EXHIBIT 10
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EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
BERKSHIRE REALTY HOLDINGS, L.P.,
BRI ACQUISITION, LLC
AND
BERKSHIRE REALTY COMPANY, INC.
DATED AS OF APRIL 13, 1999
TABLE OF CONTENTS
Page
ARTICLE 1
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Effective Time . . . . . . . . . . . . . . . . . . . . . . . 3
1.4 Effect of Merger on Certificate of Incorporation and By-laws 3
1.5 Directors and Officers . . . . . . . . . . . . . . . . . . . 3
1.6 Effect on Shares . . . . . . . . . . . . . . . . . . . . . . 3
1.7 Merger Consideration . . . . . . . . . . . . . . . . . . . . 4
1.8 Transactions Relating to Seller Partnership . . . . . . . . 5
1.9 Exchange of Certificates; Pre-Closing Dividends:
Fractional Shares . . . . . . . . . . . . . . . . . . . . 5
1.10 Dissenting Shares . . . . . . . . . . . . . . . . . . . . . 7
1.11 Alternative Structure of Merger . . . . . . . . . . . . . . 7
1.12 Further Assurances. . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . . . 8
2.1 Organization, Standing and Power of Seller . . . . . . . . . 9
2.2 Seller Subsidiaries . . . . . . . . . . . . . . . . . . . . 9
2.3 Capital Structure . . . . . . . . . . . . . . . . . . . . 10
2.4 Other Interests . . . . . . . . . . . . . . . . . . . . . 11
2.5 Authority; Noncontravention; Consents . . . . . . . . . . 12
2.6 SEC Documents; Financial Statements; Undisclosed
Liabilities . . . . . . . . . . . . . . . . . . . . . . . 13
2.7 Absence of Certain Changes or Events . . . . . . . . . . . 14
2.8 Litigation . . . . . . . . . . . . . . . . . . . . . . . . 15
2.9 Properties . . . . . . . . . . . . . . . . . . . . . . . . 16
2.10 Environmental Matters . . . . . . . . . . . . . . . . . . 18
2.11 Related Party Transactions . . . . . . . . . . . . . . . . 20
2.12 Employee Benefits . . . . . . . . . . . . . . . . . . . . 20
2.13 Employee Matters . . . . . . . . . . . . . . . . . . . . . 22
2.14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.15 No Payments to Employees, Officers or Directors . . . . . 25
2.16 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.17 Compliance With Laws . . . . . . . . . . . . . . . . . . . 25
2.18 Contracts; Debt Instruments . . . . . . . . . . . . . . . 26
2.19 Opinions of Financial Advisors . . . . . . . . . . . . . . 28
2.20 State Takeover Statutes . . . . . . . . . . . . . . . . . 28
2.21 Proxy Statement and Consent Solicitation Statement . . . . 29
2.22 Investment Company Act of 1940 . . . . . . . . . . . . . . 29
2.23 Definition of Knowledge of Seller . . . . . . . . . . . . 29
2.24 Insurance . . . . . . . . . . . . . . . . . . . . . . . . 29
2.25 Board Recommendation . . . . . . . . . . . . . . . . . . . 30
2.26 Representations in Partnership Merger Agreement . . . . . 30
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PARENT AND BUYER . . . . . . . 30
3.1 Organization, Standing and Power of Parent and Buyer . . . 30
3.2 [Intentionally Omitted] . . . . . . . . . . . . . . . . . 31
3.3 Ownership of Parent and Buyer . . . . . . . . . . . . . . 31
3.4 Authority; Noncontravention; Consents . . . . . . . . . . 31
3.5 Litigation . . . . . . . . . . . . . . . . . . . . . . . . 32
3.6 Undisclosed Liability . . . . . . . . . . . . . . . . . . 33
3.7 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.8 Compliance With Laws . . . . . . . . . . . . . . . . . . . 33
3.9 Contracts; Debt Instruments . . . . . . . . . . . . . . . 33
3.10 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.11 [Intentionally Omitted] . . . . . . . . . . . . . . . . . 34
3.12 Proxy Statement and Consent Solicitation Statement . . . . 34
3.13 Investment Company Act of 1940 . . . . . . . . . . . . . . 34
3.14 Parent and Buyer Not Interested Stockholders . . . . . . . 34
3.15 Definition of Knowledge . . . . . . . . . . . . . . . . . 34
3.16 [Intentionally Omitted] . . . . . . . . . . . . . . . . . 34
3.17 Sufficient Funds . . . . . . . . . . . . . . . . . . . . . 34
3.18 Pro Forma Capitalization Table . . . . . . . . . . . . . . 35
3.19 Representations in Partnership Merger Agreement . . . . . 35
ARTICLE 4
COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . .. . 35
4.1 Acquisition Proposals . . . . . . . . . . . . . . . . . . 35
4.2 Conduct of Seller's Business Pending Merger . . . . . . . 37
4.3 Conduct of Parent's and Buyer's Business Pending Merger . 40
4.4 Other Actions . . . . . . . . . . . . . . . . . . . . . . 42
4.5 Partnership Merger Agreement . . . . . . . . . . . . . . . 42
4.6 Private Placement . . . . . . . . . . . . . . . . . . . . 42
4.7 Irrevocable Letter of Credit . . . . . . . . . . . . . . . 42
ARTICLE 5
ADDITIONAL COVENANTS . . . . . . . . . . . . . . . . . . . . . . 43
5.1 Preparation of the Proxy Statement; Seller Stockholders
Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.2 Access to Information: Confidentiality . . . . . . . . . 45
5.3 Reasonable Best Efforts; Notification . . . . . . . . . . 46
5.4 Tax Treatment . . . . . . . . . . . . . . . . . . . . . . 46
5.5 Public Announcements . . . . . . . . . . . . . . . . . . . 46
5.6 Transfer Taxes . . . . . . . . . . . . . . . . . . . . . . 47
5.7 Benefit Plans . . . . . . . . . . . . . . . . . . . . . . 47
5.8 Indemnification . . . . . . . . . . . . . . . . . . . . . 47
5.9 Declaration of Dividends and Distributions . . . . . . . . 49
5.10 Resignations . . . . . . . . . . . . . . . . . . . . . . . 50
5.11 Outside Property Management Agreements . . . . . . . . . . 50
5.12 Stockholder Claims . . . . . . . . . . . . . . . . . . . . 50
ARTICLE 6
CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
6.1 Conditions to Each Party's Obligation to Effect the Merger 51
6.2 Conditions to Obligations of Parent and Buyer . . . . . . 51
6.3 Conditions to Obligations of Seller . . . . . . . . . . . 53
ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER . . . . . . . . . . . . . . . 55
7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . 55
7.2 Certain Fees and Expenses . . . . . . . . . . . . . . . . 56
7.3 Effect of Termination . . . . . . . . . . . . . . . . . . 59
7.4 Amendment . . . . . . . . . . . . . . . . . . . . . . . . 59
7.5 Extension: Waiver . . . . . . . . . . . . . . . . . . . . 59
ARTICLE 8
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . 59
8.1 Nonsurvival of Representations and Warranties . . . . . . 59
8.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 59
8.3 Interpretation . . . . . . . . . . . . . . . . . . . . . . 61
8.4 Counterparts . . . . . . . . . . . . . . . . . . . . . . . 61
8.5 Entire Agreement; No Third-Party Beneficiaries . . . . . . 61
8.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . 62
8.7 Assignment . . . . . . . . . . . . . . . . . . . . . . . . 62
8.8 Enforcement . . . . . . . . . . . . . . . . . . . . . . . 62
8.9 Severability . . . . . . . . . . . . . . . . . . . . . . . 62
EXHIBITS
Exhibit A Financing Commitments
Exhibit B Pro Forma Capitalization Table of Parent and its
Subsidiaries
Exhibit C Form of Letter of Credit
Exhibit D Form of Tax Opinions
INDEX OF DEFINED TERMS
DEFINED TERM SECTION
Accrued Dividends . . . . . . . . . . . . . . . . . . . . . . . . 1.7(a)
Acquisition Proposal . . . . . . . . . . . . . . . . . . . . . . 4.1(a)
Additional Filings . . . . . . . . . . . . . . . . . . . . . . . 5.1(a)
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.11
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
AICPA Statement . . . . . . . . . . . . . . . . . . . . . . . . . 5.1(b)
Alternative Merger . . . . . . . . . . . . . . . . . . . . . . . . 1.11
Break-Up Expenses . . . . . . . . . . . . . . . . . . . . . . . . 7.2(a)
Break-Up Fee . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2(a)
Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Buyer Disclosure Letter . . . . . . . . . . . . . . . . . . . . Article 3
Buyer Material Adverse Effect . . . . . . . . . . . . . . . . . . 3.1(b)
Buyer Operating Partnership . . . . . . . . . . . . . . . . . . Recital E
Cash Collateral . . . . . . . . . . . . . . . . . . . . . . . . . 4.7(a)
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . 1.9(c)
Certificate of Merger . . . . . . . . . . . . . . . . . . . . . . . . 1.3
Change of Control Preference . . . . . . . . . . . . . . . . . . 1.7(a)
Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.8(b)
Class A Preferred Units . . . . . . . . . . . . . . . . . . . . . . . 1.8
Class B Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.8
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2(a)
Closing Date . . . . . . . . . . . . . . . . . . . . . . 1.2(a), 1.2(b)
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.12(a)
Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2(r)
Common Merger Consideration . . . . . . . . . . . . . . . . . . . 1.7(a)
Consent Solicitation Statement . . . . . . . . . . . . . . . . . 5.1(a)
Controlled Group Member . . . . . . . . . . . . . . . . . . . . . . 2.12
Development . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.9(g)
Development Agreements . . . . . . . . . . . . . . . . . . . . . 4.2(i)
DGCL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
DLLCA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . 1.10
Effective Time . . . . . . . . . . . . . . . . . . . . . . . 1.2(b), 1.3
Election Notice . . . . . . . . . . . . . . . . . . . . . . . . . . 1.11
Employee Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.12
Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . 2.9(a)
Environmental Law . . . . . . . . . . . . . . . . . . . . . . . . . 2.10
Environmental Liabilities and Costs . . . . . . . . . . . . . . . . 2.10
Equity Commitments . . . . . . . . . . . . . . . . . . . . . . . . 3.17
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.12
Escrow Agent . . . . . . . . . . . . . . . . . . . . . . . . . . 4.7(a)
Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . . . 4.7(a)
Financing Commitment . . . . . . . . . . . . . . . . . . . . . . . 3.17
Fee Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.7(c)
Flow-Through Entity . . . . . . . . . . . . . . . . . . . . . . . 2.14(b)
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6
Governmental Entity . . . . . . . . . . . . . . . . . . . . . . . 2.5(b)
HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5(b)
Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . . 2.10(a)
Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . 2.18(b)
Indemnified Parties . . . . . . . . . . . . . . . . . . . . . . . 5.8(a)
Indemnifying Parties . . . . . . . . . . . . . . . . . . . . . . 5.8(b)
Injunction . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1(d)
Knowledge of Buyer . . . . . . . . . . . . . . . . . . . . . . . . 3.15
Knowledge of Parent . . . . . . . . . . . . . . . . . . . . . . . . 3.15
Knowledge of Seller . . . . . . . . . . . . . . . . . . . . . . . . 2.23
Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5(b)
Lazard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.16
Xxxxxx . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.16
Letter of Credit . . . . . . . . . . . . . . . . . . . . . . . . 4.7(a)
Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
Liquidation Vote . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2
Material Contract . . . . . . . . . . . . . . . . . . . . . . . . 2.18(a)
Merger . . . . . . . . . . . . . . . . . . . . . . . . . Recital A, 1.11
Merger Consideration . . . . . . . . . . . . . . . . . . . . . . 1.7(a)
1940 Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.22
Option Consideration . . . . . . . . . . . . . . . . . . . . . . 1.7(b)
Ordinary Course Liabilities . . . . . . . . . . . . . . . . . . . 4.2(q)
Outside Property Management Agreements . . . . . . . . . . . . . 2.18(e)
Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Parent Material Adverse Effect . . . . . . . . . . . . . . . . . 3.1(a)
Parent's Closing Notice . . . . . . . . . . . . . . . . . . . . . 1.2(d)
Partial Period . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.9
Partial Period Dividend . . . . . . . . . . . . . . . . . . . . . . . 5.9
Partnership Merger . . . . . . . . . . . . . . . . . . . . . . . . . 1.8
Partnership Merger Agreement . . . . . . . . . . . . . . . . . Recital E
Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . 1.9(a)
Pension Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.12
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(a)
Preferred Merger Consideration . . . . . . . . . . . . . . . . . 1.7(a)
Property Restrictions . . . . . . . . . . . . . . . . . . . . . . 2.9(a)
Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . 5.1(a)
Prudential . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.16
REIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.14(b)
SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5(b)
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6
Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Seller Common Shares . . . . . . . . . . . . . . . . . . . . . . 2.3(a)
Seller Contribution Agreements . . . . . . . . . . . . . . . . . 2.18(a)
Seller Disclosure Letter . . . . . . . . . . . . . . . . . . . Article 2
Seller Financial Statement Date . . . . . . . . . . . . . . . . . . . 2.7
Seller General Partner . . . . . . . . . . . . . . . . . . . . . . 2.25
Seller Material Adverse Change . . . . . . . . . . . . . . . . . . . 2.7
Seller Material Adverse Effect . . . . . . . . . . . . . . . . . . . 2.1
Seller OP Units . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.8
Seller Options . . . . . . . . . . . . . . . . . . . . . . . . . 2.3(b)
Seller Partner Approval . . . . . . . . . . . . . . . . . . . . . 2.5(a)
Seller Partnership . . . . . . . . . . . . . . . . . . . . . . Recital E
Seller Partnership Agreement . . . . . . . . . . . . . . . . . . 2.3(e)
Seller Permits . . . . . . . . . . . . . . . . . . . . . . . . . . 2.17
Seller Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3(a)
Seller Preferred Shares . . . . . . . . . . . . . . . . . . . . . 2.3(a)
Seller Properties . . . . . . . . . . . . . . . . . . . . . 2.9(a), 2.10
Seller SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . 2.6
Seller Shareholder Approval . . . . . . . . . . . . . . . . . . . 2.5(a)
Seller Shareholders Meeting . . . . . . . . . . . . . . . . . . . 5.1(c)
Seller Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . 2.2(a)
Seller Unit Holder . . . . . . . . . . . . . . . . . . . . . . . . . 1.8
Seller's Closing Notice . . . . . . . . . . . . . . . . . . . . . 1.2(c)
Seller's Environmental Reports . . . . . . . . . . . . . . . . . . 2.10
Share Unit Account . . . . . . . . . . . . . . . . . . . . . . . 1.7(c)
Share Units . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.7(c)
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(a)
Superior Acquisition Proposal . . . . . . . . . . . . . . . . . . 4.1(d)
Surviving Company . . . . . . . . . . . . . . . . . . . . . . . 1.1, 1.11
Surviving Operating Partnership . . . . . . . . . . . . . . . . Recital E
Takeover Statute . . . . . . . . . . . . . . . . . . . . . . . . . 2.20
Tax(es) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.14(a)
Tax Authority . . . . . . . . . . . . . . . . . . . . . . . . . . 2.14(a)
Tax Return(s) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.14(a)
Tax Protection Agreements . . . . . . . . . . . . . . . . . . . . 2.18(i)
Third Party Provisions . . . . . . . . . . . . . . . . . . . . . . . 8.5
Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.25
Transfer Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.6
Welfare Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.12
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of
April 13, 1999, is by and among Berkshire Realty Holdings, L.P., a
Delaware limited partnership ("Parent"), BRI Acquisition, LLC, a Delaware
limited liability company and subsidiary of Parent ("Buyer"), and
Berkshire Realty Company, Inc., a Delaware corporation ("Seller").
RECITALS:
A. The sole member of Buyer and the Board of Directors of
Seller deem it advisable and in the best interests of their respective
members and stockholders, subject to the conditions and other provisions
contained herein, that Buyer shall merge with and into Seller (the
"Merger").
B. Seller has received fairness opinions relating to the
transactions contemplated hereby as more fully described herein.
C. Buyer and Seller desire to make certain representations,
warranties and agreements in connection with the transactions
contemplated hereby.
D. Contemporaneously with the execution of this Agreement,
BRI Acquisition Sub, LP, a Delaware limited partnership ("Buyer Operating
Partnership"), and BRI OP Limited Partnership, a Delaware limited
partnership (the "Seller Partnership"), and Parent will enter into a
Merger Agreement (the "Partnership Merger Agreement") pursuant to which,
immediately prior to the Merger, Buyer Operating Partnership will be
merged with and into Seller Partnership with Seller Partnership as the
surviving entity ("Surviving Operating Partnership").
E. Immediately following the Merger, Parent may liquidate
Seller and, as a result of such liquidation, Parent would acquire all of
the assets, and assume all of the liabilities, of Seller.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein,
the parties hereto hereby agree as follows:
ARTICLE 1
THE MERGER
1.1 The Merger. Upon the terms and subject to the terms and
conditions of this Agreement (including, without limitation, Section
1.11), and in accordance with Section 264 of the Delaware General
Corporation Law ("DGCL") and Section 18-209 of the Delaware Limited
Liability Company Act ("DLLCA"), Buyer shall be merged with and into
Seller, with Seller as the surviving entity (the entity surviving the
Merger, the "Surviving Company").
1.2 Closing.
(a) Subject to Section 1.2(b), Seller's compliance with
Section 1.2(c) and the satisfaction (or waiver by the parties entitled to
the benefit thereof) of the conditions set forth in Article 6, the
closing of the Merger (the "Closing") will take place at 10:00 a.m.,
local time in Boston, Massachusetts on the date (the "Satisfaction Date")
which is the first business day to occur on or after the day which is the
later of (i) the 10th calendar day following satisfaction (or waiver by
the parties entitled to the benefit thereof) of the conditions set forth
in Article 6 (other than Sections 6.2(d), 6.2(g), 6.2(i), 6.3(d) and
6.3(g)) and (ii) October 15, 1999, at the offices of Xxxx and Xxxx LLP,
00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, unless another date or
place is agreed to in writing by the parties. The date on which the
Closing occurs shall be referred to herein as the "Closing Date."
(b) Notwithstanding the provisions of Section 1.2(a)
and subject to Parent's compliance with Section 4.7(b) hereof, Parent may
elect to extend the Closing Date to any business day on or prior to
December 29, 1999 by delivering written notice of such election to Seller
as contemplated under Section 1.2(d).
(c) On the first business day after the satisfaction
(or waiver by Parent and Buyer) of the conditions set forth in Sections
6.1 and 6.2 (other than Sections 6.2(d), 6.2(g) and 6.2(i)), Seller shall
deliver a written notice ("Seller's Closing Notice") to Parent and Buyer
which (i) sets forth the date that is the Satisfaction Date and (ii)
certifies, as of the date of such notice, the satisfaction (or waiver by
Parent and Buyer) of the conditions set forth in Sections 6.1 and 6.2
(other than Sections 6.2(d), 6.2(g) and 6.2(i)).
(d) At least three business days prior to the
Satisfaction Date (as indicated in Seller's Closing Notice), Parent shall
deliver a written notice to Seller ("Parent's Closing Notice") indicating
one of the following: (i) Parent's determination to exercise the election
contemplated by Section 1.2(b) and to extend the Closing Date to such
business day on or prior to December 29, 1999 as is set forth in such
notice, or (ii) Parent's determination not to exercise the election
contemplated by Section 1.2(b), in which case the Closing Date shall be
the Satisfaction Date.
(e) If the Closing Date is extended as contemplated by
Section 1.2(b), then for purposes of the conditions set forth in
Section 6.2 (other than Sections 6.2(g) and 6.2(i)), all references in
the lettered subsections thereof to the terms "Closing Date" and
"Effective Time" shall be deemed to mean the Satisfaction Date, and the
certificates and other documents to be delivered by the parties pursuant
to such Sections shall be delivered on and as of the Satisfaction Date.
