares issuable pursuant to company
options outstanding on the date hereof; (ii) other than in the ordinary and
usual course of business, transfer, lease, license, guarantee, sell, mortgage,
pledge, dispose of or encumber any other property or assets (including capital
stock of any of its Subsidiaries) or incur or modify any material indebtedness
or other liability; or (iii) make or authorize or commit for any capital
expenditures other than in amounts less than $10,000 individually and $100,000
in the aggregate or, by any means, make any acquisition of, or investment in,
assets or stock of any other Person or entity;
(d) except for the adoption of severance arrangements not to exceed
in the aggregate $150,000, neither it nor any of its Subsidiaries shall
terminate, establish, adopt, enter into, make any new grants or awards under,
amend or otherwise modify, any Compensation and Benefit Plans or increase the
salary, wage, bonus or other compensation of any employees except increases
occurring in the ordinary and usual course of business (which shall include
normal periodic performance reviews and related compensation and benefit
increases);
(e) neither it nor any of its Subsidiaries shall settle or
compromise any material claims or litigation or, except in the ordinary and
usual course of business
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modify, amend or terminate any of its material Contracts or waive, release or
assign any material rights or claims;
(f) neither it nor any of its Subsidiaries shall make any Tax
election or permit any insurance policy naming it as a beneficiary or
loss-payable payee to be canceled or terminated except in the ordinary and usual
course of business;
(g) neither it nor any of its Subsidiaries shall take any action or
omit to take any action that would cause any of its representations and
warranties herein to become untrue in any material respect; and
(h) neither it nor any of its Subsidiaries will authorize or enter
into an agreement to do any of the foregoing.
(i) subject to Section 6.1(b) hereof, the operations of it and its
Subsidiaries will be conducted in such a manner as to permit it to qualify as a
REIT for all taxable years through its taxable year ending on the Closing Date
and avoid the imposition of any taxes imposed by Sections 857 or 4981 of the
Code.
(j) it will at all times reflect on the consolidated balance sheet
of the Company and its Subsidiaries appropriate debt reserves in accordance with
GAAP.
6.2. Acquisition Proposals. The Company agrees that neither it nor
any of its Subsidiaries nor any of the officers and trustees of it or its
Subsidiaries shall, and that it shall direct and use its best efforts to cause
its and its Subsidiaries' employees, agents and representatives (including any
investment banker, attorney or accountant retained by it or any of its
Subsidiaries) not to, directly or indirectly, initiate, solicit or encourage any
inquiries or the making of any proposal or offer with respect to a merger,
reorganization, share exchange, consolidation or similar transaction involving,
or any purchase of all or any significant portion of the assets or any equity
securities of, it or any of its Subsidiaries (any such proposal or offer being
hereinafter referred to as an "Acquisition Proposal"). The Company further
agrees that neither it nor any of its Subsidiaries nor any of the officers and
trustees of it or its Subsidiaries shall, and that it shall direct and use its
best efforts to cause its and its Subsidiaries' employees, agents and
representatives (including any investment banker, attorney or accountant
retained by it or any of its Subsidiaries) not to, directly or indirectly,
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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. Notwithstanding the foregoing, nothing contained in this
Agreement shall prevent the Company or its Board of Trustees from (A) complying
with Rule 14e-2 promulgated under the Exchange Act with regard to an Acquisition
Proposal; (B) providing information in response to a request therefor by a
Person who has made an unsolicited bona fide Acquisition Proposal if the Board
of Trustees receives from the Person so requesting such information an executed
confidentiality agreement on terms substantially similar to those contained in
the Confidentiality Agreement (as defined in Section 9.7); (C) engaging in any
negotiations or discussions with any Person who has made an unsolicited bona-
fide written Acquisition Proposal; (D) recommending such an Acquisition Proposal
to the shareholders of the Company; or (E) referring any third party to this
Section 6.2, if and only to the extent that, (i) in each such case referred to
in clause (B), (C) or (D) above, the Board of Trustees of the Company determine
in good faith after consulting with outside legal counsel that such action is
necessary in order for its trustees to comply with their respective fiduciary
duties under applicable law and (ii) in each case referred to in clause (C) or
(D) above, the Board of Trustees of the Company determine in good faith (after
consultation with its legal counsel and financial advisor) that such Acquisition
Proposal, if accepted, (A) is reasonably likely to be consummated, taking into
account all legal, financial and regulatory aspects of the proposal and the
Person making the proposal and (B) would, if consummated, result in a
transaction more favorable to the Company's shareholders from a financial point
of view than the transaction contemplated by this Agreement (any such
Acquisition Proposal meeting the requirements of (A) and (B) directly above
being referred to in this Agreement as a "Superior Proposal"). The Company
agrees that it 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. The Company agrees that it will take the
necessary steps to promptly inform the individuals or entities referred to in
the first sentence hereof of the obligations undertaken in this Section 6.2 and
in the Confidentiality Agreement (as defined in Section 9.7). The Company agrees
that it will notify Parent immediately if any such inquiries, proposals or
offers are received by, any such information is requested from, or any such
discussions or negotiations are sought to be initiated or continued with, any of
its representatives
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indicating, in connection with such notice, the name of such Person and the
material terms and conditions of any proposals or offers and thereafter shall
keep Parent informed, on a current basis, on the status and terms of any such
proposals or offers and the status of any such negotiations or discussions. The
Company also agrees that it will promptly request each Person that has executed
a confidentiality agreement on or after January 1, 1997 in connection with its
consideration of acquiring it or any of its Subsidiaries to return all
confidential information heretofore furnished to such Person by or on behalf of
it or any of its Subsidiaries.