The parties hereto agree that other than with respect to the conditions
set forth in Section 6.2(g) and 6.2(i) (which conditions shall be
satisfied or waived by the parties entitled to the benefit thereof as of
the Closing Date), none of the conditions set forth in Section 6.2 shall
be required to be satisfied at any time after the Satisfaction Date.
Notwithstanding the foregoing, for purposes of determining whether Parent
or Buyer has the right to terminate this Agreement pursuant to Section
7.1(b), the conditions set forth in Section 6.2(b) shall, in all
circumstances, be evaluated as of the Closing Date.
(f) If the conditions set forth in Sections 6.1 and 6.2
are not satisfied (or waived by Parent and Buyer), or if the certificates
and other documents required to be delivered pursuant to Section 6.2 are
not delivered, in each case on and as of the Satisfaction Date (as
indicated in Seller's Closing Notice), then (i) the Satisfaction Date
shall be deemed not to have occurred, (ii) Seller's Closing Notice and
Parent's Closing Notice shall be void and of no further effect, (iii) the
Closing shall remain subject to Seller's further compliance with Section
1.2(c) hereof and the Closing shall occur as provided in Section 1.2(a)
and (iv) Parent shall have retained its right, subject to its compliance
with Section 1.2(b), to extend the Closing Date as contemplated
thereunder.
(g) If the Satisfaction Date occurs on or before
October 29, 1999 and the Closing Date is extended as contemplated by
Section 1.2(b) to a date that is after October 29, 1999, then
notwithstanding anything to the contrary contained in the first paragraph
of Section 5.9, Seller may declare a dividend not to exceed $.25 per
Seller Common Share for the dividend for the fourth quarter of 1999
(i.e., with a record date of November 1, 1999).
1.3 Effective Time. On the Closing Date, the Surviving Company
shall execute and file a certificate of merger (the "Certificate of
Merger"), executed in accordance with Delaware law, and shall make all
other filings and recordings required under Delaware law. The Merger
shall become effective at the time ("Effective Time") the Certificate of
Merger is filed with the Secretary of State of the State of Delaware, or
at such time as Buyer and Seller shall agree should be specified in the
Certificate of Merger (not to exceed thirty (30) days after the
Certificate of Merger is filed with the Secretary of State of the State
of Delaware). Unless otherwise agreed, the parties shall cause the
Effective Time to occur on the Closing Date.
1.4 Effect of Merger on Certificate of Incorporation and
By-laws. Subject to Section 1.11, the Restated Certificate of
Incorporation, as amended, of Seller and the By-laws of Seller, as in
effect immediately prior to the Effective Time, shall constitute the
Restated Certificate of Incorporation and By-laws, respectively, of the
Surviving Company, from and after the Effective Time, until further
amended in accordance with applicable Delaware law.
1.5 Directors and Officers. Subject to Section 1.11, the
directors and officers of the Surviving Company shall be the Persons who
were the directors and officers, respectively, of Seller immediately
prior to the Effective Time. Such directors and officers shall continue
to serve for the balance of their unexpired terms or their earlier death,
resignation or removal.
1.6 Effect on Shares. The effect of the Merger on the shares
of Seller shall be as provided in this Article 1. Each membership
interest of Buyer outstanding immediately prior to the Merger shall be
converted, without any action on the part of the holder thereof, into one
share of the common stock of the Surviving Company.
1.7 Merger Consideration.
(a) Subject to Section 1.10 and Section 5.9 below, at
the Effective Time, by virtue of the Merger and without any action on the
part of Parent, Buyer, Seller or the holders of the following securities,
each Seller Common Share (as defined in Section 2.3(a)) issued and
outstanding immediately prior to the Effective Time (other than Seller
Common Shares held by Parent, Buyer, any wholly-owned subsidiary of
Parent or Buyer, or in the treasury of Seller, which shares, by virtue of
the Merger and without any action on the part of the holder thereof,
shall be canceled and shall cease to exist with no payment being made
with respect thereto, and other than Dissenting Shares (as defined in
Section 1.10)) shall be converted into the right to receive $12.25 in
cash (the "Common Merger Consideration"), without interest thereon, upon
surrender of the certificate formerly representing such share. In
addition, at the Effective Time, by virtue of the Merger and without any
action on the part of Parent, Buyer, Seller or the holders of the
following securities, each Seller Preferred Share (as defined in
Section 2.3(a)) issued and outstanding immediately prior to the Effective
Time (other than Dissenting Shares) shall be converted into the right to
receive the "Change of Control Preference" in the amount of $28.75 per
Seller Preferred Share together with 115% of any Accrued Dividends per
Seller Preferred Share ("Change of Control Preference" and "Accrued
Dividends" each being defined in the Certificate of Designation of the
Seller Preferred Shares) (the "Preferred Merger Consideration"), without
interest thereon, upon surrender of the certificate formerly representing
such share. The Surviving Company shall have the right to, and shall,
take all steps necessary to ensure compliance, and shall comply, with all
withholding obligations with respect to any foreign stockholders of
Seller in connection with the payment of the Merger Consideration. The
Preferred Merger Consideration, together with the Common Merger
Consideration, is hereinafter referred to as the "Merger Consideration".
(b) Each outstanding Seller Option (as defined in
Section 2.3(b)) shall be subject to the terms of this Agreement. As of
the Effective Time, each outstanding Seller Option, whether or not then
vested or exercisable, shall have the expiration date thereof accelerated
to the Closing Date and shall be converted into the right to receive from
the Surviving Company an amount of cash equal to the product of (i) the
number of Seller Common Shares subject to the Seller Option and (ii) the
excess, if any, of the Common Merger Consideration over the exercise
price per Seller Common Share of such option (the "Option
Consideration"). Prior to the Effective Time, Seller shall take all
steps necessary to give written notice to each holder of a Seller Option
that all Seller Options shall expire effective as of the Effective Time
and be converted into the right to receive the Option Consideration. The
Surviving Company shall cause the Paying Agent (as defined in
Section 1.9(a)) to pay each holder of Seller Options, promptly following
the Effective Time, the Option Consideration for all Seller Options held
by such holder. The Board of Directors of Seller or any committee
thereof responsible for the administration of Seller's stock option plans
shall take any and all action necessary to effectuate the matters
described in this Section 1.7(b) on or before the Effective Time. Any
amounts payable pursuant to this Section 1.7(b) shall be subject to any
required withholding of taxes and shall be paid without interest. Parent
agrees to provide the Surviving Company with sufficient funds to permit
the Surviving Company to satisfy its obligations under this
Section 1.7(b).
(c) The Seller has adopted a Directors Retainer Fee
Plan (the "Fee Plan") pursuant to which eligible directors may elect to
receive certain fees in cash or in Seller Common Shares or to defer
payment of such fees and credit such fees to an account (the "Share Unit
Account") consisting of units that are equivalent in value to Seller
Common Shares ("Share Units"). The Seller shall take all actions
necessary so that all Share Units outstanding immediately prior to the
Effective Time shall be canceled immediately prior to the Effective Time
in exchange for the right of each holder of Share Units to receive an
amount in cash equal to the product of (A) the number of Share Units in
such holder's Share Unit Account outstanding immediately prior to the
Effective Time and (B) the Common Merger Consideration to be delivered by
the Surviving Company immediately following the Effective Time. All
applicable withholding taxes attributable to the payments contemplated by
this Section 1.7(c) shall be deducted from the amounts payable under this
Section 1.7(c) and any amounts payable under this Section 1.7(c) shall be
payable without interest. Except as provided in this Section 1.7(c), the
Fee Plan shall terminate at the Effective Time.
1.8 Transactions Relating to Seller Partnership.
Contemporaneously with the execution of this Agreement, Parent and Buyer
shall cause Buyer Operating Partnership to enter into the Partnership
Merger Agreement with Seller Partnership pursuant to which, among other
things, (i) Buyer Operating Partnership will be merged with and into
Seller Partnership (the "Partnership Merger") with Seller Partnership
surviving as the Surviving Operating Partnership and (ii) each holder
("Seller Unit Holder") of units in the Seller Partnership ("Seller OP
Units") will be offered the option of receiving either (A) an amount per
Seller OP Unit equal to the Common Merger Consideration or (B) one
Class A Preferred Unit (as defined in the Partnership Merger Agreement)
for each Seller OP Unit held by such holder or (C) one Class B Unit (as
defined in the Partnership Merger Agreement) for each Seller OP Unit held
by such holder. Seller hereby consents to the cancellation of the Seller
OP Units it owns immediately prior to the effective time of the
Partnership Merger in accordance with the provisions of the Partnership
Merger Agreement. Buyer hereby consents to the cancellation of its
general partnership interest in Buyer Operating Partnership owned
immediately prior to the effective time of the Partnership Merger in
accordance with the provisions of the Partnership Merger Agreement.
1.9 Exchange of Certificates; Pre-Closing Dividends: Fractional
Shares.
(a) Prior to the Effective Time, Buyer shall appoint a
paying agent reasonably acceptable to Seller to act as agent (the "Paying
Agent") for the payment of the Merger Consideration upon surrender of
certificates formerly representing issued and outstanding Seller Common
Shares or Seller Preferred Shares, as applicable, and payment in respect
of Seller Options and amounts owing under the Fee Plan.
(b) Parent and Buyer shall provide to the Paying Agent
on or before the Effective Time, for the benefit of the holders of Seller
Common Shares, Seller Preferred Shares, Seller Options and Share Units,
cash payable in exchange for the issued and outstanding Seller Common
Shares, cash payable in exchange for the issued and outstanding Seller
Preferred Shares, cash payable in respect of Seller Options and cash
payable in respect of Share Units.
(c) Promptly after the Effective Time, the Surviving
Company shall cause the Paying Agent to mail to each holder of record of
a certificate or certificates which immediately prior to the Effective
Time represented outstanding Seller Common Shares or Seller Preferred
Shares (the "Certificates") (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to
the Certificates shall pass, only upon delivery of the Certificates to
the Paying Agent and shall be in such form and have such other provisions
as Buyer may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for the Merger
Consideration. Upon surrender of a Certificate for cancellation to the
Paying Agent, together with such letter of transmittal, duly executed and
completed in accordance with the instructions thereto, the holder of such
Certificate shall be entitled to receive in exchange therefor the
applicable Merger Consideration, and the Certificate so surrendered shall
forthwith be canceled. In the event of a transfer of ownership of Seller
Common Shares or Seller Preferred Shares which is not registered in the
transfer records of Seller, payment may be made to a Person (as defined
in Section 2.2(a)) other than the Person in whose name the Certificate so
surrendered is registered if such Certificate shall be properly endorsed
or otherwise be in proper form for transfer and the Person requesting
such payment either shall pay any transfer or other Taxes (as defined in
Section 2.14(a)) required by reason of such payment being made to a
Person other than the registered holder of such Certificate or establish
to the satisfaction of the Surviving Company that such Tax or Taxes have
been paid or are not applicable. Until surrendered as contemplated by
this Section 1.9, each Certificate (other than Certificates representing
Dissenting Shares) shall be deemed at any time after the Effective Time
to represent only the right to receive upon such surrender the Merger
Consideration, without interest. No interest will be paid or will accrue
on the Merger Consideration upon the surrender of any Certificate.
(d) All Merger Consideration paid upon the surrender of
Certificates in accordance with the terms of this Section 1.9 shall be
deemed to have been paid in full satisfaction of all rights pertaining to
the Seller Common Shares or Seller Preferred Shares, as applicable,
formerly represented by such Certificates; provided, however, that Seller
shall transfer to the Paying Agent cash sufficient to pay any dividends
or make any other distributions with a record date on or prior to the
Effective Time which may have been declared or made by Seller on such
Seller Common Shares, including without limitation any dividends
permitted by the second paragraph of Section 5.9 hereof, or Seller
Preferred Shares, as applicable, in accordance with the terms of this
Agreement or prior to the date of this Agreement and which remain unpaid
at the Effective Time and have not been paid prior to such surrender, and
there shall be no further registration of transfers on the stock transfer
books of Seller of the Seller Common Shares and Seller Preferred Shares
which were outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates are presented to the Surviving
Company for any reason, they shall be canceled and exchanged as provided
in this Section 1.9.
(e) None of Parent, Seller, Buyer, the Surviving
Company or the Paying Agent shall be liable to any Person in respect of
any Merger Consideration delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law. Any portion of
the Merger Consideration delivered to the Paying Agent pursuant to this
Agreement that remains unclaimed for 12 months after the Effective Time
shall be redelivered by the Paying Agent to the Surviving Company, upon
demand, and any holders of Certificates who have not theretofore complied
with Section 1.9(c) shall thereafter look only to the Surviving Company
for delivery of the Merger Consideration and any unpaid dividends,
subject to applicable escheat and other similar Laws (as defined in
Section 2.5(b)).
1.10 Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, Seller Common Shares and Seller Preferred
Shares outstanding immediately prior to the Effective Time and held by a
holder who has not voted in favor of the Merger or consented thereto in
writing and who has demanded appraisal for such shares in accordance with
Section 262 of the DGCL ("Dissenting Shares") shall not be converted into
the right to receive the Merger Consideration as provided in Section 1.7,
unless and until such holder fails to perfect or withdraws or otherwise
loses his right to appraisal and payment under the DGCL. If, after the
Effective Time, any such holder fails to perfect or withdraws or loses
his right to appraisal, such Dissenting Shares shall thereupon be treated
as if they had been converted as of the Effective Time into the right to
receive the Merger Consideration, if any, to which such holder is
entitled, without interest thereon. Seller shall give Buyer prompt
notice of any demands received by Seller for appraisal of shares and,
prior to the Effective Time, Buyer shall have the right to participate in
all negotiations and proceedings with respect to such demands. Prior to
the Effective Time, Seller shall not, except with the prior written
consent of Buyer, make any payment with respect to, or settle or offer to
settle, any such demands.
1.11 Alternative Structure of Merger. While it is currently
contemplated that the Merger shall be effected through the merger of
Buyer with and into Seller, Parent shall have the option, in its sole
discretion and without requiring the further consent of Seller or
Seller's Board of Directors or stockholders, to cause the Merger to be
effected through an alternative transaction structure of Seller merging
into Parent, with Parent being the Surviving Company (the "Alternative
Merger"), in which case (i) each general partnership interest and limited
partnership interest of Parent issued and outstanding immediately prior
to the Effective Time shall be converted in the Merger into a
corresponding general partnership interest or limited partnership
interest, as the case may be, of the Surviving Company, (ii) the limited
partnership agreement of Parent shall be the limited partnership
agreement of the Surviving Company and (iii) the general partners and
officers of Parent shall be the general partners and officers of the
Surviving Company. Parent shall make such election by delivering to
Seller a notice (the "Election Notice") electing to effect the
Alternative Merger. The Election Notice shall be available for the
inspection of any stockholder of Seller upon request during normal
business hours. Any such election may be made only after the respective
approvals of the Merger and the Partnership Merger by the stockholders of
Seller and Seller Unit Holders and after satisfaction (or waiver by the
parties entitled to the benefits thereof) of all other conditions to the
consummation of the Merger set forth in Article 6. For purposes of this
Agreement, (i) all references to the term "Merger" shall be deemed to
include the Alternative Merger, except for such references contained in
the second sentence of Section 1.6 and in this Section 1.11, and (ii) all
references to the term "Surviving Company" shall be deemed to include
Parent in its capacity as the surviving entity in the Alternative Merger.
As part of the Proxy Statement and the Consent Solicitation Statement and
in the manner required by applicable law, Seller shall describe the
provisions of this Section 1.11. In the event the Alternative Merger is
effectuated, the parties agree that for Federal income tax purposes, the
Merger shall be treated as an asset acquisition by Parent, followed by a
liquidation of Seller.
1.12 Further Assurances. If, at any time after the Effective
Time, the Surviving Company shall determine or be advised that any deeds,
bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise
in the Surviving Company the right, title or interest in, to or under any
of the rights, properties or assets of Seller acquired or to be acquired
by the Surviving Company as a result of, or in connection with, the
Merger or otherwise to carry out this Agreement, the Surviving Company
shall be authorized to execute and deliver, in the name and on behalf of
each of Parent, Buyer and Seller or otherwise, all such deeds, bills of
sale, assignments and assurances and to take and do, in the name and on
behalf of each of Parent, Buyer and Seller or otherwise, all such other
actions and things as may be necessary or desirable to vest, perfect or
confirm any and all right, title and interest in, to and under such
rights, properties or assets in the Surviving Company or otherwise to
carry out this Agreement.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Parent and Buyer, except as
set forth in the letter of even date herewith signed by the President of
Seller and delivered to Buyer prior to the execution hereof (the "Seller
Disclosure Letter") (it being understood that the Seller Disclosure
Letter shall be arranged in sections corresponding to the sections
contained in this Article 2, and the disclosures in any section of the
Seller Disclosure Letter shall qualify all of the representations in the
corresponding section of this Article 2 and, in addition, other sections
in this Article 2 to the extent it is clear from a reading of the
disclosure that such disclosure is applicable to such other sections) as
follows:
2.1 Organization, Standing and Power of Seller. Seller is a
corporation duly organized and validly existing under the Laws of
Delaware. Seller has the requisite corporate power and authority to
carry on its business as now being conducted. Seller is duly qualified
or licensed to do business as a foreign corporation and is in good
standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or
licensing necessary, other than in such jurisdictions where the failure
to be so qualified or licensed, individually or in the aggregate, would
not have a Seller Material Adverse Effect. Seller has delivered to Buyer
complete and correct copies of Seller's Certificate of Incorporation and
By-laws, in each case, as amended to the date of this Agreement. As used
in this Agreement, "Seller Material Adverse Effect" shall mean a material
adverse effect on the business, properties, assets, financial condition,
or results of operations of Seller and its Subsidiaries, taken as a
whole, including the prevention of the ability of Seller, the Seller
General Partner (as defined below) or the Seller Partnership to
consummate any of the Transactions (as defined below).
2.2 Seller Subsidiaries.
(a) Section 2.2 of the Seller Disclosure Letter sets
forth (i) each Subsidiary (as defined below) of Seller (the "Seller
Subsidiaries"), (ii) the ownership interest therein of Seller, (iii) if
not wholly owned by Seller, the identity and ownership interest of each
of the other owners of such Seller Subsidiary and (iv) each apartment
community owned by such Subsidiary. As used in this Agreement,
"Subsidiary" of any Person (as defined below) means any corporation,
partnership, limited liability company, joint venture, trust or other
legal entity of which such Person (either directly or through or together
with another Subsidiary of such Person) owns 50% or more of the capital
stock or other equity interests of such corporation, partnership, limited
liability company, joint venture or other legal entity, including,
without limitation, the Seller Partnership, but does not include
short-term money market investments and other participation interests in
short-term investments. As used herein, "Person" means an individual,
corporation, partnership, limited liability company, joint venture,
association, trust, unincorporated organization or other entity.
(b) (i) All the outstanding shares of capital stock
owned by Seller of each Seller Subsidiary that is a corporation have been
validly issued and are (A) fully paid, nonassessable and free of any
preemptive rights, (B) owned by Seller or by another Seller Subsidiary
and (C) owned free and clear of all pledges, claims, liens, charges,
encumbrances and security interests of any kind or nature whatsoever
(collectively, "Liens") or any other limitation or restriction (including
any contractual restriction on the right to vote or sell the same) other
than restrictions under applicable securities laws; and (ii) all equity
interests in each Seller Subsidiary that is a partnership, joint venture,
limited liability company or trust which are owned by Seller, by another
Seller Subsidiary or by Seller and another Seller Subsidiary are owned
free and clear of all Liens or any other limitation or restriction
(including any contractual restriction on the right to vote or sell the
same) other than restrictions under applicable securities laws. Each
Seller Subsidiary that is a corporation is duly incorporated and validly
existing under the Laws of its jurisdiction of incorporation and has the
requisite corporate power and authority to carry on its business as now
being conducted, and each Seller Subsidiary that is a partnership,
limited liability company or trust is duly organized and validly existing
under the Laws of its jurisdiction of organization and has the requisite
power and authority to carry on its business as now being conducted.