6.3. Information Supplied. The Company and Parent each agrees, as to
itself and its Subsidiaries, that none of the information supplied or to be
supplied by it or its Subsidiaries for inclusion or incorporation by reference
in (i) the Registration Statement on Form S-4 to be filed with the SEC by Parent
in connection with the issuance of shares of Parent Common Stock in the Merger
(including the proxy statement and prospectus (the "Prospectus/Proxy
Statement") constituting a part thereof) (the "S-4 Registration Statement")
will, at the time the S-4 Registration Statement becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to
state any 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, and (ii) the Prospectus/Proxy Statement and any amendment or
supplement thereto will, at the date of mailing to shareholders and at the times
of the meetings of shareholders of the Company to be held in connection with the
Merger, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
6.4. Shareholders Meeting. The Company will take, in accordance with
applicable law and its certificate and by-laws, all action necessary to convene
a meeting of holders of Shares (the "Shareholders Meeting") as promptly as
practicable after the S-4 Registration Statement is declared effective to
consider and vote upon the approval of this Agreement. Subject to fiduciary
obligations under applicable law, the Company's Board of Trustees shall
recommend such approval and shall take all lawful action to solicit such
approval.
6.5. Filings; Other Actions; Notification. (a) Parent and the
Company shall promptly prepare and file
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with the SEC the Prospectus/Proxy Statement, and Parent shall prepare and file
with the SEC the S-4 Registration Statement as promptly as practicable. The
Prospectus/Proxy Statement shall be filed as part of the S-4 Registration
Statement. Parent and the Company each shall use its best efforts to have the
S-4 Registration Statement declared effective under the Securities Act as
promptly as practicable after such filing, and promptly thereafter mail the
Prospectus/Proxy Statement to the shareholders of the Company. Parent shall also
use its best efforts to obtain prior to the effective date of the S-4
Registration Statement all necessary state securities law or "blue sky" permits
and approvals required in connection with the Merger and to consummate the other
transactions contemplated by this Agreement and will pay all expenses incident
thereto.
(b) The Company and Parent shall cooperate with each other and use
(and shall cause their respective Subsidiaries to use) their respective best
efforts to take or cause to be taken all actions, and do or cause to be done all
things, necessary, proper or advisable on its part under this Agreement and
applicable Laws to consummate and make effective the Merger and the other
transactions contemplated by this Agreement as soon as practicable, including
preparing and filing as promptly as practicable all documentation to effect all
necessary notices, reports and other filings and to obtain as promptly as
practicable all consents, registrations, approvals, permits, authorizations and
closing agreements or other arrangements described in Section 7.2(k) necessary
or advisable to be obtained from any third party and/or any Governmental Entity
in order to consummate the Merger or any of the other transactions contemplated
by this Agreement; provided, however, that nothing in this Section 6.5 shall
require, or be construed to require, Parent to proffer to, or agree to, sell or
hold separate and agree to sell, before or after the Effective Time, any assets,
businesses, or interest in any assets or businesses of Parent, the Company or
any of their respective Affiliates (or to consent to any sale, or agreement to
sell, by the Company of any of its assets or businesses) or to agree to any
material changes or restriction in the operations of any such assets or
businesses. Subject to applicable laws relating to the exchange of information,
Parent and the Company shall have the right to review in advance, and to the
extent practicable each will consult the other on, all the information relating
to Parent or the Company, as the case may be, and any of their respective
Subsidiaries, that appear in any filing made with, or written materials
submitted to, any third party and/or any Governmental Entity in connection with
the Merger and the other transactions contemplated by this Agreement. In
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exercising the foregoing right, each of the Company and Parent shall act
reasonably and as promptly as practicable.
(c) The Company and Parent each shall, upon request by the other,
furnish the other with all information concerning itself, its Subsidiaries,
trustees, officers and shareholders and such other matters as may be reasonably
necessary or advisable in connection with the Prospectus/Proxy Statement, the
S-4 Registration Statement or any other statement, filing, notice or application
made by or on behalf of Parent, the Company or any of their respective
Subsidiaries to any third party and/or any Governmental Entity in connection
with the Merger and the transactions contemplated by this Agreement.
(d) The Company and Parent each shall keep the other apprised of the
status of matters relating to completion of the transactions contemplated
hereby, including promptly furnishing the other with copies of notice or other
communications received by Parent or the Company, as the case may be, or any of
its Subsidiaries, from any third party and/or any Governmental Entity with
respect to the Merger and the other transactions contemplated by this Agreement.
6.6. Taxation. Subject to Section 6.2, neither Parent nor the
Company shall take or cause to be taken any action not described in this
Agreement or the Recitals to this Agreement, whether before or after the
Effective Time, that would disqualify the Merger as a "reorganization" within
the meaning of Section 368(a) of the Code.
6.7. Access. Upon reasonable notice, and except as may otherwise be
required by applicable law, the Company and Parent each shall (and shall cause
its Subsidiaries to) afford the other's officers, employees, counsel,
accountants and other authorized representatives ("Representatives") access,
during normal business hours throughout the period prior to the Effective Time,
to its properties (subject to the rights of tenants), books, contracts and
records and, during such period, each shall (and shall cause its Subsidiaries
to) furnish promptly to the other all information concerning its business,
properties and personnel as may reasonably be requested, provided that no
investigation pursuant to this Section shall affect or be deemed to modify any
representation or warranty made by the Company, Parent or Merger Sub, and
provided, further, that the foregoing shall not require the Company or Parent to
permit any inspection, or to disclose any information, that in the reasonable
judgment of the Company or Parent, as the case may be, would result in the
disclosure of any trade
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secrets of third parties or violate any of its obligations with respect to
confidentiality if the Company or Parent, as the case may be, shall have used
reasonable commercial efforts to obtain the consent of such third party to such
inspection or disclosure. Parent and the Company, as the case may be, shall
indemnify the other for any damage or other liabilities incurred by the other
party resulting from the foregoing access. Each of Parent and the Company, as
the case may be, shall have the right to have one of its Representatives
accompany the other's Representatives in connection with the foregoing access.