Each Seller Subsidiary is duly qualified or licensed to do business and
is in good standing in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such jurisdictions
where the failure to be so qualified or licensed, individually or in the
aggregate, would not have a Seller Material Adverse Effect. True and
correct copies of the certificate of incorporation, By-laws, organization
documents and partnership, joint venture and operating agreements of each
Seller Subsidiary, and all amendments to the date of this Agreement, have
been made available or previously delivered to Buyer.
2.3 Capital Structure.
(a) The authorized shares of capital stock of Seller
consist of 60,000,000 shares of preferred stock, $0.01 par value per
share, of which 2,737,000 shares are issued and outstanding as of the
date hereof and are designated as Series 1997-A Convertible Preferred
Shares (the "Seller Preferred Shares"), and 140,000,000 shares of Common
Stock, $0.01 par value per share (the "Seller Common Shares"), of which
36,727,591 are issued and outstanding as of the date hereof. As of the
date hereof, (i) 3,300,000 Seller Common Shares have been reserved for
issuance under the Amended and Restated Stock Option Plan of Seller (the
"Seller Plan"), under which options in respect of 1,534,300 Seller Common
Shares have been granted and are outstanding as of the date hereof,
(ii) 9,982,255 Seller Common Shares are reserved for issuance upon
conversion of Seller OP Units, (iii) 5,680,917 Seller Common Shares are
reserved for issuance upon conversion of the Seller Preferred Shares and
(iv) no Seller Preferred Shares or Seller Common Shares are held in the
Seller's treasury.
(b) Set forth in Section 2.3 of the Seller Disclosure
Letter is a true and complete list of the following: (i) each qualified
or nonqualified option to purchase Seller Common Shares granted under the
Seller Plan or any other formal or informal arrangement ("Seller
Options"); (ii) each grant of Seller Common Shares to employees which are
subject to any risk of forfeiture; and (iii) all other warrants or other
rights to acquire stock, all limited stock appreciation rights, phantom
stock, dividend equivalents, performance units and performance shares
granted under the Seller Plan which are outstanding as of the date
hereof. On the date of this Agreement, except as set forth in this
Section 2.3 or Section 2.3 of the Seller Disclosure Letter, no shares of
capital stock of Seller were outstanding or reserved for issuance.
(c) All outstanding shares of capital stock of Seller
are duly authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights. There are no bonds, debentures, notes or
other indebtedness of Seller having the right under applicable law or
Seller's Certificate of Incorporation or By-laws to vote (or convertible
into, or exchangeable for, securities having the right to vote) on any
matters on which shareholders of Seller may vote.
(d) There are no outstanding securities, options,
warrants, calls, rights, commitments, agreements, arrangements or
undertakings of any kind to which Seller or any Seller Subsidiary is a
party or by which any such entity is bound, obligating Seller or any
Seller Subsidiary to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock, voting securities
or other ownership interests of Seller or any Seller Subsidiary or
obligating Seller or any Seller Subsidiary to issue, grant, extend or
enter into any such security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking (other than to Seller or a Seller
Subsidiary). There are no outstanding obligations of Seller or any
Seller Subsidiary to repurchase, redeem or otherwise acquire any shares
of stock of Seller or shares of stock or other ownership interests of any
Seller Subsidiary.
(e) As of the date hereof, 46,376,824 Seller OP Units
are validly issued and outstanding, fully paid and nonassessable except
to the extent provided by applicable law, of which 36,414,986 are owned
by Seller and 312,605 are owned by Berkshire Apartments, Inc. Section
2.3 of the Seller Disclosure Letter sets forth the name of each Seller
Unit Holder and the number of Seller OP Units owned by each such Seller
Unit Holder as of the date of this Agreement. The Seller OP Units are
subject to no restriction established by Seller or under applicable law
(other than restrictions on sale imposed by applicable securities laws)
except as set forth in the Amended and Restated Limited Partnership
Agreement of the Seller Partnership (the "Seller Partnership Agreement")
and Seller Contribution Agreements. Seller Partnership has not issued or
granted and is not a party to any outstanding commitments of any kind
relating to, or any presently effective agreements or understandings with
respect to, issuing interests in Seller Partnership or securities
convertible into interests in Seller Partnership.
(f) All dividends on Seller Common Shares and
distributions on Seller OP Units which have been declared prior to the
date of this Agreement have been paid in full (except for the dividend on
Seller Common Shares and distributions on Seller OP Units payable on
May 15, 1999).
2.4 Other Interests. Neither Seller nor any of its
Subsidiaries owns directly or indirectly any interest or investment
(whether equity or debt) in any corporation, partnership, joint venture,
business, trust or entity (other than investments in the Seller
Subsidiaries and short-term investment securities). Neither Seller nor
any of the Seller Subsidiaries is in material breach of any provision of
any agreement, document or contract governing its rights in or to any
such interests owned or held by it. To the Knowledge of Seller (as
defined in Section 2.23), no other party to any such agreement, document
or contract is in material breach of any of its obligations under any
such agreement, document or contract, nor has Seller or any of Seller's
Subsidiaries received any notice of any such material breach.
2.5 Authority; Noncontravention; Consents.
(a) Seller has the requisite corporate power and
authority to enter into this Agreement and, subject to the adoption of
this Agreement by holders of (i) a majority of the outstanding Seller
Preferred Shares and (ii) a majority of the Seller Common Shares and
Seller Preferred Shares (voting on an as-converted basis), voting as a
single class, representing a majority of the issued and outstanding
Seller Common Shares (after giving effect to a deemed conversion of the
Seller Preferred Shares) of the Seller (collectively, the "Seller
Shareholder Approval"), to consummate the transactions contemplated by
this Agreement to which Seller is a party. The execution and delivery of
this Agreement by Seller and the consummation by Seller of the
transactions contemplated by this Agreement to which Seller is a party
have been duly authorized by all necessary corporate action on the part
of Seller, except for and subject to the Seller Shareholder Approval and
approval by the holders of a majority of the limited partnership interest
in the Seller Partnership (the "Seller Partner Approval"). This
Agreement has been duly executed and delivered by Seller and constitutes
a valid and binding obligation of Seller, enforceable against Seller in
accordance with and subject to its terms, subject to applicable
bankruptcy, insolvency, moratorium or other similar Laws relating to
creditors' rights and general principles of equity. The respective
Boards of Directors of Seller and the Seller General Partner have duly
and validly approved, and taken all corporate or partnership action
required to be taken by them for the consummation of the Transactions,
including but not limited to all actions required to render inapplicable
to the Merger and this Agreement (and the transactions provided for
herein) the restrictions on "business combinations" (as defined in
Section 203(a)(1) of the DGCL) set forth in Section 203 of the DGCL.
(b) The execution and delivery of this Agreement by
Seller do not, and the consummation of the transactions contemplated by
this Agreement to which Seller is a party and compliance by Seller with
the provisions of this Agreement will not, require any consent, approval
or notice under, or conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration of any
obligation or to loss of a benefit under, or result in the creation of
any Lien upon any of the properties or assets of Seller or any Seller
Subsidiary under, (i) the Certificate of Incorporation or the Amended and
Restated By-laws of Seller or the comparable certificate of incorporation
or organizational documents or partnership or similar agreement (as the
case may be) of any Seller Subsidiary, each as amended or supplemented to
the date hereof, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, reciprocal easement agreement, lease, joint venture agreement,
development agreement, benefit plan or other agreement, instrument,
permit, concession, franchise or license applicable to Seller or any
Seller Subsidiary or their respective properties or assets or
(iii) subject to the governmental filings and other matters referred to
in the following sentence, any judgment, order, decree, statute, law,
ordinance, rule or regulation (collectively, "Laws") applicable to Seller
or any Seller Subsidiary, or their respective properties or assets, other
than, in the case of clause (ii) (other than such items relating to the
incurrence of indebtedness) or (iii), any such conflicts, violations,
defaults, rights, loss or Liens that individually or in the aggregate
would not reasonably be expected to (x) have a Seller Material Adverse
Effect or (y) prevent or delay beyond December 31, 1999 the consummation
of the transactions contemplated by this Agreement. No consent,
approval, order or authorization of, or registration, declaration or
filing with, any federal, state or local government or any court,
administrative or regulatory agency or commission or other governmental
authority or agency, domestic or foreign (a "Governmental Entity"), is
required by or with respect to Seller or any Seller Subsidiary in
connection with the execution and delivery of this Agreement by Seller or
the consummation by Seller of the transactions contemplated by this
Agreement, except for (i) the filing with the Securities and Exchange
Commission (the "SEC") and the New York Stock Exchange of the Proxy
Statement (as defined in Section 5.1(a)) and any filings required by the
Exchange Act (including Schedule 13E-3), (ii) the filing of the
Certificate of Merger with the Secretary of State of the State of
Delaware, (iii) the filing of a certificate of merger with the Secretary
of State of the State of Delaware with respect to the Partnership Merger,
(iv) any filings required under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), (v) the filing of a
Form D with the SEC with respect to the transaction contemplated by the
Partnership Merger Agreement and (vi) such other consents, approvals,
orders, authorizations, registrations, declarations and filings (A) as
are set forth in Section 2.5 of the Seller Disclosure Letter, (B) as may
be required under (y) federal, state or local environmental Laws or
(z) the "blue sky" laws of various states, to the extent applicable or
(C) which, if not obtained or made, would not prevent or delay beyond
December 31, 1999 the consummation of any of the transactions
contemplated by this Agreement or otherwise prevent or delay beyond
December 31, 1999 Seller from performing its obligations under this
Agreement in any material respect or have, individually or in the
aggregate, a Seller Material Adverse Effect.
2.6 SEC Documents; Financial Statements; Undisclosed
Liabilities.
(a) Seller has filed all Seller SEC Documents (as
defined below) on a timely basis. Section 2.6 of the Seller Disclosure
Letter contains a complete list of all Seller SEC Documents filed by
Seller or Seller Partnership with the SEC since January 1, 1999 and on or
prior to the date of this Agreement. All of the Seller SEC Documents
(other than preliminary material), as of their respective filing dates,
complied in all material respects with all applicable requirements of the
Securities Act of 1933, as amended (the "Securities Act"), and the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
each case, the rules and regulations promulgated thereunder applicable to
such Seller SEC Documents. None of the Seller SEC Documents at the time
of filing contained, or will contain at the time of filing if not yet
filed, any untrue statement of a material fact or omitted, or will omit
at the time of filing if not yet filed, 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, except to the extent such statements have been
modified or superseded by later Seller SEC Documents filed and publicly
available. The consolidated financial statements of Seller included in
the Seller SEC Documents complied (or, with respect to the Seller SEC
Documents that have not been filed on or before the date hereof, will
comply) as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared (or will be prepared) in accordance
with generally accepted accounting principles ("GAAP") (except, in the
case of unaudited statements, as permitted by the applicable rules and
regulations of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and fairly
presented (or will fairly present) in all material respects, in
accordance with the applicable requirements of GAAP and the applicable
rules and regulations of the SEC, the consolidated financial position of
Seller and its Subsidiaries, as of the dates thereof and the consolidated
results of operations and cash flows for the periods then ended (subject,
in the case of unaudited statements, to normal year-end audit
adjustments). Seller has no Subsidiaries which are not consolidated for
accounting purposes.
(b) Except (i) for liabilities or obligations incurred
in the ordinary course of business, (ii) for liabilities or obligations
incurred in connection with the transactions contemplated by this
Agreement, or (iii) as disclosed in the Seller SEC Documents filed after
December 31, 1998 or in the Seller Disclosure Letter, Seller and its
Subsidiaries have no material liabilities or obligations (whether
absolute, accrued, contingent or otherwise). As used herein, "Seller SEC
Documents" shall mean all reports, schedules, forms, statements and other
documents required to be filed by the Seller with the SEC since
January 1, 1996; provided that with respect to all representations and
warranties of Seller contained in this Article 2 (except those contained
in Section 2.6(a)), references to Seller SEC Documents shall refer only
to those filings made prior to the date hereof.
2.7 Absence of Certain Changes or Events. Except as disclosed
in the Seller SEC Documents, since the date of the most recent audited
financial statements included in the Seller SEC Documents (the "Seller
Financial Statement Date"), Seller and its Subsidiaries have conducted
their business only in the ordinary course (taking into account prior
practices, including the acquisition of properties and issuance of
securities) and, except as disclosed in the Seller SEC Documents or the
Seller Disclosure Letter, there has not been (a) any Seller Material
Adverse Change (as defined below), (b) except for regular quarterly
distributions not in excess of $.25 per Seller Common Share or Seller OP
Unit and dividends on the Seller Preferred Shares in accordance with the
terms of Seller's Certificate of Incorporation, respectively (or as
necessary to maintain REIT status), in each case subject to rounding
adjustments as necessary and with customary record and payment dates, and
except as permitted by Section 5.9 of this Agreement, any authorization,
declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to the
Seller Common Shares, the Seller OP Units or the Seller Preferred Shares,
(c) any split, combination or reclassification of the Seller Common
Shares, the Seller OP Units or the Seller Preferred Shares or any
issuance or the authorization of any issuance of any other securities in
respect of, in lieu of or in substitution for, or giving the right to
acquire by exchange or exercise, shares of stock of Seller or partnership
interests in Seller partnerships or any issuance of an ownership interest
in, any Seller Subsidiary, (d) any damage, destruction or loss, whether
or not covered by insurance, that has or would reasonably be likely to
have a Seller Material Adverse Effect, (e) any change in financial or tax
accounting methods, principles or practices by Seller or any Seller
Subsidiary materially affecting its assets, liabilities or business,
except insofar as may have been required by a change in GAAP, (f) (x) any
granting by Seller or any of its Subsidiaries to any officer or other key
employee of Seller or any of its Subsidiaries of any increase in
compensation, except for normal increases in the ordinary course of
business consistent with past practice or as required under employment
agreements in effect as of December 31, 1998, (y) any granting by Seller
or any of its Subsidiaries to any such officer or key employee of any
increase in severance or termination pay, except as was required under
any employment, severance or termination agreements in effect as of
December 31, 1998 or (z) any entry by Seller or any of its Subsidiaries
into any employment, severance or termination agreement with any such
officer or key employee except in the ordinary course of business
consistent with past practice, (g) any acquisition or disposition of any
real property, or any commitment to do so, made by Seller or any of its
Subsidiaries or (h) any making or revocation of any material tax
election. As used in this Agreement, "Seller Material Adverse Change"
shall mean (i) any material adverse change in the business, properties,
assets, financial condition or results of operations of Seller and its
Subsidiaries, taken as a whole, or (ii) any other change that would
prevent or delay beyond December 31, 1999 the ability of Seller, the
Seller General Partner or the Seller Partnership from consummating any of
the Transactions.
2.8 Litigation. Except as disclosed in the Seller SEC
Documents, and other than personal injury and other routine tort
litigation arising from the ordinary course of operations of Seller and
its Subsidiaries (a) which are covered by adequate insurance or (b) for
which all material costs and liabilities arising therefrom are
reimbursable pursuant to common area maintenance or similar agreements,
as of the date hereof, there are no suits, actions or proceedings pending
(in which service of process has been received by an employee of Seller
or an Seller Subsidiary) or, to the Knowledge of Seller, threatened in
writing against or affecting Seller or any Seller Subsidiary that,
individually or in the aggregate, would reasonably be expected to
(i) have a Seller Material Adverse Effect or (ii) prevent or delay beyond
December 31, 1999 the consummation of any of the material transactions
contemplated by this Agreement, nor are there any judgments, decrees,
injunctions, rules or orders of any court or arbitrator or suits, actions
or proceedings pending or threatened in writing by any Governmental
Entity outstanding against Seller or any of its Subsidiaries with respect
to any of the Transactions. Notwithstanding the foregoing, (y) Section
2.8 of the Seller Disclosure Letter sets forth, as of the date hereof,
each and every (i) uninsured claim with respect to which if determined
adversely would reasonably be expected to result in a dollar cost to
Seller or its Subsidiaries in excess of $100,000, (ii) equal employment
opportunity claim against Seller or a Seller Subsidiary with respect to
which if determined adversely would reasonably be expected to result in a
cost in excess of $100,000 and (iii) claim against Seller or a Seller
Subsidiary relating to sexual harassment and/or discrimination pending
or, to the Knowledge of Seller, threatened as of the date hereof with
respect to which if determined adversely would reasonably be expected to
result in a cost in excess of $100,000, in each case with a brief summary
of such claim or threatened claim and (z) no claim is pending or has been
made within the five-year period ending on the date of this Agreement
under any director's or officer's liability insurance policy maintained
at any time by Seller or by any of its Subsidiaries.
2.9 Properties.
(a) Seller or a Seller Subsidiary set forth in Section
2.2 of the Seller Disclosure Letter owns good and marketable fee simple
title to each of the real properties identified in Section 2.2 of the
Seller Disclosure Letter (collectively, the "Seller Properties" and each,
a "Seller Property"), which are all of the real properties owned by them
as of the date hereof. Except as set forth in the existing title reports
identified in clause (iii) below and except for any easements granted in
the ordinary course of business since the date of such title reports
which do not have a material adverse effect on the operation of any of
the Seller Properties, no other Person has any real property ownership
interest in any of the Seller Properties. The Seller Properties are not
subject to any rights of way, written agreements, Laws, ordinances and
regulations affecting building use or occupancy, or reservations of an
interest in title (collectively, "Property Restrictions") or Liens
(including Liens for Taxes), mortgages or deeds of trust, claims against
title, charges which are Liens, security interests or other encumbrances
on title (the "Encumbrances"), except for (i) Property Restrictions and
Encumbrances set forth in Section 2.9(a)(i) of the Seller Disclosure
Letter, (ii) Property Restrictions imposed or promulgated by law or any
governmental body or authority with respect to real property, including
zoning regulations, which, individually or in the aggregate, would not
have a Seller Material Adverse Effect, (iii) Property Restrictions and
Encumbrances disclosed on existing title reports or existing surveys (in
either case copies of which title reports and surveys have been delivered
to Xxxxxxxx & Xxxxxxxx or made available to Buyer's representatives at
the offices of Xxxx and Xxxx LLP on or prior to February 18, 1999);
provided that such Encumbrances secure either indebtedness which is
described in the Seller Disclosure Letter or indebtedness which has been
discharged in full, and (iv) mechanics', carriers', workmen's,
repairmen's Liens and other Encumbrances and Property Restrictions, if
any, which, individually or in the aggregate, would not have a Seller
Material Adverse Effect. Section 2.9 of the Seller Disclosure Letter
lists each of the Seller Properties which is under development as of the
date of this Agreement and describes the status of such development as of
the date hereof.
(b) Valid policies of title insurance have been issued
insuring Seller or the applicable Seller Subsidiary's fee simple title to
each of the Seller Properties owned by it in amounts at least equal to
the purchase price thereof paid by Seller or its Subsidiary subject only
to the matters disclosed above and in Section 2.9(b) of the Seller
Disclosure Letter. Such policies are, at the date hereof, in full force
and effect. No claim has been made against any such policy.
(c) Seller has not failed to obtain and maintain in
full force and effect a certificate, permit or license from any
governmental authority having jurisdiction over any of the Seller
Properties which failure, individually or in the aggregate, would have a
Seller Material Adverse Effect. There is no pending threat of
modification or cancellation of any of same which, individually or in the
aggregate, would have a Seller Material Adverse Effect. There is no
notice of any violation of any federal, state or municipal law,
ordinance, order, regulation or requirement issued by any governmental
authority which, individually or in the aggregate, would have a Seller
Material Adverse Effect. There has been no physical damage to any Seller
Properties which, individually or in the aggregate, would have a Seller
Material Adverse Effect for which there is no insurance in effect
covering the cost of the restoration.
(d) Neither Seller nor any of the Seller Subsidiaries
has received any notice with respect to any Seller Property to the effect
that any condemnation or rezoning proceedings are pending or threatened
which, individually or in the aggregate, would have a Seller Material
Adverse Effect. All work to be performed, payments to be made and
actions to be taken by Seller or the Seller Subsidiaries prior to the
date hereof pursuant to any agreement entered into with a governmental
body or authority in connection with a site approval, zoning
reclassification or other similar action (e.g., Local Improvement
District, Road Improvement District, Environmental Mitigation) material
to Seller and the Seller Subsidiaries taken as a whole have been
performed, paid or taken, as the case may be, and Seller has no Knowledge
of any planned or proposed work, payments or actions that may be required
after the date hereof pursuant to such agreements that are material to
Seller and the Seller Subsidiaries taken as a whole.
(e) Except as set forth in Section 2.9(e) of the Seller
Disclosure Letter, all of the Seller's Properties are self-managed.
(f) The rent roll for the Seller's Properties as of
February 1, 1999 has been previously delivered to Buyer and was complete
and correct in all material respects as of the date thereof.
(g) Except as set forth in Section 2.9(g) of the Seller
Disclosure Letter, no Seller Property is currently under development or
subject to any agreement with respect to development, and neither Seller
nor any Seller Subsidiary shall enter into any such agreements between
the date hereof and the Effective Time without the prior written approval
of Buyer; provided, however, that "development" shall not include capital
improvements made in the ordinary course of business to existing Seller
Properties and repairs made to existing Seller Properties.
(h) No Governmental Entity having jurisdiction over any
Seller Property under development has denied or rejected any applications
by Seller for a certificate, permit or license with respect to such
Seller Property, which denial or rejection, individually or in the
aggregate, would have a Seller Material Adverse Effect.
(i) For purposes of this Section 2.9, all individual
items that are qualified by Seller Material Adverse Effect and do not
cause a representation set forth in this Section 2.9 to be untrue because
such items individually do not have a Seller Material Adverse Effect
shall be aggregated and the representations set forth in this Section 2.9
shall be deemed to be untrue if the aggregate of all of such individual
matters has a Seller Material Adverse Effect.
(j) All buildings, structures and other improvements
in, on or within the Seller Properties are in good operating condition
and repair, subject to continued repair and replacement in accordance
with past practice except for any failures to be in such condition and
repair that would not, individually or in the aggregate, have a Seller
Material Adverse Effect.
2.10 Environmental Matters.
(a) Except as disclosed in the Seller SEC Documents and
Seller's Environmental Reports (as defined below) previously made
available to Buyer, to Seller's knowledge, none of Seller, any of the
Seller Subsidiaries or any other Person has caused or permitted (i) the
presence of any hazardous substances, hazardous materials, toxic
substances or waste materials, pollutants, contaminants, and materials
regulated or defined or designated as hazardous, extremely or imminently
hazardous, dangerous, or toxic pursuant to any local, county, state,
territorial or federal governmental authority or with respect to which
such a governmental authority otherwise requires environmental
investigation, monitoring, reporting or remediation (collectively,
"Hazardous Materials") on any of the Seller Properties that is not in
compliance with, or that would result in any liability under, any
Environmental Law or (ii) any spills, releases, discharges or disposal of
Hazardous Materials to have occurred or be presently occurring on or from
the Seller Properties as a result of any construction on or operation and
use of the Seller Properties, which presence or occurrence would,
individually or in the aggregate, have a Seller Material Adverse Effect;
and in connection with the construction on or operation and use of the
Seller Properties, Seller and the Seller Subsidiaries have complied with
all applicable local, state and federal Environmental Laws, including all
regulations, ordinances and administrative and judicial orders relating
to the generation, recycling, reuse, sale, storage, handling, transport
and disposal of any Hazardous Materials, except to the extent such
failure to comply, individually or in the aggregate, would not have a
Seller Material Adverse Effect. With respect to each Seller Property,
since the date of the most recent Seller's Environmental Report relating
to such Seller Property, except where the failure of any of the following
to be true individually or in the aggregate would not have a Seller
Material Adverse Effect, (i) the assets, properties, businesses and
operations of Seller and its Subsidiaries are and have been in compliance
with applicable Environmental Laws, (ii) Seller and its Subsidiaries have
obtained, currently maintain and, as currently operating, are in
compliance with all Seller Permits necessary under any Environmental Law
for the conduct of the business and operations of Seller and its
Subsidiaries in the manner now conducted, and there are no actions or
proceedings pending or threatened to revoke or materially modify such
Seller Permits, (iii) no Hazardous Materials have been used, stored,
manufactured, treated, processed or transported to or from any such
Seller Property except as necessary to the customary conduct of business
and in compliance with law and in a manner that does not result in
liability under Environmental Laws; (iv) there have been no spills,
releases, discharges or disposals of Hazardous Materials on or from such
Seller Property; and (v) Seller and Seller Subsidiaries have not received
any notice of potential responsibility, letter of inquiry or notice of
alleged liability from any Person regarding such Seller Property or the
business conducted thereon. For the purposes of this Paragraph 2.10
only, "Seller Properties" shall be deemed to include all property
formerly owned, operated or leased by Seller or Seller Subsidiaries;
solely, however, as to the period of time when such property was so
owned, operated or leased by Seller or the Seller Subsidiaries. Seller
has previously delivered or made available to Buyer complete copies of
all final versions of environmental investigations and testing or
analysis (other than those which have been superseded by more recent
investigations, testing or analyses) that are in the possession, custody
or control of any of Seller or any of the Seller Subsidiaries with
respect to the environmental condition of the Seller Properties, all of
which are listed in Section 2.10 of the Seller Disclosure Letter
("Seller's Environmental Reports").
(b) Except as set forth in Seller's Environmental
Reports, (i) there are no asbestos-containing materials, lead-based
paints, or radon at, in or part of any facility owned, operated or leased
by Seller or any of its Subsidiaries, the presence of which, individually
or in the aggregate, would reasonably be expected to result in Seller
incurring Environmental Liabilities and Costs aggregating $30 million or
more and (ii) there are no underground storage tanks owned, operated or
controlled by Seller or its Subsidiaries on any real property owned,
operated or leased by Seller, the presence of which, individually or in
the aggregate, would be reasonably expected to result in Seller incurring
Environmental Liabilities and Costs aggregating $30 million or more.
(c) For purposes of this Agreement, the terms below
shall have the following meanings:
"Environmental Law" means any law (including, without
limitation, common law), regulation, ordinance, guideline, code, decree,
judgment, order, permit or authorization or other legally enforceable
requirement of any Governmental Entity relating to or imposing liability
with respect to worker or public safety or the indoor or outdoor
environment or natural resources, including, without limitation,
pollution, contamination, Hazardous Materials, cleanup, regulation and
protection of the air, natural resources, water or soils in the indoor or
outdoor environment; and
"Environmental Liabilities and Costs" means all losses,
liabilities, damages, fines, penalties, obligations, costs or expenses
(including, without limitation, fees, disbursements, expenses of legal
counsel, experts and engineers and the costs of investigation and cleanup
studies and to remove, treat or clean up Hazardous Materials) incurred,
assessed or levied pursuant to any Environmental Law.
2.11 Related Party Transactions. Set forth in Section 2.11 of
the Seller Disclosure Letter is a list of all arrangements, agreements
and contracts entered into by Seller or any of the Seller Subsidiaries
with any Person who is an officer, director or Affiliate (as defined
below) of Seller, or any entity of which any of the foregoing is an
Affiliate, except those of a type available to Seller employees
generally. Such documents, copies of all of which have previously been
delivered or made available to Buyer, are listed in Section 2.11 of the
Seller Disclosure Letter. As used in this Agreement, the term
"Affiliate" shall have the same meaning as such term is defined in Rule
405 promulgated under the Securities Act.
2.12 Employee Benefits. As used herein, the term "Employee
Plan" includes any pension, retirement, savings, disability, medical,
dental, health, life, death benefit, group insurance, profit sharing,
deferred compensation, stock option, bonus, incentive, vacation pay,
tuition reimbursement, severance pay, or other material employee benefit
plan, trust, employment agreement, contract, agreement, policy or
commitment (including, without limitation, any pension plan, as defined
in Section 3(2) of the Employee Retirement Income Security Act of 1974,
as amended and the rules and regulations promulgated thereunder ("ERISA")
("Pension Plan"), and any welfare plan as defined in Section 3(1) of
ERISA ("Welfare Plan")), whether any of the foregoing is funded, insured
or self-funded, written or oral, (i) sponsored or maintained by Seller or
its Subsidiaries (each a "Controlled Group Member") and covering any
Controlled Group Member's active or former employees (or their
beneficiaries), (ii) to which any Controlled Group Member is a party or
by which any Controlled Group Member (or any of the rights, properties or
assets thereof) is bound or (iii) with respect to which any current
Controlled Group Member may otherwise have any material liability
(whether or not such Controlled Group Member still maintains such
Employee Plan). Each Employee Plan is listed in Section 2.12 of the
Seller Disclosure Letter. With respect to the Employee Plans:
(a) Except as disclosed in Section 2.12 of the Seller
Disclosure Letter, no Controlled Group Member has any continuing
liability under any Welfare Plan which provides for continuing benefits
or coverage for any participant or any beneficiary of a participant after
such participant's termination of employment, except as may be required
by Section 4980B of the Internal Revenue Code of 1986, as amended (the
"Code"), or Section 601 (et seq.) of ERISA, or under any applicable state
law, and at the expense of the participant or the beneficiary of the
participant.
(b) Each Employee Plan complies in all material
respects with the applicable requirements of ERISA and any other
applicable law governing such Employee Plan, and each Employee Plan has
at all times been properly administered in all material respects in
accordance with all such requirements of law, and in accordance with its
terms and the terms of any applicable collective bargaining agreement to
the extent consistent with all such requirements of law. Each Pension
Plan which is intended to be qualified is qualified under Section 401(a)
of the Code, has received a favorable determination letter from the IRS
stating that such Plan meets the requirements of Section 401(a) of the
Code and that the trust associated with such Plan is tax exempt under
Section 501(a) of the Code and to the Knowledge of Seller no event has
occurred which would jeopardize the qualified status of any such plan or
the tax exempt status of any such trust under Sections 401(a) and
Section 501(a) of the Code, respectively, except in circumstances in
which, individually or in the aggregate, the failure to so qualify or be
tax exempt would not have a Seller Material Adverse Effect. No lawsuits,
claims (other than routine claims for benefits) or complaints to, or by,
any Person or Governmental Entity have been filed or are pending which,
individually or in the aggregate, would have a Seller Material Adverse
Effect and, to the Knowledge of Seller, there is no fact or contemplated
event which would be expected to give rise to any such lawsuit, claim
(other than routine claims for benefits) or complaint with respect to any
Employee Plan that would have a Seller Material Adverse Effect. Without
limiting the foregoing, except in the case of the following clauses (i)
through (vi) as would not individually or in the aggregate have a Seller
Material Adverse Effect, the following are true with respect to each
Employee Plan:
(i) all Controlled Group Members have filed or
caused to be filed every material return, report statement, notice,
declaration and other document required by any law or governmental
agency, federal, state and local (including, without limitation, the
Internal Revenue Service and the Department of Labor) with respect to
each such Employee Plan, each of such filings has been complete and
accurate in all material respects and no Controlled Group Member has
incurred any material liability in connection with such filings;
(ii) all Controlled Group Members have
delivered or caused to be delivered to every participant, beneficiary and
other party entitled to such material, all material plan descriptions,
returns, reports, schedules, notices, statements and similar materials,
including, without limitation, summary plan descriptions and summary
annual reports, as are required under Title I of ERISA, the Code, or
both, and no Controlled Group Member has incurred any material liability
in connection with such deliveries;
(iii) all contributions and payments with
respect to Employee Plans that are required to be made by a Controlled
Group Member with respect to periods ending on or before the Closing Date
(including periods from the first day of the current plan or policy year
to the Closing Date) have been, or will be, made or accrued before the
Closing Date in accordance with the appropriate plan document, actuarial
report, collective bargaining agreements or insurance contracts or
arrangements or as otherwise required by ERISA or the Code;
(iv) with respect to each such Employee Plan,
to the extent applicable, Seller has delivered to or has made available
to Buyer true and complete copies of (A) plan documents, or any and all
other documents that establish the existence of the plan, trust,
arrangement, contract, policy or commitment and all amendments thereto,
(B) the most recent determination letter, if any, received from the
Internal Revenue Service, (C) the three most recent Form 5500 Annual
Reports (and all schedules and reports relating thereto) and actuarial
reports and (D) all related trust agreements, insurance contract or other
funding agreements that implement each such Employee Plan;
(v) no payment made or to be made to an
officer, director or employee pursuant to an Employee Plan either before,
on, or after consummation of the transactions contemplated by this
Agreement shall constitute an "excess parachute payment" within the
meaning of Section 280G of the Code; and
(vi) consummation of the transactions
contemplated by this Agreement shall not (A) give rise to a severance pay
obligation with respect to those employees who continue employment with
the Surviving Corporation or (B) enhance or trigger (including
acceleration of vesting, payment or funding) any benefits under any
Employee Plan.
(c) With respect to each Employee Plan, there has not
occurred, and no Person or entity is contractually bound to enter into,
any "prohibited transaction" within the meaning of Section 4975(c) of the
Code of Section 406 of ERISA, which transaction is not exempt under
Section 4975(d) of the Code or Section 408 of ERISA which, individually
or in the aggregate, would have a Seller Material Adverse Effect.
(d) No Controlled Group Member has maintained or been
obligated to contribute to any Employee Plan subject to Code Section 412
or Title IV of ERISA.
2.13 Employee Matters. Neither Seller nor any of the Seller
Subsidiaries is a party to, or bound by, any collective bargaining
agreement, contract or other agreement or understanding with a labor
union or other labor organization, nor has Seller or any of the Seller
Subsidiaries agreed that any unit of its employees is appropriate for
collective bargaining. No union or other labor organization has been
certified as bargaining representative for any of Seller's employees. To
the Knowledge of Seller, there are no organizational efforts with respect
to the formation of a collective bargaining unit presently being made or
threatened involving employees of Seller or any of the Seller
Subsidiaries.
2.14 Taxes.
(a) Each of Seller and the Seller Subsidiaries and any
consolidated, combined, unitary or aggregate group for tax purposes of
which Seller or any Seller Subsidiary is or has been a member has timely
filed all Tax Returns (as defined below) required to be filed by it
(after giving effect to any timely filed extension properly granted by a
Tax Authority (as defined below) having authority to do so) and has
timely paid (or Seller has timely paid on its behalf) all Taxes (as
defined below) shown on such Tax Returns as required to be paid by it
except (i) as set forth in Section 2.14 of the Seller Disclosure Letter,
(ii) Taxes that are being contested in good faith by appropriate
proceedings and for which Seller or the applicable Seller Subsidiary
shall have set aside on its books adequate reserves or (iii) where the
failure to file such Tax Returns or pay such Taxes would not have a
Seller Material Adverse Effect. Each such Tax Return is complete and
accurate except where any failure to be complete and accurate would not
have a Seller Material Adverse Effect. The most recent audited financial
statements contained in the Seller SEC Documents reflect an adequate
reserve for all Taxes payable by Seller and the Seller Subsidiaries for
all taxable periods and portions thereof through the date of such
financial statements except where any failure would not have a Seller
Material Adverse Effect. Since the Seller Financial Statement Date,
Seller has incurred no liability for Taxes under Sections 857(b), 857(f),
860(c) or 4981 of the Code, including without limitation any Tax arising
from a prohibited transaction described in Section 857(b)(6) of the Code,
and neither Seller nor any Seller Subsidiary has incurred any material
liability for Taxes other than in the ordinary course of business. No
event has occurred, and no condition or circumstance exists, which
presents a risk that any Tax described in the preceding sentence will be
imposed upon Seller or any Seller Subsidiary except where any failure
would not have a Seller Material Adverse Effect. No material
deficiencies for any Taxes have been proposed, asserted or assessed
against Seller or any Seller Subsidiary, and no requests for waivers of
the time to assess any such Taxes are pending and no extensions of time
to assess any such Taxes are in effect. All Taxes required to be
withheld, collected and paid over to any Tax Authority by the Seller and
any Seller Subsidiary have been timely withheld, collected and paid over
to the proper Tax Authority except where failure to do so would not have
a Seller Material Adverse Effect. Except as set forth in Section 2.14 of
the Seller Disclosure Letter, there are no material pending actions or
proceedings by any Taxing Authority for assessment or collection of any
Tax. Complete copies of all federal, state and local income or franchise
Tax Returns that have been filed by Seller and each Seller Subsidiary for
all taxable years beginning on or after January 1, 1996, all extensions
filed with any Tax Authority that are currently in effect and all written
communications with a Taxing Authority relating thereto, have been or
will hereafter promptly be delivered to the Buyer and the representatives
of the Buyer. No claim has been made by a Taxing Authority in a
jurisdiction where Seller or any Seller Subsidiary does not file Tax
Returns that it is or may be subject to taxation by the jurisdiction
except where the failure to file such Tax Return would not have a Seller
Material Adverse Effect. Neither the Seller nor any Seller Subsidiary
holds any material asset (A) the disposition of which would be subject to
rules similar to Section 1374 of the Code as a result of an election
under Internal Revenue Service Notice 88-19, or (B) that is subject to a
consent filed pursuant to Section 341(f) of the Code and the regulations
thereunder. Except as set forth in Section 2.14 of the Seller Disclosure
Letter, neither the Seller, nor any Seller Subsidiary is obligated to
make after the Closing any payment that would not be deductible pursuant
to Section 162(m) of the Code except where the lack of such deduction
would not have a Seller Material Adverse Effect. Except as set forth in
Section 2.14 of the Seller Disclosure Letter, neither Seller nor any
Seller Subsidiary is party to, nor has any liability under (including
liability with respect to any predecessor entity), any indemnification,
allocation or sharing agreement with respect to Taxes. As used in this
Agreement, "Tax" or "Taxes" shall include all federal, state, local and
foreign income, property, sales, use, occupancy, transfer, recording,
withholding, franchise, employment, excise and other taxes, tariffs or
governmental charges of any nature whatsoever, together with penalties,
interest or additions to tax with respect thereto. As used in this
Agreement, "Tax Return" or "Tax Returns" shall include all original and
amended returns and reports (including elections, claims, declarations,
disclosures, schedules, estimates, computations and information returns)
required to be supplied to a Tax Authority in any jurisdiction. As used
in this Agreement, "Tax Authority" shall mean the Internal Revenue
Service and any other domestic or foreign bureau, department, entity,
agency or other Governmental Entity responsible for the administration of
any Tax.