All requests for information made pursuant to this Section shall be directed to
an executive officer of the Company or Parent, as the case may be, or such
Person as may be designated by either of its officers, as the case may be. All
such information shall be governed by the terms of the Confidentiality
Agreement.
6.8. Affiliates. Parent and the Company agree that for purposes of
this Agreement only the Persons listed on Exhibit B are "affiliates" of the
Company within the meaning of Rule 145 under the Securities Act. The Company
shall provide to Parent such information and documents as Parent shall
reasonably request for purposes of preparing such list. There shall be added to
such list the names and addresses of any other Person subsequently identified,
(based on facts and circumstances of which the Company and Parent are unaware as
of the date of this Agreement) by either Parent or the Company as a Person who
may be deemed to be such an affiliate of the Company; provided, however, that no
such Person identified by Parent shall be added to the list of affiliates of the
Company if Parent shall receive from the Company, on or before the date of the
Shareholders Meeting, an opinion of counsel reasonably satisfactory to Parent to
the effect that such Person is not such an affiliate. The Company shall exercise
its best efforts to deliver or cause to be delivered to Parent, prior to the
date of the Shareholders Meeting, from each affiliate of the Company identified
in the foregoing list (as the same may be supplemented as aforesaid), a letter
dated as of the Closing Date substantially in the form attached as Exhibit A
(the "Affiliates Letter"). Parent shall not be required to maintain the
effectiveness of the S-4 Registration Statement or any other registration
statement under the Securities Act for the purposes of resale of Parent Stock by
such affiliates received in the Merger and the certificates representing Parent
Stock received by such affiliates shall bear a customary legend regarding
applicable Securities Act restrictions and the provisions of this Section.
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6.9. Stock Exchange Listing and De-listing. Parent shall use its
best efforts to cause the shares of Parent Stock to be issued in the Merger to
be approved for listing on the NYSE subject to official notice of issuance,
prior to the Closing Date. The Surviving Entity shall use its best efforts to
cause the Shares to be de-listed from the NYSE and de-registered under the
Exchange Act as soon as practicable following the Effective Time.
6.10. Publicity. The Company and Parent each shall consult with each
other prior to issuing any press releases or otherwise making public
announcements with respect to the Merger and the other transactions contemplated
by this Agreement and prior to making any filings with any third party and/or
any Governmental Entity (including any national securities exchange) with
respect thereto, except as may be required by law or by obligations pursuant to
any listing agreement with or rules of any national securities exchange.
6.11. Stock Options. Prior to the Effective Time, the Company shall
take such actions as may be necessary such that immediately prior to the
Effective Time each Company Option, whether or not then exercisable, shall be
canceled and only entitle the holder thereof, as soon as reasonably practicable
after surrender thereof, to receive an amount in cash equal to the product of
(x) the total number of Shares subject to the Company Option and (y) the excess
of the Merger Consideration over the exercise price per Share under such Company
Option.
(a) Expenses. The Surviving Entity shall pay all charges and
expenses, including those of the Exchange Agent, in connection with the
transactions contemplated in Article IV, and Parent shall reimburse the
Surviving Entity for such charges and expenses. Except as otherwise provided in
Section 8.5(b), whether or not the Merger is consummated, all costs and expenses
incurred in connection with this Agreement and the Merger and the other
transactions contemplated by this Agreement shall be paid by the party incurring
such expense, except that expenses incurred in connection with the filing fee
for the S-4 Registration Statement and printing and mailing the Prospectus/Proxy
Statement and the S-4 Registration Statement shall be shared equally by Parent
and the Company.
(b) Indemnification. (i) From and after the Effective Time, Parent
agrees that it will indemnify and hold harmless each present and former trustee
and officer of the Company and its Subsidiaries, (when acting in such capacity)
determined as of the Effective Time (the "Indemni-
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fied Parties"), against any costs or expenses (including reasonable attorneys'
fees), judgments, fines, losses, claims, damages or liabilities (collectively,
"Costs") incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative,
arising out of matters existing or occurring at or prior to the Effective Time,
whether asserted or claimed prior to, at or after the Effective Time, to the
fullest extent that the Company or its Subsidiaries, as applicable, would have
been permitted under applicable law and the applicable declaration of trust,
partnership agreement or other charter documents or by-laws in effect on the
date hereof to indemnify such Person (and Parent shall also advance expenses as
incurred to the fullest extent permitted under applicable law; provided the
Person to whom expenses are advanced provides an undertaking to repay such
advances if it is ultimately determined that such Person is not entitled to
indemnification); and provided, further, that any determination required to be
made with respect to whether an officer's or trustee's conduct complies with the
standards set forth under applicable law and the Company's or Subsidiary's
charter documents and by-laws shall be made by independent counsel selected by
the Surviving Entity.
(c) If Parent or any of its successors or assigns (i) shall
consolidate with or merge into any other corporation or entity and shall not be
the continuing or surviving entity of such consolidation or merger or (ii) shall
transfer all or substantially all of its properties and assets to any
individual, corporation or other entity, then, and in each such case, proper
provisions shall be made so that the successors and assigns of Parent shall
assume all of the obligations set forth in this Section.
6.14. Other Actions by the Company and Parent.
(a) Takeover Statute. If any Takeover Statute is or may become
applicable to the Merger or the other transactions contemplated by this
Agreement, each of Parent and the Company and its board of trustees shall grant
such approvals and take such actions as are necessary so that such transactions
may be consummated as promptly as practicable on the terms contemplated by this
Agreement or by the Merger and otherwise act to eliminate or minimize the
effects of such statute or regulation on such transactions.
(b) Dividends. In addition to the Company's regular quarterly
dividend payable on November 15, 1997, the Company may pay, immediately prior to
the Closing, a special
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dividend with respect to the Shares in an amount per Share that, when combined
with the full regular dividend paid or payable per Share (to all holders of
Parent Preferred Stock including the shareholders of the Company who have duly
made, and not revoked prior to the Election Deadline, a Preferred Election) with
respect to the Parent Preferred Stock into which a Share would be convertible
pursuant to the Preferred Election for the quarterly period during which the
Closing Date occurs, does not exceed $0.175.
ARTICLE VII
Conditions
7.1. Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver at or prior to the Effective Time of each of the
following conditions:
(a) Shareholder Approval. This Agreement shall have been duly
approved by holders of Shares constituting the Company Requisite Vote.
(b) NYSE Listing. The shares of Parent Stock issuable to the Company
shareholders pursuant to this Agreement shall have been authorized for listing
on the NYSE upon official notice of issuance.
(c) Regulatory Consents. Other than the filing provided for in
Section 1.3, all notices, reports and other filings required to be made prior to
the Effective Time by the Company or Parent or any of their respective
Subsidiaries with, and all consents, registrations, approvals, permits and
authorizations required to be obtained prior to the Effective Time by the
Company or Parent or any of their respective Subsidiaries from, any Governmental
Entity (collectively, "Governmental Consents") in connection with the execution
and delivery of this Agreement and the consummation of the Merger and the other
transactions contemplated hereby by the Company, Parent and Merger Sub shall
have been made or obtained (as the case may be).
(d) Litigation. No court or Governmental Entity of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
law, statute, ordinance, rule, regulation, judgment, decree, injunction or other
order (whether temporary, preliminary or permanent) that is in effect and
restrains, enjoins or otherwise
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prohibits consummation of the Merger (collectively, an "Order").
(e) S-4. The S-4 Registration Statement shall have become effective
under the Securities Act. No stop order suspending the effectiveness of the S-4
Registration Statement shall have been issued, and no proceedings for that
purpose shall have been initiated or be threatened, by the SEC.
(f) Blue Sky Approvals. Parent shall have received all state
securities and "blue sky" permits and approvals necessary to consummate the
transactions contemplated hereby.
7.2. Conditions to Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub to effect the Merger are also subject to
the satisfaction or waiver by Parent at or prior to the Effective Time of the
following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement shall be true and correct
in all material respects as of the date of this Agreement and as of the Closing
Date as though made on and as of the Closing Date (except to the extent any such
representation or warranty expressly speaks as of an earlier date) and Parent
shall have received a certificate to such effect signed by the President of the
Company.
(b) Performance of Obligations of the Company. The Company shall
have performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date and Parent shall have
received a certificate to such effect signed by the President of the Company.
(c) Consents Under Agreements. Except where the failure to obtain
any such consent or approval, individually or in the aggregate, is not
reasonably likely to have a Company Material Adverse Effect, the Company shall
have obtained the consent or approval of each Person whose consent or approval
shall be required under any Contract (other than any consent of PNC Bank N.A.
required pursuant to the Amended and Restated Loan Agreement dated as of August
8, 1994 between the Company and PNC Bank N.A. and any consent, waiver or
approval required under the Indenture, dated as of August 19, 1993 by and
between EQK Green Acres Funding Corp. and Bankers Trust Company or the related
Consolidated and Restated Mortgage, Security Agreement,
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Assignment of Leases and Rents and Fixture Filing) to which the Company or any
of its Subsidiaries is a party and Parent shall have received a certificate to
such effect signed on behalf of the Company by the President of the Company.
(d) Tax Opinion. Parent shall have received an opinion (which may be
a reasoned opinion) of Wolf, Block, Xxxxxx and Xxxxx-Xxxxx LLP, dated the
Closing Date and in a form reasonably acceptable to Parent, to the effect that
the Company qualified as a REIT for its taxable year ending December 31, 1996
and will so qualify for its taxable year ending on the Closing Date.
(e) REIT Qualification. Parent shall not be aware of any issue
creating uncertainty as to the Company's qualification as a REIT for any period
and Parent shall not be aware of any issue, whether relating to the Company's
qualification as a REIT for any period or arising as a result of the Merger or
other transactions contemplated by this Agreement, that, in the judgement of
Parent, would jeopardize Parent's ability to qualify as a REIT following the
Merger or Parent's ability to obtain following the Merger an opinion acceptable
to Parent regarding its qualification as a REIT.
(f) Affiliates Letters. Parent shall have received an Affiliates
Letter from each Person identified as an affiliate of the Company pursuant to
Section 6.8.
(g) Title Insurance. Parent shall have received, with respect to
each of the Real Properties, an ALTA title policy reflecting title to the Real
Property in the state of title contemplated by the second sentence of Section
5.1(q) and including such endorsements as Parent shall reasonably require.
(h) Survey. Parent shall have received, with respect to the Real
Property, an ALTA/ASCM survey which survey does not disclose any state of
material facts with respect to the Real Property that is not disclosed in
Section 5.1(q).
(i) Ground Lessor Estoppel Certificates. Parent shall have received,
with respect to the Real Property, an estoppel certificate in form and substance
reasonably satisfactory to Parent from each ground lessor.
(j) Violations. Parent shall have received evidence reasonably
satisfactory to it that the Real Property is not in violation to any federal,
state or municipal law, ordinance, order, regulation or requirement
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affecting any portion of the Real Property that has not been cured except to the
extent that any such violation does not have, individually or in the aggregate,
a Company Material Adverse effect.
(k) Closing Agreement. Company shall have obtained a closing agreement
described in Section 7121 of the Code (a "Closing Agreement") or other
arrangement with the IRS, in either case in a form (taking into account any
related Closing Agreements or other arrangements) acceptable to Parent in its
sole discretion, regarding the effect upon the Company's classification as a
REIT of the Company's failure to mail shareholder solicitation statements in
1995.