(b) Seller (i) for all taxable years commencing with
its initial taxable year through December 31, 1998 has been properly
subject to taxation as a real estate investment trust (a "REIT") within
the meaning of Section 856 of the Code and has qualified as a REIT for
such years, (ii) has operated since December 31, 1998, and will continue
to operate to the Closing, in such a manner as to qualify as a REIT for
the taxable year beginning January 1, 1999 determined as if the taxable
year of the REIT ended as of the Closing and (iii) has not taken or
omitted to take any action which would reasonably be expected to result
in a challenge to its status as a REIT, and no such challenge is pending
or to Seller's Knowledge threatened. Each Seller Subsidiary which is a
partnership, joint venture or limited liability company (i) has been
since its formation and continues to be treated for federal income tax
purposes as a partnership or disregarded as a separate entity, as the
case may be, and has not been treated for federal income tax purposes as
a corporation or an association taxable as a corporation and (ii) has not
since the later of its formation or the acquisition by Seller of a direct
or indirect interest therein owned any assets (including, without
limitation, securities) that would cause Seller to violate
Section 856(c)(4) of the Code. The nature of the assets of the Seller
and the Seller Subsidiaries is such that the sale of all of the assets
owned by them would not cause the Seller to be disqualified as a REIT
under Code Section 856(c)(2) or 856(c)(3) or otherwise. The Seller has
not elected and will not elect to pay Tax on any capital gain recognized
on or after January 1, 1999. Each Seller Subsidiary which is a
corporation has been since its formation a qualified REIT subsidiary
under Section 856(i) of the Code. Seller Partnership is not a publicly
traded partnership within the meaning of Section 7704 of the Code, and
the interests in the Seller Partnership are not considered to be
(i) traded on an established securities market or (ii) readily tradable
on a secondary market or the substantial equivalent thereof under either
Internal Revenue Service Notice 88-75 or Treasury Regulations
Section 1.7704-1. In the case of a partner of Seller Partnership that is
a Flow-Through Entity (as defined below), no Person owning an interest in
such Flow-Through Entity (directly or through another Flow-Through
Entity) is treated as a partner of the Seller Partnership under either
Internal Revenue Service Notice 88-75 or Treasury Regulation
Section 1.7704-1(h)(3). For purposes of this Section 2.14(b),
"Flow-Through Entity" means an entity classified as a partnership, a
grantor trust or an S corporation for federal income tax purposes.
(c) For purposes of this Section 2.14, all individual
items that are qualified by Seller Material Adverse Effect and do not
cause a representation set forth in this Section 2.14 to be untrue
because such items individually do not have a Seller Material Adverse
Effect shall be aggregated and the representations set forth in this
Section 2.14 shall be deemed to be untrue if the aggregate of all of such
individual matters has a Seller Material Adverse Effect.
2.15 No Payments to Employees, Officers or Directors. Section
2.15 of the Seller Disclosure Letter contains a true and complete list of
all cash and non-cash payments, rights to property or other contract
rights which will become payable, accelerated or vested to or in each
employee, officer or director of Seller or any Seller Subsidiary as a
result of the Merger. There is no employment or severance contract, or
other agreement requiring payments or an increase in existing payments,
cancellation of indebtedness or other obligation to be made on a change
of control or otherwise as a result of the consummation of any of the
transactions contemplated by this Agreement, with respect to any
employee, officer or director of Seller or any Seller Subsidiary.
2.16 Brokers. No broker, investment banker, financial advisor
or other Person, other than Lazard Freres & Co. LLC ("Lazard"), Xxxxxx
Brothers Inc. ("Xxxxxx") and Prudential Securities Incorporated
("Prudential"), the fees and expenses of which are as described in the
engagement letters dated May 22, 1998, as amended on July 27, 1998,
May 26, 1998, and December 17, 1998, respectively, and, in the case of
Prudential, as further amended on April 13, 1999, true and correct copies
of which have previously been given to Buyer, is entitled to any
broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated hereby based
upon arrangements made by or on behalf of Seller or any Seller
Subsidiary.
2.17 Compliance With Laws. Except as set forth on Section 2.17
of the Seller Disclosure Letter, (i) neither Seller nor any of the Seller
Subsidiaries has violated or failed to comply with any statute, law,
ordinance, regulation, rule, judgment, decree or order of any
Governmental Entity applicable to its business, properties or operations,
except to the extent that such violation or failure has not had or would
not reasonably be expected to have a Seller Material Adverse Effect;
(ii) Seller and its Subsidiaries have, and are in compliance with, all
permits, licenses, certificates, franchises, registrations, variances,
exemptions, orders and approvals of all Governmental Entities which are
material to the operation of their businesses, taken as a whole ("Seller
Permits"), except where the failure to comply has not had or would not
reasonably be expected to have a Seller Material Adverse Effect; and
(iii) no investigation by any Governmental Entity with respect to the
Seller or the Seller Subsidiaries is pending or, to the knowledge of the
Seller, threatened, other than investigations which, individually or in
the aggregate, would not reasonably be expected to have a Seller Material
Adverse Effect.
2.18 Contracts; Debt Instruments.
(a) Except as disclosed in the Seller SEC Documents,
there is no contract or agreement that purports to limit in any material
respect the geographic location in which Seller or any Seller Subsidiary
may conduct its business. Neither Seller nor any Seller Subsidiary
(i) is in violation of or in default under any material loan or credit
agreement, note, bond, mortgage, indenture, lease, permit, concession,
franchise, license or any other material contract, agreement, arrangement
or understanding, to which it is a party or by which it or any of its
properties or assets is bound (each, a "Material Contract"), nor (ii) to
the Knowledge of Seller does such a violation or default exist, except to
the extent that such violation or default referred to in clauses (i) or
(ii), individually or in the aggregate, would not have a Seller Material
Adverse Effect. Each Material Contract which has not been filed as an
Exhibit to any of the Seller SEC Documents has been previously delivered
to Xxxxxxxx & Xxxxxxxx or made available to Buyer's representatives at
the offices of Xxxx and Xxxx LLP on or prior to February 18, 1999, and a
list of all Material Contracts that have not been so filed is set forth
in Section 2.18(a) of the Seller Disclosure Letter. Seller has
previously delivered to Xxxxxxxx & Xxxxxxxx or made available to Buyer's
representatives at the offices of Xxxx and Xxxx LLP on or prior to
February 18, 1999, all contracts and other agreements relating to the
contribution of assets to Seller Partnership in exchange for Seller
OP Units (the "Seller Contribution Agreements"). Except as set forth in
Section 2.18(a) of the Seller Disclosure Letter, neither Seller nor any
of its Subsidiaries is in default in any respect in the performance,
observance or fulfillment of any of the obligations, covenants or
conditions contained in any Material Contract to which it is a party
where such default, individually or in the aggregate, would reasonably be
expected to have a Seller Material Adverse Effect.
(b) Section 2.18(b) of the Seller Disclosure Letter
sets forth a list as of the date hereof of each loan or credit agreement,
note, bond, mortgage, indenture and any other agreement and instrument
pursuant to which any Indebtedness (as defined below) of Seller or any of
Seller Subsidiaries, other than Indebtedness payable to Seller or a
Seller Subsidiary, is outstanding or may be incurred in an amount in
excess of $50,000, together with the amount outstanding thereunder as of
the date hereof. For purposes of this Section 2.18, "Indebtedness" shall
mean (i) indebtedness for borrowed money, whether secured or unsecured,
(ii) obligations under conditional sale or other title retention
agreements relating to property purchased by such Person,
(iii) capitalized lease obligations, (iv) obligations under interest rate
cap, swap, collar or similar transaction or currency hedging transactions
(valued at the termination value thereof) and (v) guarantees of any such
indebtedness of any other Person.
(c) To the extent not set forth in response to the
requirements of Section 2.18(b), Section 2.18 of the Seller Disclosure
Letter sets forth as of the date hereof each interest rate cap, interest
rate collar, interest rate swap, currency hedging transaction, and any
other agreement relating to a similar transaction, in each case involving
$50,000 or more, to which Seller or any Seller Subsidiary is a party or
an obligor with respect thereto.
(d) Neither Seller nor any of the Seller Subsidiaries
is a party to any agreement relating to the management of any of the
Seller Properties by any Person other than Seller Partnership.
(e) Neither Seller nor any of the Seller Subsidiaries
is a party to any agreement pursuant to which Seller or any Seller
Subsidiary manages any real properties other than Seller Properties,
except for the agreements described in Section 2.18 of the Seller
Disclosure Letter (the "Outside Property Management Agreements"). The
Outside Property Management Agreements constitute legal, valid, binding
and enforceable obligations of Seller and, to Seller's Knowledge, of each
other party thereto, and there exists no default of Seller or, to
Seller's Knowledge, any other party thereto, except for any defaults that
would not reasonably be expected to have a Seller Material Adverse
Effect.
(f) Section 2.18 of the Seller Disclosure Letter lists
all agreements entered into by Seller or any of the Seller Subsidiaries
relating to the development or construction of, or additions or
expansions to, any Seller Properties which are currently in effect and
under which Seller or any of the Seller Subsidiaries currently has, or
expects to incur, any obligation in excess of $1,000,000 per Seller
Property or $10,000,000 in the aggregate. True and correct copies of
such agreements have previously been delivered or made available to
Buyer.
(g) Section 2.18(g) of the Seller Disclosure Letter
lists all agreements entered into by Seller or any of the Seller
Subsidiaries providing for the sale or exchange of, or option to sell or
exchange, any Seller Properties or the purchase of or exchange, or option
to purchase or exchange, any real estate which are currently in effect.
(h) Neither Seller nor any Seller Subsidiary has any
continuing contractual liability (i) for indemnification or otherwise
under any agreement relating to the sale of real estate previously owned,
whether directly or indirectly, by Seller or any Seller
Subsidiary,(ii) to pay any additional purchase price for any of the
Seller Properties, or (iii) to make any reprorations or adjustments to
prorations involving an amount in excess of $100,000 that may previously
have been made with respect to any property currently or formerly owned
by Seller.
(i) Neither Seller nor any Seller Subsidiary has
entered into or is subject, directly or indirectly, to any "Tax
Protection Agreements." As used herein, a Tax Protection Agreement is an
agreement, oral or written, (A) that has as one of its purposes to permit
a Person to take the position that such Person could defer federal
taxable income that otherwise might have been recognized upon a transfer
of property to Seller Partnership or any other Seller Subsidiary that is
treated as a partnership for federal income tax purposes, and (B) that
(i) prohibits or restricts in any manner the disposition of any assets of
Seller or any Seller Subsidiary, (ii) requires that Seller or any Seller
Subsidiary maintain, or put in place, or replace, indebtedness, secured
by one or more of the Seller Properties, or (iii) requires that Seller or
any Seller Subsidiary offer to any Person at any time the opportunity to
guarantee or otherwise assume, directly or indirectly, the risk of loss
for federal income tax purposes for indebtedness or other liabilities of
Seller or any Seller Subsidiary.
(j) Except as set forth in Section 2.18(j) of Seller
Disclosure Letter and except for obligations to provide funds to the
Seller Partnership or to Seller Subsidiaries owned entirely by Seller
and/or Seller Partnership, there are no material outstanding contractual
obligations of Seller or its Subsidiaries to provide any funds to, or
make investments in, any other Person.
(k) Except as set forth in Section 2.18(k) of the
Seller Disclosure Letter and Section 2.18(i), neither Seller nor any of
the Seller Subsidiaries is party to any agreement which would restrict
any of them from prepaying any of their Indebtedness without penalty or
premium at any time or which requires any of them to maintain any amount
of Indebtedness with respect to any of the Seller Properties.
2.19 Opinions of Financial Advisors. Seller has received the
opinions of Lazard, Xxxxxx and Prudential, each dated April 13, 1999, a
signed copy of each of which is being provided to Buyer concurrently with
the execution and delivery of this Agreement, with respect to the
fairness of the cash consideration to be received by the holders (other
than Parent and its Subsidiaries) of Seller Common Shares and Seller OP
Units in connection with the Merger and the Partnership Merger.
2.20 State Takeover Statutes. Seller has taken all action
necessary to exempt the transactions contemplated by this Agreement,
including without limitation the Merger and the Alternative Merger, among
Parent, Buyer and Seller and their respective Affiliates from the
operation of any "fair price," "moratorium," "control share acquisition"
or any other anti-takeover statute or similar statute other than
Section 203 of the DGCL enacted under the state or federal Laws of the
United States or similar statute or regulation (a "Takeover Statute").
Assuming the accuracy of the representation and warranty of Parent and
Buyer set forth in Section 3.14, the action of the Board of Directors of
the Seller in approving the Merger and this Agreement (and the
transactions provided for herein) is sufficient to render inapplicable to
the Merger and this Agreement (and the transactions provided for herein,
including without limitation the Alternative Merger) the restrictions on
"business combinations" (as defined in Section 203 of the DGCL) set forth
in Section 203 of the DGCL.
2.21 Proxy Statement and Consent Solicitation Statement. The
information relating to Seller and the Seller Subsidiaries included in
the Proxy Statement (as defined in Section 5.1(a)) and the Consent
Solicitation Statement (as defined in Section 5.1(a)) will not, as of the
date of mailing of the Proxy Statement and the Consent Solicitation
Statement, respectively, contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.
2.22 Investment Company Act of 1940. Neither Seller nor any of
Seller Subsidiaries is, or at the Effective Time will be, required to be
registered under the Investment Company Act of 1940, as amended (the
"1940 Act").
2.23 Definition of Knowledge of Seller. As used in this
Agreement, the phrase "Knowledge of Seller" (or words of similar import)
means the knowledge of those individuals identified in Section 2.23 of
the Seller Disclosure Letter.
2.24 Insurance. Seller and Seller Subsidiaries maintain
insurance coverage for Seller and Seller Subsidiaries and their
respective properties and assets of a type and in amounts typical of
similar companies engaged in the respective businesses in which Seller
and Seller Subsidiaries are engaged. All such insurance policies (a) are
in full force and effect, and with respect to all policies neither of
Seller nor any Seller Subsidiary is delinquent in the payment of any
premiums thereon, and no notice of cancellation or termination has been
received with respect to any such policy, and (b) are sufficient for
compliance with all requirements of law and of all agreements to which
Seller or the Seller Subsidiaries are a party or otherwise bound and are
valid, outstanding, collectible, and enforceable policies, subject to any
exception in the case of either clause (a) or (b), as would not, alone or
in the aggregate, be reasonably expected to have a Seller Material
Adverse Effect or prevent or materially delay the ability of Seller to
consummate the transactions contemplated by this Agreement. Neither
Seller nor any Seller Subsidiary has received written notice within the
last 12 months from any insurance company or board of fire underwriters
of any defects or inadequacies that would materially adversely affect the
insurability of, or cause any material increase in the premiums for,
insurance covering either Seller or any Seller Subsidiary or any of their
respective properties or assets that have not been cured or repaired to
the satisfaction of the party issuing the notice, except as would not
have a Seller Material Adverse Effect.
2.25 Board Recommendation. The Board of Directors of Seller,
at a meeting duly called and held on April 13, 1999, based upon the
recommendations of a special committee of the Board of Directors of the
Seller consisting of four directors unaffiliated with Parent or Buyer,
unanimously adopted resolutions adopting this Agreement and approving the
transactions contemplated hereby, including the Merger and the
Alternative Merger. The Board of Directors of the general partner of the
Seller Partnership (the "Seller General Partner"), at a meeting duly
called and held on April 13, 1999, unanimously adopted resolutions
adopting the Partnership Merger Agreement and approving the transactions
contemplated thereby, including, without limitation, the Partnership
Merger (such transactions, together with the transactions contemplated by
this Agreement, including, without limitation, the Merger and the
Alternative Merger, are hereinafter collectively referred to as the
"Transactions"). The Board of Directors of the Seller recommended that
Seller's stockholders adopt this Agreement and approve the Merger and the
Alternative Merger and the Board of Directors of the Seller General
Partner recommended that the Seller Unit Holders adopt the
Partnership Merger Agreement and approve the Partnership Merger. Such
recommendations shall not be withdrawn, modified or amended, other than
as expressly permitted under Section 4.1.
2.26 Representations in Partnership Merger Agreement. The
representations and warranties of the Seller General Partner and the
Seller Partnership set forth in the Partnership Merger Agreement are true
and correct.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PARENT AND BUYER
Parent and Buyer, jointly and severally, represent and warrant
to Seller, except as set forth in the letter of even date herewith signed
by a general partner of Parent and the sole member of Buyer and delivered
to Seller prior to the execution hereof (the "Buyer Disclosure Letter")
(it being understood that the Buyer Disclosure Letter shall be arranged
in sections corresponding to the sections contained in this Article 3,
and the disclosures in any section of the Buyer Disclosure Letter shall
qualify all of the representations in the corresponding section of this
Article 3 and, in addition, other sections in this Article 3 to the
extent it is clear from a reading of the disclosure that such disclosure
is applicable to such other sections) as follows:
3.1 Organization, Standing and Power of Parent and Buyer.
(a) Parent is a limited partnership duly organized and
validly existing under the Laws of Delaware and has the requisite power
and authority to carry on its business as now being conducted. Parent is
duly qualified or licensed to do business as a foreign limited
partnership and is in good standing in each jurisdiction in which the
nature of its business or the ownership or leasing of its properties
makes such qualification or licensing necessary, other than in such
jurisdictions where the failure to be so qualified or licensed,
individually or in the aggregate, would not have a material adverse
effect on the ability of Parent and Buyer to consummate the transactions
contemplated by this Agreement or the Partnership Merger Agreement
("Parent Material Adverse Effect"). Parent has delivered to Seller
complete and correct copies of its organizational documents (including
the partnership agreement of Parent) as amended or supplemented to the
date of this Agreement.
(b) Buyer is a limited liability company duly organized
and validly existing under the Laws of Delaware and has the requisite
power and authority to carry on its business as now being conducted.
Buyer is duly qualified or licensed to do business as a foreign limited
liability company and is in good standing in each jurisdiction in which
the nature of its business or the ownership or leasing of its properties
makes such qualifications or licensing necessary, other than in such
jurisdictions where the failure to be so qualified or licensed,
individually or in the aggregate, would not have a material adverse
effect on the ability of Buyer to consummate the transactions
contemplated by this Agreement or the Partnership Merger Agreement (a
"Buyer Material Adverse Effect"). Buyer has delivered to Seller complete
and correct copies of its organizational documents as amended or
supplemented to the date of this Agreement.
(c) Parent and Buyer are newly formed and, except for
activities incident to the acquisition of Seller, neither Parent nor
Buyer has (i) engaged in any business activities of any type or kind
whatsoever or (ii) acquired any property of any type or kind whatsoever.
3.2 [Intentionally Omitted].
3.3 Ownership of Parent and Buyer. All of Parent's partnership
interests are owned by affiliates of The Berkshire Companies Limited
Partnership, Whitehall Street Real Estate Limited Partnership XI and
Blackstone Real Estate Acquisitions III L.L.C. Buyer is a wholly owned
Subsidiary of Parent.
3.4 Authority; Noncontravention; Consents.
(a) Each of Parent and Buyer has the requisite power
and authority to enter into this Agreement and to consummate the
transactions contemplated by this Agreement to which it is a party. The
execution and delivery of this Agreement by Parent and Buyer and the
consummation by Parent and Buyer of the transactions contemplated by this
Agreement to which Parent and/or Buyer is a party have been duly
authorized by all necessary partnership or limited liability company
action on the part of Parent and Buyer. This Agreement has been duly
executed and delivered by Parent and Buyer and constitutes a valid and
binding obligation of each of Parent and Buyer, enforceable against each
of Parent and Buyer in accordance with and subject to its terms, subject
to applicable bankruptcy, insolvency, moratorium or other similar Laws
relating to creditors' rights and general principles of equity.