7.3. Conditions to Obligation of the Company. The obligation of the
Company to effect the Merger is also subject to the satisfaction or waiver by
the Company at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Parent and Merger Sub set forth in this Agreement shall be true
and correct in all material respects as of the date of this Agreement and as of
the Closing Date as though made on and as of the Closing Date (except to the
extent any such representation and warranty expressly speaks as of an earlier
date) and the Company shall have received a certificate to such effect signed on
behalf of Parent by the President of Parent.
(b) Performance of Obligations of Parent and Merger Sub. Each of
Parent and Merger Sub shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior to
the Closing Date and the Company shall have received a certificate to such
effect signed on behalf of Parent by the President of Parent.
(c) Consents Under Agreements. Parent shall have obtained the
consent or approval of each Person whose consent or approval shall be required
in order to consummate the transactions contemplated by this Agreement under any
material Contract to which Parent or any of its Subsidiaries is a party and the
Company shall have received a certificate to such effect signed on behalf of
Parent by the President of Parent.
(d) Tax Opinion. The Company shall have received the opinion (which
may be a reasoned opinion) of Wolf, Block, Xxxxxx and Xxxxx-Xxxxx LLP, counsel
to the Company, dated the Closing Date, to the effect that the Merger will be
treated for Federal income tax purposes as a
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reorganization within the meaning of Section 368(a) of the Code, and that each
of Parent and the Company will be a party to that reorganization within the
meaning of Section 368(b) of the Code.
ARTICLE VIII
Termination
8.1. Termination by Mutual Consent. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time, whether
before or after the approval by shareholders of the Company referred to in
Section 7.1(a), by mutual written consent of the Company and Parent by action of
their respective Boards of Trustees.
8.2. Termination by Either Parent or the Company. This Agreement may
be terminated and the Merger may be abandoned at any time prior to the Effective
Time by action of the Board of Trustees of either Parent or the Company if (i)
the Merger shall not have been consummated by December 31, 1997 (except that
such date shall be the earlier of (A) March 31, 1998 or (B) the later of (x) the
date on which the Shareholder Meeting is ultimately held, if the Shareholder
Meeting is adjourned or postponed until the first calendar quarter of 1998 or
(y) the date on which the condition set forth in Section 7.2(k) is satisfied),
whether such date is before or after the date of approval by the shareholders of
the Company; (ii) the approval of the Company's shareholders required by Section
7.1(a) shall not have been obtained at a meeting duly convened therefor or at
any adjournment or postponement thereof, or (iii) any Order permanently
restraining, enjoining or otherwise prohibiting consummation of the Merger shall
become final and non-appealable (whether before or after the approval by the
shareholders of the Company; provided, that the right to terminate this
Agreement pursuant to clause (i) above shall not be available to any party that
has breached in any material respect its obligations under this Agreement in any
manner that shall have proximately contributed to the occurrence of the failure
of the Merger to be consummated.
8.3. Termination by the Company. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time, whether
before or after the approval by shareholders of the Company referred to in
Section 7.1(a), by action of the Board of Trustees of the Company:
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(a) if (i) the Company is not in material breach of any of the terms
of this Agreement, (ii) the Board of Trustees of the Company authorizes the
Company, subject to complying with the terms of this Agreement, to enter into a
binding written agreement concerning a transaction that constitutes a Superior
Proposal and (iii) the Company prior to such termination pays to Parent in
immediately available funds any fees required to be paid pursuant to Section
8.5; or
(b) if there has been a material breach by Parent or Merger Sub of
any representation, warranty, covenant or agreement contained in this Agreement
that is not curable or, if curable, is not cured within 30 days after written
notice of such breach is given by the Company to the party committing such
breach.
8.4. Termination by Parent. (a) This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time by action of
the Board of Trustees of Parent if (i) the Board of Trustees of the Company
shall have withdrawn or adversely modified its approval or recommendation of
this Agreement or failed to reconfirm its recommendation of this Agreement
within five business days after a written request by Parent to do so or (ii)
there has been a material breach by the Company of any representation, warranty,
covenant or agreement contained in this Agreement that is not curable or, if
curable, is not cured within 30 days after written notice of such breach is
given by Parent to the party committing such breach.