(b) The execution and delivery of this Agreement by
each of Parent and Buyer does not, and the consummation of the
transactions contemplated by this Agreement to which Parent and/or Buyer
is a party and compliance by each of Parent and Buyer with the provisions
of this Agreement will not, conflict with, or result in any violation of
or default (with or without notice or lapse of time, or both) under, or
give rise to a right of termination, cancellation or acceleration of any
material obligation or to loss of a material benefit under, or result in
the creation of any Lien upon any of the properties or assets of Parent
or any of its Subsidiaries under, (i) the organizational documents of
Parent or Buyer or the comparable certificate of incorporation or
organizational documents or partnership or similar agreement (as the case
may be) of any other Subsidiary of the Parent, each as amended or
supplemented to the date of this Agreement, (ii) any loan or credit
agreement, note, bond, mortgage, indenture, reciprocal easement
agreement, lease or other agreement, instrument, permit, concession,
franchise or license applicable to Parent or any of its Subsidiaries or
their respective properties or assets or (iii) subject to the
governmental filings and other matters referred to in the following
sentence, any Laws applicable to Parent or any of its Subsidiaries or
their respective properties or assets, other than, in the case of clause
(ii) or (iii), any such conflicts, violations, defaults, rights, loss or
Liens that individually or in the aggregate would not reasonably be
expected to (x) have a Parent Material Adverse Effect or a Buyer Material
Adverse Effect or (y) prevent the consummation of the transactions
contemplated by this Agreement. No consent, approval, order or
authorization of, or registration, declaration or filing with, any
Governmental Entity is required by or with respect to Parent or any of
its Subsidiaries in connection with the execution and delivery of this
Agreement by Parent or Buyer or the consummation by Parent or Buyer of
any of the transactions contemplated by this Agreement, except for
(i) any filings required under the Exchange Act (including Schedule 13E-
3), (ii) the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware, (iii) the filing of a certificate of
merger with the Secretary of State of the State of Delaware with respect
to the Partnership Merger, (iv) such filings as may be required in
connection with the payment of any Transfer Taxes (as defined in
Section 5.6), (v) any filings required under the HSR Act, (vi) the filing
of a Form D with the SEC with respect to the transaction contemplated by
the Partnership Merger Agreement and (vii) such other consents,
approvals, orders, authorizations, registrations, declarations and
filings (A) as may be required under federal, state or local
environmental Laws, (B) as may be required under the "blue sky" laws of
various states, to the extent applicable, or (C) which, if not obtained
or made, would not prevent or delay beyond December 31, 1999 the
consummation of any of the transactions contemplated by this Agreement or
otherwise prevent Parent or Buyer from performing its obligations under
this Agreement in any material respect or have, individually or in the
aggregate, a Parent Material Adverse Effect.
3.5 Litigation. As of the date of this Agreement, there is no
suit, action or proceeding pending (in which service of process has been
received by an employee of Parent or any of its Subsidiaries) or, to the
Knowledge of Parent (as defined in Section 3.15), threatened in writing
against or affecting Parent or any of its Subsidiaries that, individually
or in the aggregate, would reasonably be expected to prevent or delay
beyond December 31, 1999 the consummation of any of the material
transactions contemplated by this Agreement, nor, as of the date of this
Agreement, is there any judgment, decree, injunction, rule or order of
any Governmental Entity or arbitrator outstanding against Parent or any
of its Subsidiaries having, or which, insofar as reasonably can be
foreseen, in the future would have, any such effect.
3.6 Undisclosed Liability. Neither Parent nor Buyer has any
liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) required by GAAP to be set forth on a
consolidated balance sheet of Parent or Buyer or in the notes thereto and
which, individually or in the aggregate, would have a Parent Material
Adverse Effect or Buyer Material Adverse Effect.
3.7 Brokers. No broker, investment banker, financial advisor
or other Person, other than Xxxxxxxxx & Co., LLC, the fees and expenses
of which will be paid by Parent, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with
the Merger based upon arrangements made by or on behalf of Parent or any
of its Subsidiaries.
3.8 Compliance With Laws. Neither Parent nor any of its
Subsidiaries has violated or failed to comply with any statute, law,
ordinance, regulation, rule, judgment, decree or order of any
Governmental Entity applicable to its business, properties or operations,
except to the extent that such violation or failure would not reasonably
be expected to have a Parent Material Adverse Effect or Buyer Material
Adverse Effect.
3.9 Contracts; Debt Instruments. Neither Parent nor any of its
Subsidiaries (i) has received a written notice that Parent or any of its
Subsidiaries is in violation of or in default under any material loan or
credit agreement, note, bond, mortgage, indenture, lease, permit,
concession, franchise, license or any other material contract, agreement,
arrangement or understanding, to which it is a party or by which it or
any of its properties or assets is bound, nor (ii) to the Knowledge of
Buyer (as defined in Section 3.15) does such a violation or default
exist, except to the extent such violation or default referred to in
clauses (i) or (ii), individually or in the aggregate, would not have a
Parent Material Adverse Effect or a Buyer Material Adverse Effect.
3.10 Solvency. Immediately after giving effect to the
transactions contemplated by this Agreement, the Partnership Merger
Agreement and the Equity Commitments and the closing of any financing to
be obtained by the Parent, Buyer or Buyer Operating Partnership in order
to effect the transactions contemplated by this Agreement, the Surviving
Company and the Surviving Operating Partnership shall be able to pay
their respective debts as they become due and shall each own property
having a fair saleable value greater than the amounts required to pay its
debts (including a reasonable estimate of the amount of all contingent
liabilities). Immediately after giving effect to the transactions
contemplated by this Agreement, the Partnership Merger Agreement and the
Equity Commitments and the closing of any financing to be obtained by
Parent, Buyer or Buyer Operating Partnership in order to effect the
transactions contemplated by this Agreement and the Partnership Merger
Agreement, the Surviving Company and the Surviving Operating Partnership
shall have adequate capital to carry on their respective businesses. No
transfer of property is being made and no obligation is being incurred in
connection with the transactions contemplated by this Agreement and the
Partnership Merger Agreement and the closing of any financing to be
obtained by Parent, Buyer or Buyer Operating Partnership in order to
effect the transactions contemplated by this Agreement and the
Partnership Merger Agreement with the intent to hinder, delay or defraud
either present or future creditors of Parent, Buyer, Buyer Operating
Partnership, the Surviving Company or the Surviving Operating
Partnership.
3.11 [Intentionally Omitted].
3.12 Proxy Statement and Consent Solicitation Statement. The
information provided by Parent or Buyer with respect to Parent and its
Subsidiaries for inclusion in the Proxy Statement and the Consent
Solicitation Statement will not, as of the date of mailing of the Proxy
Statement and the Consent Solicitation Statement, respectively, contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein, or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
3.13 Investment Company Act of 1940. Neither Parent nor any of
its Subsidiaries is, or at the Effective Time will be, required to be
registered under the 1940 Act.
3.14 Parent and Buyer Not Interested Stockholders. Neither
Parent nor Buyer is an "interested stockholder" of Seller within the
meaning of Section 203 of the DGCL.
3.15 Definition of Knowledge. As used in this Agreement, the
phrase "Knowledge of Parent" or "Knowledge of Buyer" (or words of similar
import) means the knowledge of those individuals identified in Section
3.15 of the Buyer Disclosure Letter.
3.16 [Intentionally Omitted].
3.17 Sufficient Funds. After giving effect to Parent's equity
commitments provided in the partnership agreement of Parent (the "Equity
Commitments"), and to borrowings under Parent's financing commitments
attached as Exhibit A (the "Financing Commitments"), the Surviving
Company and the Surviving Operating Partnership will have sufficient
funds available to:
(a) refinance or repay in cash all indebtedness for
borrowed money of Seller or any Seller Subsidiary that will become due as
a result of the transactions contemplated by this Agreement or the
Partnership Merger Agreement, plus unpaid interest accrued thereon, and
any prepayment, breakage or other costs associated with the repayment or
refinancing, as the case may be;
(b) pay all amounts required to be paid pursuant to
this Agreement and the Partnership Merger Agreement;
(c) pay all fees, costs and expenses incurred by Seller
and the Seller Partnership in connection with this Agreement, the
Partnership Merger Agreement and the transactions contemplated herein and
therein assuming such fees, costs and expenses (other than severance
costs) are not in excess of $11 million; and
(d) pay all fees, costs and expenses incurred by
Parent, Buyer and Buyer Operating Partnership in connection with this
Agreement, the Partnership Merger Agreement and the other transactions
contemplated herein and therein.
3.18 Pro Forma Capitalization Table. Attached hereto as
Exhibit B is a true and correct pro forma capitalization table of Parent
and its Subsidiaries, giving effect to the Equity Commitments, the
Financing Commitments and consummation of the transactions contemplated
by this Agreement and the Partnership Merger Agreement.
3.19 Representations in Partnership Merger Agreement. The
representations and warranties of Parent and the Buyer Operating
Partnership set forth in the Partnership Merger Agreement are true and
correct.
ARTICLE 4
COVENANTS
4.1 Acquisition Proposals. During the period from the date
hereof and continuing through the Effective Time or the earlier
termination of this Agreement in accordance with its terms, Seller agrees
that:
(a) neither it nor any of the Seller Subsidiaries shall
initiate, solicit or knowingly encourage, directly or indirectly, any
inquiries or the making or implementation of any proposal or offer
(including, without limitation, any proposal or offer to its
stockholders) with respect to a merger, acquisition, tender offer,
exchange offer, consolidation, sale of assets or similar transaction
involving all or any significant portion of the assets or any equity
securities of, Seller or any of its Subsidiaries, other than the
transactions contemplated by this Agreement (any such proposal or offer
being hereinafter referred to as an "Acquisition Proposal") or engage in
any negotiations concerning or provide any confidential information or
data to, or have any discussions with, any Person relating to an
Acquisition Proposal, or otherwise facilitate any effort or attempt to
make or implement an Acquisition Proposal;
(b) it shall direct and use its best efforts to cause
its officers, directors, employees, agents or financial advisors not to
engage in any of the activities described in Section 4.1(a);
(c) 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 and
will take the necessary steps to inform the individuals or entities
referred to in Section 4.1(b) of the obligations undertaken in this
Section 4.1; and
(d) it will notify Buyer promptly if Seller receives
any such inquiries or proposals, or any requests for such information, or
if any such negotiations or discussions are sought to be initiated or
continued with it;
provided, however, that nothing contained in this Agreement shall
prohibit the Board of Directors of Seller (and the officers, directors,
employees, agents and financial advisors of Seller acting at the
direction of the Board of Directors) from prior to the Seller
Shareholders Meeting (as defined below) furnishing information to or
entering into discussions or negotiations with, any Person that makes an
unsolicited Acquisition Proposal, if, and only to the extent that (A) the
Board of Directors of Seller determines in good faith that such action is
required for the Board of Directors to comply with its duties to
stockholders imposed by law and such proposal is a Superior Acquisition
Proposal (as defined below), (B) prior to furnishing such information to,
or entering into discussions or negotiations with, such Person, Seller
provides written notice to Buyer to the effect that it is furnishing
information to, or entering into discussions with, such Person and
(C) subject to any confidentiality agreement with such Person, Seller
keeps Buyer informed of the status (not the terms) of any such
discussions or negotiations (Seller agreeing that it will not enter into
any confidentiality agreement with any Person subsequent to the date
hereof which prohibits Seller from providing such information to Buyer);
and (ii) to the extent applicable, taking and disclosing to the Seller
stockholders a position contemplated by Rules 14d-9 and 14e-2 promulgated
under the Exchange Act with regard to an Acquisition Proposal; provided,
however, that the Board of Directors of Seller may not approve or
recommend an Acquisition Proposal, or withdraw or modify its approval or
recommendation of this Agreement and the Merger, unless such Acquisition
Proposal is a Superior Acquisition Proposal. Nothing in this Section 4.1
shall (x) permit Seller to terminate this Agreement (except as
specifically provided in Article 7 hereof), (y) permit Seller to enter
into an agreement with respect to an Acquisition Proposal during the term
of this Agreement (other than a confidentiality agreement in customary
form executed as provided above) or (z) affect any other obligation of
Seller under this Agreement; provided, however, that the Board of
Directors of Seller may approve and recommend a Superior Acquisition
Proposal and, in connection therewith, withdraw or modify its approval or
recommendation of this Agreement and the Merger. As used herein,
"Superior Acquisition Proposal" means a bona fide Acquisition Proposal
made by a third party which the Board of Directors of Seller (or a duly
constituted committee thereof charged with considering Acquisition
Proposals) determines in good faith (after consultation with its
financial advisor) to be more favorable to Seller's stockholders than the
Merger and which the Board of Directors of Seller (or any such committee)
determines is reasonably capable of being consummated.
4.2 Conduct of Seller's Business Pending Merger. During the
period from the date hereof and continuing through the Effective Time,
except as consented to in writing by Buyer or as contemplated by this
Agreement, specifically including Section 1.7(b), and except as set forth
on Section 4.2 of the Seller Disclosure Letter, Seller shall, and shall
cause each of the Seller Subsidiaries to:
(a) conduct its business only in the usual, regular and
ordinary course and in substantially the same manner as heretofore
conducted and take all action necessary to continue to qualify as a REIT;
(b) use its reasonable efforts to (i) preserve intact
its business (corporate or otherwise) organizations and goodwill;
provided that Seller may cause Seller General Partner to be converted
into a Delaware limited liability company on or prior to the Closing Date
and take such actions to cause the conversions and liquidations
contemplated by Section 6.2(g) to occur, (ii) keep available the services
of its officers and key employees and (iii) keep intact the relationship
with its customers, tenants, suppliers and others having business
dealings with Seller and Seller's Subsidiaries;
(c) confer on a regular basis with one or more
representatives of Buyer to report operational matters of materiality
and, subject to Section 4.1, any proposals to engage in material
transactions;
(d) promptly notify Buyer of any material emergency or
other material adverse change in the condition (financial or otherwise),
business, properties, assets, liabilities or the normal course of its
businesses or in the operation of its properties, or of any material
governmental complaints, investigations or hearings (or communications
indicating that the same may be contemplated);
(e) promptly deliver to Buyer true and correct copies
of any report, statement or schedule to be filed with the SEC subsequent
to the date of this Agreement and prior to the Closing Date;
(f) maintain its books and records in accordance with
GAAP consistently applied and not change in any material manner any of
its methods, principles or practices of accounting in effect at the
Seller Financial Statement Date, except as may be required by the SEC,
applicable law or GAAP;
(g) duly and timely file all material Tax Returns and
other documents required to be filed with federal, state, local and other
Tax Authorities, subject to timely extensions permitted by law, provided
Seller notifies Buyer that it is availing itself of such extensions and
provided such extensions do not adversely affect Seller's status as a
qualified REIT under the Code;
(h) not make or rescind any material express or deemed
election relative to Taxes (unless required by law or necessary to
preserve Seller's status as a REIT or the status of any Seller Subsidiary
as a partnership for federal income tax purposes or as a qualified REIT
subsidiary under Section 856(i) of the Code, as the case may be);
(i) not acquire, enter into any option to acquire, or
exercise an option or contract to acquire, additional real property,
incur additional indebtedness except for working capital under its
revolving lines of credit, encumber assets or commence construction of,
or enter into any agreement or commitment to develop or construct, other
real estate projects, except with respect to the construction of the
multi-family residential projects described in the Seller SEC Documents
or the Seller Disclosure Letter as being under development in accordance
with the agreements in existence on the date of this Agreement and
previously furnished to Buyer (the "Development Agreements");
(j) not (except as contemplated by this Agreement)
amend its certificate of incorporation or By-laws, or the articles or
certificate of incorporation, bylaws, code of regulations, partnership
agreement, operating agreement or joint venture agreement or comparable
charter or organization document of any Seller Subsidiary;
(k) make no change in the number of its shares of
capital stock, membership interests or units of limited partnership
interest (as the case may be) issued and outstanding or reserved for
issuance, other than pursuant to (i) the exercise of options or other
rights disclosed in Section 2.3 of the Seller Disclosure Letter, (ii) the
conversion of Seller Preferred Shares, or (iii) the conversion or
redemption of Seller OP Units pursuant to the Seller Partnership
Agreement for Seller Common Shares or cash, at Seller's option;
(l) except as set forth in Section 4.2(l) of the Seller
Disclosure Letter, grant no options or other rights or commitments
relating to its shares of capital stock, membership interests or units of
limited partnership interest or any security convertible into its shares
of capital stock, membership interests or units of limited partnership
interest, or any security the value of which is measured by shares of
capital stock, or any security subordinated to the claim of its general
creditors and, except as contemplated by this Agreement, not amend or
waive any rights under any of the Seller Options;
(m) except as provided in Section 5.9 and in connection
with the use of Seller Common Shares to pay the exercise price or tax
withholding in connection with equity-based employee benefit plans by the
participants therein, not (i) authorize, declare, set aside or pay any
dividend or make any other distribution or payment with respect to any
Seller Common Shares, Seller Preferred Shares or Seller OP Units or
(ii) directly or indirectly redeem, purchase or otherwise acquire any
shares of capital stock, membership interests or units of partnership
interest or any option, warrant or right to acquire, or security
convertible into, shares of capital stock, membership interests, or units
of partnership interest, except for (a) redemptions of Seller Common
Shares required under Article V of the Restated Certificate of
Incorporation of Seller in order to preserve the status of Seller as a
REIT under the Code or (b) conversions or redemptions of Seller OP Units,
whether or not outstanding on the date of this Agreement, for cash or
Seller Common Shares in accordance with the terms of the Seller
Partnership Agreement;
(n) not sell, lease, mortgage, subject to any material
Lien or otherwise dispose of any of the Seller Properties;
(o) not sell, lease, mortgage, subject to any material
Lien or otherwise dispose of any of its personal property or intangible
property, except sales of equipment which are not material to Seller and
its Subsidiaries taken as a whole which are made in the ordinary course
of business;
(p) not make any loans, advances or capital
contributions to, or investments in, any other Person, other than loans,
advances and capital contributions to Seller Subsidiaries in existence on
the date hereof;
(q) not pay, discharge or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise) which are material to Seller and its
Subsidiaries taken as a whole, other than the payment, discharge or
satisfaction, in the ordinary course of business consistent with past
practice or in accordance with their terms, of liabilities reflected or
reserved against in, or contemplated by, the most recent consolidated
financial statements (or the notes thereto) furnished to Buyer or
incurred in the ordinary course of business consistent with past practice
(collectively, "Ordinary Course Liabilities"), nor fail to pay Ordinary
Course Liabilities as they come due consistent with past practice;
(r) except as provided in Section 4.2(i) above, not
enter into any commitment, contractual obligation or transaction (each, a
"Commitment") for the purchase of any real estate; provided that
expansion or improvements made in the ordinary course of business to
existing real property shall not be considered a purchase of real
property;
(s) not guarantee the indebtedness of another Person,
enter into any "keep well" or other agreement to maintain any financial
statement condition of another Person or enter into any arrangement
having the economic effect of any of the foregoing;
(t) not enter into any contractual obligation with any
officer, director or Affiliate of Seller;
(u) not increase any compensation or enter into or
amend any employment, severance or other agreement with any of its
officers, directors or employees earning a base salary of more than
$100,000 per annum, other than as required by any contract or Employee
Plan or pursuant to waivers by employees of benefits under such
agreements;
(v) not adopt any new employee benefit plan or amend,
terminate or increase any existing plans or rights, not grant any
additional options, warrants, rights to acquire stock, stock appreciation
rights, phantom stock, dividend equivalents, performance units or
performance stock to any officer, employee or director, or accelerate
vesting with respect to any grant of Seller Common Shares to employees
which are subject to any risk of forfeiture, except for changes which are
required by law and changes which are not more favorable to participants
than provisions presently in effect;
(w) not change the ownership of any of its
Subsidiaries, except changes which arise as a result of the conversion of
Seller OP Units into Seller Common Shares or cash;
(x) not accept a promissory note in payment of the
exercise price payable under any option to purchase Seller Common Shares;
(y) not enter into or amend or otherwise modify or
waive any material rights under any agreement or arrangement for the
Persons that are executive officers or directors of Seller or any Seller
Subsidiary;
(z) not directly or indirectly or through a subsidiary,
merge or consolidate with, acquire all or substantially all of the assets
of, or acquire the beneficial ownership of a majority of the outstanding
capital stock or a majority of any other equity interest in, any Person;
(aa) perform all agreements required to be performed by
the Seller and its Subsidiaries (including the Seller General Partner and
the Seller Partnership) under the Partnership Merger Agreement;
(bb) not make or revoke any material tax election or
settle or compromise any material tax liability; and
(cc) not agree, commit or arrange to take any action
prohibited under this Section.