(b) This Agreement may be terminated at any time before October 16,
1997 by the Board of Trustees of Parent if (i) Parent shall have received an
environmental report relating to assets of the Company that discloses
information that is (a) not contained in the Environmental Reports, and (b)
reasonably likely to have a remediation cost (excluding any portion of such cost
that is reimbursable by insurance or payments from current tenants) in excess of
$1,000,000, or (ii) Parent shall have received an engineering report relating to
the assets of the Company that discloses a structural, mechanical or other
defect or condition whose repair or replacement cost (excluding any portion of
such cost that is reimbursable by insurance or common area maintenance or HVAC
payments payable by current tenants) is reasonably likely to be in excess of
$1,000,000. The term "information" for purposes of this Section 8.4 shall
include any new or different information concerning matters already identified
in the Environmental Reports including where an existing Environmental Report
identifies the existence of an underground storage tank or hydraulic lift but a
new
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environmental report identifies contamination or non-compliance associated with
such tank or hydraulic lift which contamination or non-compliance was not noted
in the Environmental Report or where an Environmental Report identifies the
presence of asbestos but a new environmental report indicates that such asbestos
is damaged or friable and requires removal or encapsulation where the
Environmental Reports do not disclose such damage or friable conditions. This
Agreement may be terminated by the Board of Trustees of Parent on October 16,
1997 if prior to such date (a) Parent shall not have received, with respect to
the Real Property, an estoppel certificate in the form customarily given by such
tenant (which form shall contain all information required to be given pursuant
to the applicable lease) or in such other form reasonably satisfactory to Parent
from each tenant listed on Exhibit C and from other tenants representing at
least 75% of the other occupied gross leaseable area of the Real Property, each
of which estoppel certificates shall be in substance reasonably satisfactory to
Parent, or (b) Parent shall not have received, with respect to the Real
Property, a zoning opinion reasonably satisfactory to Parent or such other
evidence of zoning compliance as Parent shall reasonably require, or (c) Parent
shall not have received, with respect to the Real Property, an estoppel
certificate in form and substance reasonably satisfactory to Parent from each
mortgagee of record, or (d) Parent shall not have received whatever written
agreements Parent deems necessary documenting that notwithstanding any agreement
currently in effect, Xxxx Enterprises, Inc. ("Xxxx") is obligated, without
recourse to Xxxx'x assets other than the Demised Premises (as defined in the
Ground Lease) to pay to the Company and its successors and assigns, upon the
termination of that certain Lease Agreement, dated February 22, 1989, between
Xxxx and EQK Green Acres, L.P. (the "Ground Lease"), any principal amount that
remains outstanding under the Replacement Loan (as defined in the Ground Lease),
and that if the Company or its successors or assigns becomes the direct provider
of financing in connection with the Replacement Loan, Xxxx shall have the
mortgage currently securing the Replacement Loan, as the same may be assigned or
modified, assigned of record to the Company or its successors or assigns, or (e)
Parent shall not have received from the Company evidence satisfactory to Parent
that the insurance carried by the Company prior to the Effective Date provided
sufficient coverage for any potential claims, or (f) Parent shall not have
received all of the documentation regarding environmental conditions requested
in the letter dated August 22, 1997 from Xxxxxxxx & Xxxxxxxx to Xxxxx Xxxxx
Xxxxx or the information contained in such documentation shall not be acceptable
to Parent.
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8.5. Effect of Termination and Abandonment. (a) In the event of
termination of this Agreement and the abandonment of the Merger pursuant to this
Article VIII, this Agreement (other than as set forth in Section 9.1.) shall
become void and of no effect with no liability on the part of any party hereto
(or of any of its trustees, officers, employees, agents, legal and financial
advisors or other representatives); provided, however, except as otherwise
provided herein, no such termination shall relieve any party hereto of any
liability or damages resulting from any wilful breach of this Agreement if such
wilful breach was not cured within 14 days of receipt by the breaching party of
written notice of such breach; provided, however that if the breach is curable,
the breaching party shall have up to 60 days from the date of receipt of notice
of such breach to cure such breach if cure is commenced during the first 14 days
of such period and cure is being diligently pursued by the breaching party at
all times until the breach is cured.
(b) In the event that the closing condition contained in Section
7.2(k) is not satisfied on or prior to Xxxxx 00, 0000 (xxx at such time Parent
has complied in all material respects with its obligations under this Agreement
and has satisfied in all material respects the conditions to Closing for which
it was responsible) or in the event that Parent terminates this Agreement
pursuant to Section 8.2(ii) or Section 8.4(a)(i), the Company shall promptly,
but in no event later than two days after being notified of such by Parent, pay
all of the third party charges and expenses, including those of the Exchange
Agent and including any debt breakage costs, incurred by Parent or Merger Sub in
connection with this Agreement and the transactions contemplated by this
Agreement up to a maximum amount of $500,000, payable by wire transfer of same
day funds. In the event that this Agreement is terminated (x) by the Company
pursuant to Section 8.3(a) or (y) by Parent pursuant to Section 8.4(a)(ii), then
the Company shall promptly, but in no event later than two days after the date
of such termination, pay Parent a termination fee of $3,000,000 and shall
promptly, but in no event later than two days after being notified of such by
Parent, pay all of the third party charges and expenses, including those of the
Exchange Agent and including any debt breakage costs, incurred by Parent or
Merger Sub in connection with this Agreement and the transactions contemplated
by this Agreement up to a maximum amount of $500,000, in each case payable by
wire transfer of same day funds. In the event that (A) an Acquisition Proposal
shall have been made to the Company or any of its Subsidiaries (or the Company
or any of its Subsidiaries shall have been notified, whether or not in writing,
that
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such Acquisition Proposal would be made) or any of its shareholders or any
Person shall have publicly announced an intention (whether or not conditional)
to make an Acquisition Proposal with respect to the Company or any of its
Subsidiaries and thereafter this Agreement is terminated by Parent pursuant to
Section 8.4(a)(i) and a closing occurs pursuant to such Acquisition Proposal on
or before December 31, 1998, or (B) an Acquisition Proposal shall have been made
to the Company or any of its Subsidiaries (or the Company or any of its
Subsidiaries shall have been notified, whether or not in writing, that such
Acquisition Proposal would be made) or any of its shareholders or any Person
shall have publicly announced an intention (whether or not conditional) to make
an Acquisition Proposal with respect to the Company or any of its Subsidiaries
and thereafter this Agreement is terminated by either Parent or the Company
pursuant to Section 8.2(ii) and a closing occurs pursuant to such Acquisition
Proposal on or before December 31, 1998, then the Company shall promptly, but in
no event later than two days after the date of such closing, pay Parent a
termination fee of $3,000,000 (such amount to be in addition to the expense
reimbursement required pursuant to the first sentence of this Section 8.5(b)).
The Company acknowledges that the agreements contained in this Section 8.5(b)
are an integral part of the transactions contemplated by this Agreement, and
that, without these agreements, Parent and Merger Sub would not enter into this
Agreement; accordingly, if the Company fails to promptly pay the amount due
pursuant to this Section 8.5(b), and, in order to obtain such payment, Parent
or Merger Sub commences a suit which results in a judgment against the Company
for the fee set forth in this paragraph (b), the Company shall pay to Parent or
Merger Sub its costs and expenses (including attorneys' fees) in connection with
such suit, together with interest on the amount of the fee at the prime rate of
Citibank, N.A. in effect on the date such payment was required to be made.
ARTICLE IX
Miscellaneous and General
9.1. Survival. This Article IX and the agreements of Parent and
Merger Sub contained in Sections 4.2 (Exchange of Certificates for Shares), 4.4
(Adjustments to Prevent Dilution), 6.6 (Taxation), 6.9 (Stock Exchange Listing
and De-listing), 6.11 (Benefits), 6.12 (Expenses), 6.13 (Indemnification) and
9.5 (Governing Law and Venue; Waiver of Jury Trial) shall survive the
consummation of the Merger. This Article IX, the agreements of the Company,
Parent and Merger Sub contained in Section 6.12 (Expenses),
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Section 8.5 (Effect of Termination and Abandonment), Section 9.5 (Governing Law
and Venue; Waiver of Jury Trial) and the Confidentiality Agreement shall survive
the termination of this Agreement. All other representations, warranties,
covenants and agreements in this Agreement shall not survive the consummation of
the Merger or the termination of this Agreement.
9.2. Modification or Amendment. Subject to the provisions of the
applicable law, at any time prior to the Effective Time, the parties hereto may
modify or amend this Agreement, by written agreement executed and delivered by
duly authorized officers of the respective parties.
9.3. Waiver of Conditions. The conditions to each of the parties'
obligations to consummate the Merger are for the sole benefit of such party and
may be waived by such party in whole or in part to the extent permitted by
applicable law.
9.4. Counterparts. This Agreement may be executed in any number of
counterparts, each such counter part being deemed to be an original instrument,
and all such counterparts shall together constitute the same agreement.
9.5. GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL. (a) THIS
AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL BE
INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF THE
STATE OF DELAWARE WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF. The
parties hereby irrevocably submit to the jurisdiction of the courts of the State
of Delaware and the Federal courts of the United States of America located in
the State of Delaware solely in respect of the interpretation and enforcement
of the provisions of this Agreement and of the documents referred to in this
Agreement, and in respect of the transactions contemplated hereby, and hereby
waive, and agree not to assert, as a defense in any action, suit or proceeding
for the interpretation or enforcement hereof or of any such document, that it is
not subject thereto or that such action, suit or proceeding may not be brought
or is not maintainable in said courts or that the venue thereof may not be
appropriate or that this Agreement or any such document may not be enforced in
or by such courts, and the parties hereto irrevocably agree that all claims with
respect to such action or proceeding shall be heard and determined in such a
Delaware State or Federal court. The parties hereby consent to and grant any
such court jurisdiction over the person of such parties and over the subject
matter of such dispute and agree that mailing of process or other papers in
connection with any such action
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or proceeding in the manner provided in Section 9.6 or in such other manner as
may be permitted by law shall be valid and sufficient service thereof.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH
MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT,
OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY
MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 9.5.
9.6. Notices. Any notice, request, instruction or other document to
be given hereunder by any party to the others shall be in writing and delivered
personally or sent by registered or certified mail, postage prepaid, or by
facsimile:
if to Parent or Merger Sub:
Vornado Realty Trust
Park 00 Xxxx, Xxxxx XX
Xxxxxx Xxxxx, Xxx Xxxxxx 00000
Attention: President
Fax: (000) 000-0000
with a copy to:
Xxxxxx X. Xxxxxxx, Esq.
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
if to the Company:
Arbor Property Trust
Xxx Xxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: President
Fax: (000) 000-0000
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with a copy to:
Xxxxx X. Xxxxxxx, Esq.
Wolf, Block, Xxxxxx and Xxxxx-Xxxxx LLP
Twelfth Floor, Packard Building
S.E. Xxxxxx 00xx xxx Xxxxxxxx Xxxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Fax: (000) 000-0000
or to such other persons or addresses as may be designated in writing by the
party to receive such notice as provided above.
9.7. Entire Agreement; No Other Representations. This Agreement
(including any exhibits hereto), the Company Disclosure Letter, the Parent
Disclosure Letter and the Confidentiality Agreement, dated June 2, 1997, between
Parent and the Company (the "Confidentiality Agreement") constitute the entire
agreement, and supersede all other prior agreements, understandings,
representations and warranties both written and oral, among the parties, with
respect to the subject matter hereof.
9.8. No Third Party Beneficiaries. This Agreement (other than
Section 6.13) is not intended to confer upon any Person other than the parties
hereto any rights or remedies hereunder.
9.9. Obligations of Parent and of the Company. Whenever this
Agreement requires a Subsidiary of Parent to take any action, such requirement
shall be deemed to include an undertaking on the part of Parent to cause such
Subsidiary to take such action. Whenever this Agreement requires a Subsidiary
of the Company to take any action, such requirement shall be deemed to include
an undertaking on the part of the Company to cause such Subsidiary to take such
action and, after the Effective Time, on the part of the Surviving Entity to
cause such Subsidiary to take such action.
9.10. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability or the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected by such
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invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
9.11. Interpretation. The table of contents and headings herein are
for convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
Where a reference in this Agreement is made to a Section or Exhibit, such
reference shall be to a Section of or Exhibit to this Agreement unless otherwise
indicated. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation."
9.12. Assignment. This Agreement shall not be assignable by
operation of law or otherwise; provided, however, that Parent may designate, by
written notice to the Company, another wholly-owned direct or indirect
Subsidiary to be a Constituent Corporation in lieu of Merger Sub, in which event
all references herein to Merger Sub shall be deemed references to such other
Subsidiary, except that all representations and warranties made herein with
respect to Merger Sub as of the date of this Agreement shall be deemed
representations and warranties made with respect to such other Subsidiary as of
the date of such designation.
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57
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties hereto as of the date
first written above.
ARBOR PROPERTY TRUST
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: President
VORNADO REALTY TRUST
By: /s/ Xxxxxx Xxxxxx
------------------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President
TREES ACQUISITION SUBSIDIARY, INC.