Notwithstanding anything in this Agreement to the contrary,
Seller shall have the right, in accordance (except with respect to
timing) with the applicable provisions of its Restated Certificate of
Incorporation, as amended, to submit to its stockholders a proposal to
liquidate the Seller (the "Liquidation Vote") and to make all required
filings with the SEC and take all such other necessary or appropriate
actions in connection therewith.
4.3 Conduct of Parent's and Buyer's Business Pending Merger.
Prior to the Effective Time, except as (i) contemplated by this
Agreement, or (ii) consented to in writing by Seller, Parent shall, and
shall cause Buyer to:
(a) use its reasonable efforts to preserve intact its
business organizations and goodwill and keep available the services of
its officers and employees;
(b) promptly notify Seller of any material emergency or
other material change in the condition (financial or otherwise),
business, properties, assets, liabilities, prospects or the normal course
of its businesses or in the operation of its properties, or of any
material governmental complaints, investigations or hearings (or
communications indicating that the same may be contemplated);
(c) not amend its certificate of limited partnership or
limited partnership agreement, or the articles or certificate of
incorporation, bylaws, code of regulations, partnership agreement,
operating agreement or joint venture agreement or comparable charter or
organization document of any Subsidiary of the Parent; provided, however,
that any such amendment may be made (1) in connection with the financing
of Parent, Buyer and Buyer Operating Partnership in accordance with the
terms of the Equity Commitments and the Financing Commitments, so long as
any such amendment would not reasonably be expected to materially
adversely affect Seller's stockholders, the Seller Unit Holders, the
Merger or the transactions contemplated by the Partnership Merger
Agreement or (2) so long as such amendment would not, under Sections 3.7
or 11.1 of the limited partnership agreement of Parent, require the
consent of any holder of Class A Preferred Units or Class B Units if such
securities were issued and outstanding at the time of such amendment and
the holders of such securities were then limited partners of the
Partnership;
(d) not enter into any Commitment for the acquisition
of any interest in real property if the amount of such Commitment would
cause the aggregate amount of all such Commitments subsequent to the date
hereof to exceed $1,000,000 unless such Commitment has been approved by
Seller;
(e) not directly or indirectly, through a subsidiary or
otherwise, merge or consolidate with, or acquire all or substantially all
of the assets of, or the beneficial ownership of a majority of the
outstanding capital stock or other equity interests in any Person whose
securities are registered under the Exchange Act unless such transaction
has been approved by Seller;
(f) except as contemplated by this Agreement, not issue
any Buyer or Buyer Operating Partnership securities pursuant to a
Registration Statement filed with the SEC relating to the public offering
of any Buyer or Buyer Operating Partnership securities from the date
hereof until the date of the Proxy Statement (as defined in
Section 5.1(a)) unless such issuance has been approved by Seller;
(g) use reasonable best efforts to do all necessary
things required to close the equity funding contemplated by the Equity
Commitments and the borrowings contemplated by the Financing Commitments
and to cause such equity funding and such borrowings to be made available
to Parent, Buyer and Buyer Operating Partnership as provided therein; and
(h) not agree, commit or arrange to take any action
prohibited under this Section.
4.4 Other Actions. Each of Seller on the one hand and Parent
and Buyer on the other hand shall not knowingly take, and shall use
commercially reasonable efforts to cause their Subsidiaries not to take,
any action that would result in (i) any of the representations and
warranties of such party (without giving effect to any "knowledge"
qualification) set forth in this Agreement that are qualified as to
materiality becoming untrue, (ii) any of such representations and
warranties (without giving effect to any "knowledge" qualification) that
are not so qualified becoming untrue in any material respect or
(iii) except as contemplated by Section 4.1, any of the conditions to the
Merger set forth in Article 6 not being satisfied.
4.5 Partnership Merger Agreement. Parent shall, and shall
cause its Subsidiaries to, perform all agreements required to be
performed by the Parent and its Subsidiaries (including the Buyer
Operating Partnership) under the Partnership Merger Agreement.
4.6 Private Placement. Parent shall take all actions necessary
for Parent to offer and sell interests in Parent to holders of Seller OP
Units in the manner contemplated by the Partnership Merger Agreement and
Section 5.1 hereof and as shall be required for the offering and sale of
such units of limited partnership interest to be exempt from the
registration requirements of the Securities Act pursuant to Rule 506 of
Regulation D.
4.7 Irrevocable Letter of Credit.
(a) Parent has delivered to American Stock Transfer and
Trust Company (the "Escrow Agent") $29,500,000 (the "Cash Collateral") in
cash to secure the obligation of Parent and Buyer to pay certain fees and
expenses pursuant to Section 7.2 and to be held in accordance with the
terms of an Escrow Agreement dated as of date hereof among the Escrow
Agent, Seller, Seller Partnership and Parent (the "Escrow Agreement").
At the election of Parent and if Seller has not given a notice to the
Escrow Agent directing the Escrow Agent to terminate Parent's right to
receive any part of the Cash Collateral, Parent may deliver to the Escrow
Agent an irrevocable letter of credit in the amount of the Cash
Collateral, substantially in the form attached hereto as Exhibit C, with
such changes as shall be reasonably satisfactory to Seller and from a
bank reasonably satisfactory to Seller (the "Letter of Credit"). Upon
delivery of such Letter of Credit and if Seller has not given a notice to
the Escrow Agent directing the Escrow Agent to terminate Parent's right
to receive any part of the Cash Collateral, the full amount of the Cash
Collateral then held by the Escrow Agent shall be immediately returned to
Buyer. Seller shall, simultaneously with delivering any direction to the
Escrow Agent to terminate Parent's right to receive any part of the Cash
Collateral as provided in the Escrow Agreement or to make a draw under
the Letter of Credit, deliver to Parent and Buyer a certificate
confirming that Seller is entitled to make such direction pursuant to
Section 7.2 and, if such certification is false or Seller is not
otherwise entitled to make such direction pursuant to Section 7.2, Parent
and Buyer shall be entitled to all remedies available at law or in equity
(including recovery of any amounts improperly withdrawn or drawn);
provided, however, that Parent and Buyer shall notify the Seller within
30 days after receiving such certificate if they wish to assert that
Seller is not entitled to so direct the Escrow Agent and any failure to
provide such notice within such 30 day period shall irrevocably prohibit
Parent and Buyer from maintaining that Seller was not so entitled.
(b) If Parent elects to extend the Closing Date as
contemplated under Section 1.2(b), then on or prior to the Additional
Collateral Date (as defined below), Parent shall increase the Cash
Collateral by either delivering an additional $25,000,000 to the Escrow
Agent in cash to be held in accordance with the terms of the Escrow
Agreement or, if Parent has previously delivered a Letter of Credit to
the Escrow Agent as contemplated under Section 4.7(a), by amending such
Letter of Credit to increase the amount available thereunder by an
additional $25,000,000. As used herein, the term "Additional Collateral
Date" shall mean the first business day following the Satisfaction Date;
provided, however, that if the conditions set forth in Sections 6.1 and
6.2 (other than Sections 6.2(g) and 6.2(i)) are satisfied (or waived by
Parent and Buyer), and if the certificates and other documents required
to be delivered pursuant to Section 6.2 are delivered, in each case as of
the Satisfaction Date and at or prior to 9:30 a.m. on such date, then the
term "Additional Collateral Date" shall mean the Satisfaction Date.
ARTICLE 5
ADDITIONAL COVENANTS
5.1 Preparation of the Proxy Statement; Seller Stockholders
Meeting.
(a) The parties shall cooperate and promptly prepare
and Seller shall file with the SEC as soon as practicable a proxy
statement with respect to the meeting of the stockholders of Seller in
connection with the Merger (the "Proxy Statement"). The parties shall
cooperate and promptly prepare and the appropriate party shall file with
the SEC as soon as practicable any other filings required under the
Exchange Act ("Additional Filings"), including without limitation, a Rule
13e-3 Transaction Statement on Schedule 13E-3 with respect to the Merger
to be filed jointly by Seller, Parent and Buyer, together with any
required amendments thereto. The parties shall cooperate and promptly
prepare a Consent Solicitation/Information Statement of Seller
Partnership and Parent for use in connection with the solicitation of
consents to the matters described in the definition of Seller Partner
Approval and the offering of units of limited partnership interest in
Parent (the "Consent Solicitation Statement"). Each of Seller, Seller
Partnership, Parent, Buyer and Buyer Operating Partnership agrees that
the information provided by it for inclusion in the Proxy Statement, the
Additional Filings, the Consent Solicitation Statement and each amendment
or supplement thereto, at the time of mailing thereof and at the time of
the meeting of stockholders of Seller and at the time of the taking of
consent in respect of the Seller Partner Approval, will not include an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Parent, Buyer and Buyer Operating Partnership shall, with
respect to the Seller Partner Approval and the offering of units of
limited partnership interest in Parent to holders of Seller OP Units,
comply with Regulation D of the Securities Act, as applicable. Seller
will use its reasonable best efforts, and Parent, Buyer and Buyer
Operating Partnership will cooperate with Seller to (i) file a
preliminary Proxy Statement with the SEC and (ii) cause the Proxy
Statement to be mailed to Seller's stockholders, in each case, as
promptly as practicable (including clearing the Proxy Statement with the
SEC). Seller will use its reasonable best efforts, and Parent, Buyer and
Buyer Operating Partnership will cooperate with Seller, to cause the
Consent Solicitation Statement to be mailed to the Seller Unit Holders as
promptly as practicable after the SEC has cleared the Proxy Statement.
Seller will notify Buyer promptly of the receipt of any comments from the
SEC and of any request by the SEC for amendments or supplements to the
Proxy Statement or the Additional Filings or for additional information
and will supply Buyer with copies of all correspondence between such
party or any of its representatives and the SEC, with respect to the
Proxy Statement or the Additional Filings. The parties shall cooperate
to cause the Proxy Statement, the Consent Solicitation Statement and any
Additional Filings to comply in all material respects with all applicable
requirements of law. Whenever any event occurs which is required to be
set forth in an amendment or supplement to the Proxy Statement, the
Additional Filings or the Consent Solicitation Statement, Seller on the
one hand, and Parent and Buyer on the other hand, shall promptly inform
the other of such occurrence and cooperate in filing with the SEC and/or
mailing to the stockholders of Seller or holders of Seller OP Units, as
applicable, such amendment or supplement to the Proxy Statement or the
Consent Solicitation Statement.
(b) It shall be a condition to the mailing of the Proxy
Statement and the Consent Solicitation Statement that if they so request,
Buyer and Buyer Operating Partnership shall have received a "comfort"
letter or an "agreed upon procedures" letter from PricewaterhouseCoopers
LLP, independent public accountants for Seller and Seller Partnership, of
the kind contemplated by the Statement of Auditing Standards with respect
to Letters to Underwriters promulgated by the American Institute of
Certified Public Accountants (the "AICPA Statement"), dated as of the
date on which the Proxy Statement is to be mailed to the stockholders of
Seller, addressed to Parent, Buyer and Buyer Operating Partnership, in
form and substance reasonably satisfactory to Buyer and Buyer Operating
Partnership, concerning the procedures undertaken by
PricewaterhouseCoopers LLP with respect to the financial statements and
information of Seller, Seller Partnership and their Subsidiaries
contained in the Proxy Statement and the other matters contemplated by
the AICPA Statement and otherwise customary in scope and substance for
letters delivered by independent public accountants in connection with
transactions such as those contemplated by this Agreement.
(c) Seller will, as soon as practicable following the
date of this Agreement duly call, give notice of, convene and hold a
meeting of its stockholders, such meeting to be held no sooner than 20
business days nor later than 45 days following the date the Proxy
Statement is mailed to the stockholders of Seller (the "Seller
Shareholders Meeting") for the purpose of obtaining the Seller
Shareholder Approval. Seller shall be required to hold the Seller
Shareholders Meeting, regardless of whether the Board of Directors of
Seller has withdrawn, amended or modified its recommendation that its
stockholders adopt this Agreement and approve the Merger, unless this
Agreement has been terminated pursuant to the provisions of Section 7.1.
Seller will, through its Board of Directors, recommend that its
stockholders adopt this Agreement and approve the transactions
contemplated hereby, including the Merger and the Alternative Merger;
provided, that prior to the Seller Shareholders Meeting, such
recommendation may be withdrawn, modified or amended if Seller shall have
received a Superior Acquisition Proposal, but only to the extent
expressly permitted under Section 4.1.
(d) If on the date for the Seller Shareholders Meeting
established pursuant to Section 5.1(c) of this Agreement, Seller has not
received duly executed proxies which, when added to the number of votes
represented in person at the meeting by Persons who intend to vote to
adopt this Agreement, will constitute a sufficient number of votes to
adopt this Agreement (but less than a majority of the outstanding Seller
Common Shares (including the Seller Preferred Shares voting with the
Seller Common Shares on an as-converted basis) have indicated their
intention to vote against, or have submitted duly executed proxies voting
against, the adoption of this Agreement), then Seller shall recommend the
adjournment of its stockholders meeting until the date ten (10) days
after the originally scheduled date of the stockholders meeting.
5.2 Access to Information: Confidentiality. Subject to the
requirements of confidentiality agreements with third parties, each of
Seller, Parent and Buyer shall, and shall cause each of its Subsidiaries
to, afford to the other party and to the officers, employees,
accountants, counsel, financial advisors and other representatives of
such other party, reasonable access during normal business hours prior to
the Effective Time to all their respective properties, books, contracts,
commitments, personnel and records and, during such period, each of
Seller, Parent and Buyer shall, and shall cause each of its Subsidiaries
to, furnish promptly to the other party all other information concerning
its business, properties and personnel as such other party may reasonably
request. Parent and Buyer shall have the right to conduct non-intrusive
environmental and engineering inspections at the Seller Properties;
provided that in no event shall Parent or Buyer have the right to conduct
so-called "Phase II" environmental tests. Notwithstanding anything in
this Section 5.2 to the contrary, all of Parent's and Buyer's activities
pursuant to this Section 5.2 must be conducted in a manner that does not
unreasonably interfere with the ongoing operations of Seller and Seller
Subsidiaries.
5.3 Reasonable Best Efforts; Notification.
(a) Subject to the terms and conditions herein
provided, Seller, Parent and Buyer shall: (i) use all reasonable best
efforts to cooperate with one another in (A) determining which filings
are required to be made prior to the Effective Time with, and which
consents, approvals, permits or authorizations are required to be
obtained prior to the Effective Time from, governmental or regulatory
authorities of the United States, the several states and foreign
jurisdictions and any third parties in connection with the execution and
delivery of this Agreement, and the consummation of the transactions
contemplated hereby, including without limitation any required filings
and consents under the HSR Act, and (B) timely making all such filings
and timely seeking all such consents, approvals, permits and
authorizations; (ii) use all reasonable best efforts (other than the
payment of money) to obtain in writing any consents required from third
parties to effectuate the Merger and avoid defaults or acceleration of
the rights of third parties under contracts with Seller or Seller
Subsidiaries as a result of the consummation of the Merger, such consents
to be in form reasonably satisfactory to Seller and Buyer; and (iii) use
all reasonable best efforts to take, or cause to be taken, all other
action and do, or cause to be done, all other things necessary, proper or
appropriate to consummate and make effective the transactions
contemplated by this Agreement. In furtherance thereof, Seller agrees to
vote in favor of the transactions contemplated by the Partnership Merger
Agreement in its capacity as a limited partner of the Seller Partnership,
and to cause the Seller General Partner to so vote in its capacity as a
general partner of the Seller Partnership. If at any time after the
Effective Time any further action is necessary or desirable to carry out
the purpose of this Agreement, Parent and the Surviving Company shall
take all such necessary action.
(b) Seller shall give prompt notice to Parent and
Buyer, and Parent and Buyer shall give prompt notice to Seller, (i) if
any representation or warranty made by it or them contained in this
Agreement that is qualified as to materiality becomes untrue or
inaccurate in any respect or any such representation or warranty that is
not so qualified becomes untrue or inaccurate in any material respect or
(ii) of the failure by it or them to comply with or satisfy in any
material respect any covenant, condition or agreement to be complied with
or satisfied by it under this Agreement; provided, however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the
parties under this Agreement.
5.4 Tax Treatment. The Surviving Operating Partnership will
use the "traditional method" under Treasury Regulations
Section 1.704-3(b) for purposes of making allocations under
Section 704(c) of the Code with respect to the properties of or interests
in the Seller Partnership as of the Effective Time. The Surviving
Company shall prepare and file all Tax Returns of Seller and Seller
Subsidiaries due after the Effective Time.
5.5 Public Announcements. Parent, Buyer and Seller will
consult with each other before issuing, and provide each other the
opportunity to review and comment upon, any press release or other
written public statements with respect to the transactions contemplated
by this Agreement, and shall not issue any such press release or make any
such written public statement prior to such consultation, except as may
be required by applicable law, court process or by obligations pursuant
to any listing agreement with any national securities exchange. The
parties agree that the initial press release to be issued with respect to
the transactions contemplated by this Agreement will be in the form
agreed to by the parties hereto prior to the execution of this Agreement.
5.6 Transfer Taxes. Buyer and Seller shall cooperate in the
preparation, execution and filing of all returns, questionnaires,
applications or other documents regarding any real property transfer,
sales, use, transfer, value added, stock transfer and stamp taxes, any
transfer, recording, registration and other fees and any similar taxes
which become payable in connection with the transactions contemplated by
this Agreement (together with any related interests, penalties or
additions to tax, "Transfer Taxes"). From and after the Effective Time,
the Surviving Company shall, or shall cause the Surviving Operating
Partnership, as appropriate, to pay or cause to be paid, without
deduction or withholding from any amounts payable to the holders of
Seller Common Shares or Seller OP Units, all Transfer Taxes.
5.7 Benefit Plans. After the Effective Time, all employees of
Seller who are employed by the Surviving Company shall, at the option of
the Surviving Company, either continue to be eligible to participate in
an "employee benefit plan," as defined in Section 3(3) of ERISA, of
Seller which is, at the option of the Surviving Company, continued by the
Surviving Company, or alternatively shall be eligible to participate in
any "employee benefit plan," as defined in Section 3(3) of ERISA,
established, sponsored or maintained by the Surviving Company after the
Effective Time. With respect to each such employee benefit plan not
formerly maintained by Seller, service with Seller or any Seller
Subsidiary (as applicable) shall be included for purposes of determining
eligibility to participate, vesting (if applicable) and entitlement to
benefits and all pre-existing condition exclusions shall be waived and
expenses incurred by any employee for deductibles and copayments in the
portion of the year prior to the date employee first becomes a
participant in such employee benefit plan shall be credited to the
benefit of such employee under such employee benefit plan for the year in
which the employee's participation commences.
5.8 Indemnification.
(a) From and after the Effective Time, the Surviving
Company shall provide exculpation and indemnification for each Person who
is now or has been at any time prior to the date hereof or who becomes
prior to the Effective Time, an officer, employee or director of Seller
or any Seller Subsidiary (the "Indemnified Parties") which is the same as
the exculpation and indemnification provided to the Indemnified Parties
by Seller and the Seller Subsidiaries immediately prior to the Effective
Time in their respective certificate of incorporation and Bylaws or other
organizational documents, as in effect on the date hereof; provided, that
such exculpation and indemnification covers actions on or prior to the
Effective Time, including, without limitation, all transactions
contemplated by this Agreement.