By: /s/ Xxxxxx Xxxxxx
------------------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President
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EXHIBIT A
Form of Affiliate's Letter
August __, 1997
Vornado Realty Trust
Park 00 Xxxx, Xxxxx XX
Xxxxxx Xxxxx, Xxx Xxxxxx 00000
Arbor Property Trust
Xxx Xxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Ladies and Gentlemen:
I have been advised that I may be considered an "affiliate" of Arbor
Property Trust(the "Company") for purposes of Rule 145 of the General Rules and
Regulations of the Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "Securities Act"). Pursuant to the terms
of the Agreement and Plan of Merger, dated as of August 22, 1997 (the "Merger
Agreement"), among the Company, Vornado Realty Trust ("Parent"), and Trees
Acquisition Subsidiary, Inc. ("Merger Sub"), the Company plans to merge with and
into Merger Sub (the "Merger"). In the Merger, the undersigned may receive
common shares of beneficial interest, par value $0.04 per share ("Parent Common
Stock") or preferred shares of beneficial interest, no par value, designated as
Series A Convertible Preferred Shares of Beneficial Interest, liquidation
preference $50 per share ("Parent Preferred Stock" and, collectively with the
Parent Common Stock, the "Parent Stock"), in exchange for common shares of
beneficial interest, no par value of the Company ("Company Common Stock").
The undersigned hereby represents, warrants and covenants with and
to Parent and the Company that if the undersigned receives any Parent Stock in
the Merger:
1. The undersigned will not sell, transfer or otherwise dispose of
such Parent Stock unless (i) such sale, transfer or other disposition has
been registered under the Securities Act, (ii) such sale, transfer or
other disposition is made in conformity with the provisions of Rule 145
under the Securities Act or (iii) in the opinion of counsel, in form and
substance reasonably satisfactory to Parent, or under a "no-action" letter
obtained by the undersigned from the
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staff of the SEC, such sale, transfer or other disposition is exempt from
registration under the Securities Act.
2. The undersigned understands that Parent is under no obligation to
register the sale, transfer or other disposition of shares of Parent Stock
by the undersigned or on the undersigned's behalf under the Securities Act
or to take any other action necessary in order to make possible compliance
with an exemption from such registration, except that Parent shall take
such actions as are necessary to comply with Rule 144(c).
3. The undersigned also understands that stop transfer instructions
will be given to Parent's transfer agent with respect to the shares of
Parent Stock issued to the undersigned in the Merger, and that there will
be placed on any certificates representing such shares, a legend stating
in substance the following:
"The shares of beneficial interest represented by this certificate
were issued in a transaction to which Rule 145 under the Securities
Act of 1933 applies. The shares represented by this certificate may
only be transferred in accordance with the terms of a letter
agreement between the registered holder hereof and Vornado Realty
Trust, a copy of which agreement is on file at the principal offices
of Vornado Realty Trust."
4. The undersigned also understands that, unless the transfer by the
undersigned of the Parent Stock issued to the undersigned in the Merger
(i) has been registered under the Act or (ii) is made in conformity with
the provisions of Rule 145(d) under the Act, Parent reserves the right, in
its sole discretion, to place the following legend on any certificates
issued to any transferee of such Parent Stock:
"The shares of beneficial interest represented by this certificate
have not been registered under the Securities Act of 1933 and were
acquired from a person who received such shares in a transaction to
which Rule 145 under the Securities Act of 1933 applies. The
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shares have been acquired by the holder not with a view to, or for
resale in connection with, any distribution thereof within the
meaning of the Securities Act of 1933 and may not be offered, sold,
pledged or otherwise transferred except in accordance with an
exemption from the registration requirements of the Securities Act
of 1933."
It is understood and agreed that the legends set forth in paragraphs
(3) and (4) above shall be removed by delivery of substitute certificates
without such legend if (A) the undersigned delivers to Parent (i) a copy of a
"no action" letter from the staff of the SEC, or a written opinion of counsel,
in form and substance reasonably satisfactory to Parent, to the effect that such
legend is not required for purposes of the Securities Act or (ii) evidence or
representations satisfactory to Parent that the Parent Stock represented by such
certificates is being or has been sold in a transaction made in conformity with
the provisions of Rule 145(d); or (B) the undersigned is eligible to sell under
Rule 145(d)(2) or (3) and requests such removal.
The undersigned understands and agrees that this letter agreement
shall apply to all shares of beneficial interest of Parent and the Company that
are deemed to be beneficially owned by the undersigned pursuant to applicable
federal securities laws. The undersigned further represents, warrants and
covenants with and to Parent that the undersigned will, and will cause each of
the other parties whose shares are so deemed to be beneficially owned by the
undersigned to, prior to the effective date of the Merger, have all shares of
Company Common Stock owned by the undersigned or such parties registered in the
name of the undersigned or such parties, as applicable and not in the name of
any bank, broker-dealer, nominee or clearing house.
The undersigned has carefully read this letter and discussed its
requirements and other applicable limitations upon the undersigned's ability to
sell, transfer or otherwise dispose of Parent Stock, to the extent the
undersigned felt necessary, with the undersigned's counsel or counsel for the
Company.
This letter constitutes the complete understanding between Parent,
the Company and the undersigned concerning the subject matter hereof. The
surviving entity in the Merger is expressly intended to be a beneficiary of this
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letter agreement. THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED WITHIN SUCH STATE.
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Very truly yours,
_________________________
Name:
[add below the signatures
of all registered owners
of shares deemed
beneficially
owned by the affiliate]
_________________________
Name:
_________________________
Name:
_________________________
Name:
Acknowledged this ______ day of ____________, 1997.
VORNADO REALTY TRUST
By:___________________________
Name:
Title:
ARBOR PROPERTY TRUST
By:___________________________
Name:
Title:
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