(b) In addition to the rights provided in
Section 5.8(a) above, in the event of any threatened or actual claim,
action, suit, proceeding or investigation, whether civil, criminal or
administrative, including without limitation, any action by or on behalf
of any or all security holders of Seller, Parent or Buyer, or any
Subsidiary of the Seller or Parent, or by or in the right of Seller,
Parent or Buyer, or any Subsidiary of the Seller or Parent, or any claim,
action, suit, proceeding or investigation (collectively, "Claims") in
which any Indemnified Party is, or is threatened to be, made a party
based in whole or in part on, or arising in whole or in part out of, or
pertaining to (i) the fact that he is or was an officer, employee or
director of Seller or any of the Seller Subsidiaries or any action or
omission or alleged action or omission by such Person in his capacity as
an officer, employee or director, or (ii) this Agreement or the
Partnership Merger Agreement or the transactions contemplated by this
Agreement or the Partnership Merger Agreement, whether in any case
asserted or arising before or after the Effective Time, Parent and the
Surviving Company (the "Indemnifying Parties") shall from and after the
Effective Time jointly and severally indemnify and hold harmless the
Indemnified Parties from and against any losses, claims, liabilities,
expenses (including reasonable attorneys' fees and expenses), judgments,
fines or amounts paid in settlement arising out of or relating to any
such Claims. Parent, the Surviving Company and the Indemnified Parties
hereby agree to use their reasonable best efforts to cooperate in the
defense of such Claims. In connection with any such Claim, the
Indemnified Parties shall have the right to select and retain one
counsel, at the cost of the Indemnifying Parties, subject to the consent
of the Indemnifying Parties (which consent shall not be unreasonably
withheld or delayed). In addition, after the Effective Time, in the
event of any such threatened or actual Claim, the Indemnifying Parties
shall promptly pay and advance reasonable expenses and costs incurred by
each Indemnified Person as they become due and payable in advance of the
final disposition of the Claim to the fullest extent and in the manner
permitted by law. Notwithstanding the foregoing, the Indemnifying
Parties shall not be obligated to advance any expenses or costs prior to
receipt of an undertaking by or on behalf of the Indemnified Party, such
undertaking to be accepted without regard to the creditworthiness of the
Indemnified Party, to repay any expenses advanced if it shall ultimately
be determined that the Indemnified Party is not entitled to be
indemnified against such expense. Notwithstanding anything to the
contrary set forth in this Agreement, the Indemnifying Parties (i) shall
not be liable for any settlement effected without their prior written
consent (which consent shall not be unreasonably withheld or delayed),
and (ii) shall not have any obligation hereunder to any Indemnified Party
to the extent that a court of competent jurisdiction shall determine in a
final and non-appealable order that such indemnification is prohibited by
applicable law. In the event of a final and non-appealable determination
by a court that any payment of expenses is prohibited by applicable law,
the Indemnified Party shall promptly refund to the Indemnifying Parties
the amount of all such expenses theretofore advanced pursuant hereto.
Any Indemnified Party wishing to claim indemnification under this
Section 5.8, upon learning of any such Claim, shall promptly notify the
Indemnifying Parties of such Claim and the relevant facts and
circumstances with respect thereto; provided however, that the failure to
provide such notice shall not affect the obligations of the Indemnifying
Parties except to the extent such failure to notify materially prejudices
the Indemnifying Parties' ability to defend such Claim; and provided,
further, however, that no Indemnified Party shall be obligated to provide
any notification pursuant to this Section 5.8(b) prior to the Effective
Time.
(c) At or prior to the Effective Time, Buyer shall
purchase directors' and officers' liability insurance policy coverage for
Seller's and each Seller Subsidiaries' directors and officers for a
period of six years which will provide the directors and officers with
coverage on substantially similar terms as currently provided by Seller
and the Seller Subsidiaries to such directors and officers. At or prior
to the Effective Time, Seller shall have the right to reasonably review
and approve any such policy, which approval shall not be unreasonably
withheld.
(d) This Section 5.8 is intended for the irrevocable
benefit of, and to grant third party rights to, the Indemnified Parties
and their successors, assigns and heirs and shall be binding on all
successors and assigns of Parent and Buyer, including without limitation
the Surviving Company. Each of the Indemnified Parties shall be entitled
to enforce the covenants contained in this Section 5.8 and Parent and
Buyer acknowledge and agree that each Indemnified Party would suffer
irreparable harm and that no adequate remedy at law exists for a breach
of such covenants and such Indemnified Party shall be entitled to
injunctive relief and specific performance in the event of any breach of
any provision in this Section 5.8.
(e) In the event that the Surviving Company or any of
its respective successors or assigns (i) consolidates with or merges into
any other Person and shall not be the continuing or surviving corporation
or entity of such consolidation or merger or (ii) transfers all or
substantially all of its properties and assets to any Person, then, and
in each such case, the successors and assigns of such entity shall assume
the obligations set forth in this Section 5.8, which obligations are
expressly intended to be for the irrevocable benefit of, and shall be
enforceable by, each director and officer covered hereby.
Parent guarantees, unconditionally and absolutely, the
performance of Surviving Company's and Buyer's obligations under this
Section 5.8.
5.9 Declaration of Dividends and Distributions. From and after
the date of this Agreement, Seller shall not make any dividend or
distribution to its stockholders without the prior written consent of
Buyer; provided, however, the written consent of Buyer shall not be
required for the authorization and payment of quarterly distributions
(i) with respect to the Seller Common Shares, (a) for the dividend for
the second and third quarters of 1999 (i.e., $.25 per share with a record
date of May 1, 1999 and August 1, 1999) and (b) as permitted under
Section 1.2(g), and (ii) with respect to the Seller Preferred Shares for
the dividend for the second quarter of 1999 and for each quarterly
dividend thereafter in the amounts provided for in the Certificate of
Designation in respect of the Seller Preferred Shares. From and after
the date of this Agreement, Seller Partnership shall not make any
distribution to the holders of Seller OP Units except a distribution per
Seller OP Unit in the same amount as a dividend per Seller Common Share
permitted pursuant to this Section 5.9 (including without limitation
pursuant to the following paragraph), with the same record and payment
dates as such dividend on the Seller Common Shares. The foregoing
restrictions shall not apply, however, to the extent a distribution by
Seller is necessary for Seller to maintain REIT status or to prevent
Seller from having to pay federal income tax; provided that in the event
of such a distribution, the aggregate cash consideration payable to
holders of Seller Common Shares in the Merger shall be reduced by the
aggregate amount of such distribution, and the Common Merger
Consideration per share shall be reduced accordingly.
Notwithstanding the foregoing, if the Effective Time occurs on a date
after November 1, 1999, the Seller may declare or establish a record date
and set aside funds for payment of a dividend for the period commencing
November 1, 1999 and ending on the date on which the Effective Time
occurs (the "Partial Period"). The amount of the dividend per Seller
Common Share for such Partial Period shall equal a fraction, (I) the
numerator of which equals (a) $.25, times (b) the number of days
comprising such Partial Period, and (II) the denominator of which is 90.
5.10 Resignations. On the Closing Date, Seller shall use its
best efforts to cause the directors and officers of Seller or any of the
Seller Subsidiaries to submit their resignations from such positions as
may be requested by Buyer, effective immediately after the Effective
Time; provided, however, that by resigning, such officers and directors
will not lose the benefit of any "change of control" provisions of any
employment agreement or other instruments to which they would otherwise
be entitled.
5.11 Outside Property Management Agreements. Seller will not,
and will not permit any of its Subsidiaries to, amend the Outside
Property Management Agreements. Seller will not, and will not permit any
of its Subsidiaries to, renew any Outside Property Management Agreement
except as approved by Buyer, which approval shall not be unreasonably
withheld or delayed.
5.12 Stockholder Claims. Seller shall not settle or compromise
for an amount in excess of $10,000,000 any claim relating to the
Transactions brought by any current, former or purported holder of any
securities of Seller or the Seller Partnership without the prior written
consent of Buyer, which consent will not be unreasonably withheld.
5.13 Cooperation with Proposed Financings and Asset Sales. At
the request of the Buyer, the Seller will, at the Buyer's expense,
reasonably cooperate with the Buyer in connection with the proposed
financing of the Transactions by the Parent and its Subsidiaries or
proposed post-closing sales of the Seller Properties, provided that such
requested actions do not unreasonably interfere with the ongoing
operations of Seller and Seller Subsidiaries.
ARTICLE 6
CONDITIONS
6.1 Conditions to Each Party's Obligation to Effect the Merger.
The obligations of each party to effect the Merger and to consummate the
other transactions contemplated by this Agreement to occur on the Closing
Date shall be subject to the fulfillment at or prior to the Closing Date
of the following conditions:
(a) Stockholder Approvals. This Agreement shall have
been adopted by the Seller Shareholder Approval.
(b) No Injunctions or Restraints. No temporary
restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the Merger, the Partnership
Merger or any of the other transactions contemplated hereby shall be in
effect.
(c) HSR. All applicable waiting periods (and any
extensions thereof) under the HSR Act shall have expired or otherwise
been terminated.
6.2 Conditions to Obligations of Parent and Buyer. The
obligations of Parent and Buyer to effect the Merger and to consummate
the other transactions contemplated to occur on the Closing Date are
further subject to the following conditions, any one or more of which may
be waived by Buyer:
(a) Representations and Warranties. The
representations and warranties of Seller set forth in this Agreement
shall be true and correct in all material respects (except for the
representations set forth in Section 2.3 or representations having a
materiality or Seller Material Adverse Effect qualification, which shall
be correct in all 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 the representation or warranty is expressly limited by its
terms to another date, in which case such representation or warranty
shall be true and correct in all material respects (except for
representations having a materiality or Seller Material Adverse Effect
qualification, which shall be correct in all respects) only as of such
specific date, and Parent and Buyer shall have received a certificate
(which certificate may be qualified by Knowledge to the same extent as
the representations and warranties of Seller contained herein are so
qualified) signed on behalf of Seller by the chief executive officer or
the chief financial officer of Seller, in such capacity, to such effect.
(b) Performance of Obligations of Seller. Seller shall
have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Effective Time,
and Parent and Buyer shall have received a certificate signed on behalf
of Seller by the chief executive officer or the chief operating officer
of Seller, in such capacity, to such effect.
(c) Material Adverse Change. Since the date of this
Agreement through and including the Satisfaction Date, (i) there shall
have been no Seller Material Adverse Change and (ii) Parent and Buyer
shall have received a certificate of the chief executive officer or chief
financial officer of Seller, in such capacity, certifying to such effect.
For purposes of this Section 6.2(c), it is understood and agreed that a
Seller Material Adverse Change shall be deemed to have occurred, without
regard to any certificate provided pursuant to clause (ii) of the first
sentence of this Section 6.2(c), if as a result of a "change of law"
after the date hereof there shall exist at the Effective Time a material
increase in the risk that the Seller would not qualify (at or prior to
the Effective Time) as a REIT. For this purpose, the term "change in
law" shall mean any amendment to or change (including any announced
prospective change having a proposed effective date at or prior to the
Effective Time) in the federal tax laws of the United States, including
any statute, regulation or proposed regulation or any official
administrative pronouncement (consisting of the issuance or revocation of
any revenue ruling, revenue procedure, notice, private letter ruling or
technical advice memorandum) or any judicial decision interpreting such
federal tax laws (whether or not such pronouncement or decision is issued
to, or in connection with, a proceeding involving the Seller or a Seller
Subsidiary or is subject to review or appeal).
(d) Tax Opinions Relating to REIT Status of Seller And
Partnership Status of Seller Partnership. Parent and Buyer shall have
received an opinion of Xxxx and Xxxx LLP, or other counsel to Seller
reasonably acceptable to Parent and Buyer, and of Xxxxx & Xxxxxxxxx LLP,
each dated as of the Effective Time, in the form attached hereto as
Exhibit D. Each of such opinions may be based on certificates in the
form of Section 6.2(d) of the Seller Disclosure Letter.
(e) Consents. All consents and waivers (including,
without limitation, waivers of rights of first refusal) from third
parties necessary in connection with the consummation of the transactions
contemplated by this Agreement (including the Merger) shall have been
obtained and not subsequently been revoked, as of the Satisfaction Date
other than such consents and waivers from third parties, which, if not
obtained, would not result, individually or in the aggregate, in a Buyer
Material Adverse Effect or a Seller Material Adverse Effect; provided,
however, that the failure to obtain any consent or waiver in connection
with any instrument, obligation or matter set forth in the Seller
Disclosure Letter shall not constitute a failure of the condition set
forth in this Section 6.2(e).
(f) [Intentionally omitted].
(g) Conversion of Corporate Subsidiaries. Seller shall
have, at or prior to the Effective Time, either converted each of its
direct or indirect corporate Subsidiaries into Delaware limited liability
companies or liquidated such subsidiaries into Seller; provided that this
condition shall not apply to corporations that are Subsidiaries of Seller
and that serve as general partners of limited partnerships if the
organizational documents of such corporations or limited partnerships
would, as of the date hereof, prevent such conversions or liquidations;
provided that no consequence of Seller's performance of this condition
will be taken into account in determining the satisfaction of any other
conditions to Parent's and Buyer's obligations to effect the Merger.
(h) Partnership Merger Conditions. All conditions set
forth in Sections 5.1(c), 5.1(d) and 5.3 of the Partnership Merger
Agreement shall have been waived or satisfied as of the Satisfaction Date
in accordance with the terms of the Partnership Merger Agreement.
(i) Partnership Merger. The Partnership Merger shall
have been consummated.
Notwithstanding anything to the contrary in this Agreement, none
of the initiation, threat or existence of any legal action of any kind
with respect to this Agreement or the Partnership Merger Agreement or any
transaction contemplated hereby or thereby, including without limitation
any action initiated, threatened or maintained by any stockholder of
Seller or any partner in the Seller Partnership, whether alleging rights
with respect to Dissenting Shares, claims under any Federal or state
securities law, contract or tort claims, claims for breach of fiduciary
duty or otherwise, will constitute a failure of the conditions set forth
in Section 6.2(a), 6.2(b), 6.2(c), 6.2(e), 6.2(h), 6.3(a), 6.3(b),
6.3(c), 6.3(e) or 6.3(f) (and no such action shall cause the chief
executive officer or chief financial officer of Seller or of Parent or
Buyer to be unable to deliver a certificate attesting to compliance with
such conditions) unless that action has resulted in the granting of
injunctive relief that prevents the consummation of the Merger and the
other transactions contemplated hereby or thereby, and such injunctive
relief has not been dissolved or vacated.
6.3 Conditions to Obligations of Seller. The obligation of
Seller to effect the Merger and to consummate the other transactions
contemplated to occur on the Closing Date is further subject to the
following conditions, any one or more of which may be waived by Seller:
(a) Representations and Warranties. The
representations and warranties of Parent and Buyer set forth in this
Agreement shall be true and correct in all material respects (except for
representations having a materiality or Parent Material Adverse Effect or
Buyer Material Adverse Effect qualification, which shall be correct in
all 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
the representation or warranty is expressly limited by its terms to
another date, in which case such representation or warranty shall be true
and correct in all material respects (except for representations having a
materiality or Parent Material Adverse Effect or Buyer Material Adverse
Effect qualification, which shall be correct in all respects) only as of
such specific date, and Seller shall have received a certificate (which
certificate may be qualified by Knowledge to the same extent as the
representations and warranties of Parent and Buyer contained herein are
so qualified) signed on behalf of Parent and Buyer by the chief executive
officer or the chief financial officer of such party, in such capacity,
to such effect.
(b) Performance of Obligations of Buyer. Each of
Parent and Buyer shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or
prior to the Effective Time, and Seller shall have received a certificate
of Parent and Buyer signed on behalf of Buyer by the chief executive
officer or the chief financial officer of Parent and Buyer, in such
capacity, to such effect.
(c) Material Adverse Change. Since the date of this
Agreement, there shall have been no change in the business, financial
condition or results of operations of Parent and its Subsidiaries, taken
as a whole, or of Buyer and the Buyer Subsidiaries, taken as a whole,
that has had or would reasonably be expected to have a material adverse
effect on the ability of Parent, Buyer or Buyer Operating Partnership to
consummate the transactions contemplated by this Agreement and the
Partnership Merger Agreement, and Seller shall have received a
certificate of the chief executive officer or chief financial officer of
Parent and Buyer, in such capacity, certifying to such effect.
(d) Tax Opinion Relating to the Partnership Merger.
Seller shall have received an opinion dated the Closing Date from Xxxx,
Weiss, Rifkind, Xxxxxxx & Xxxxxxxx, special counsel to the Buyer, based
upon such certificates and letters dated the Closing Date as are
acceptable to such special counsel, to the effect that, for federal
income tax purposes, Seller Unit Holders (other than persons that are not
United States persons within the meaning of Section 7701(a)(30) of the
Code) who elect to exchange all Seller OP Units held by them for Class A
Preferred Units or Class B Units in Parent pursuant to the Partnership
Merger shall recognize no income, gain or loss upon the exchange. For
purposes of such opinion, counsel may assume that each Seller Unit Holder
shall enter into a guarantee of indebtedness of Parent in accordance with
Section 4.8 of the partnership agreement of Parent in an amount equal to
such Seller Unit Holder's negative tax capital account and that such
guarantee shall be effective to cause the Seller Unit Holder to bear the
"economic risk of loss" (within the meaning of Treasury Regulation
Section 1.752-2) associated with the portion of the indebtedness so
guaranteed.
(e) Consents. All consents and waivers (including,
without limitation, waivers of rights of first refusal) from third
parties necessary in connection with the consummation of the transactions
contemplated hereby (including the Merger) shall have been obtained,
other than such consents and waivers from third parties, which, if not
obtained, would not result, individually or in the aggregate, in a Parent
Material Adverse Effect, a Buyer Material Adverse Effect or a Seller
Material Adverse Effect; provided, however, that the failure to obtain
any consent or waiver in connection with any instrument, obligation or
matter set forth in the Seller Disclosure Letter shall not constitute a
failure of the condition set forth in this Section 6.3(e).
(f) Partnership Merger. All conditions set forth in
Sections 5.1(c), 5.1(d) and 5.2 of the Partnership Merger Agreement shall
have been waived or satisfied in accordance with the terms of the
Partnership Merger Agreement.
(g) Solvency Opinion. Seller and the Seller
Partnership shall have received an opinion, by a reputable expert firm
selected by Parent and reasonably acceptable to the Seller, in a
customary form for transactions of this type as to the solvency and
adequate capitalization of the Seller and the Seller Partnership
immediately before and of the Surviving Company and the Surviving
Operating Partnership immediately after giving effect to the
Transactions, which opinion shall be reasonably satisfactory to the
Seller.
ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after the Seller
Shareholder Approvals are obtained:
(a) by mutual written consent duly authorized by Parent
and the Board of Directors of Seller;
(b) by Parent or Buyer, upon a breach of any
representation, warranty, covenant, obligation or agreement on the part
of Seller set forth in this Agreement, in any case such that the
conditions set forth in Section 6.2(a) or Section 6.2(b), as the case may
be, are not satisfied or would be incapable of being satisfied within 30
days after the giving of written notice to Seller;
(c) by Seller, upon a breach of any representation,
warranty, covenant obligation or agreement on the part of Parent or Buyer
set forth in this Agreement, in either case such that the conditions set
forth in Section 6.3(a) or Section 6.3(b), as the case may be, are not
satisfied or would be incapable of being satisfied within 30 days after
the giving of written notice to Parent or Buyer;
(d) by Parent, Buyer or Seller, if any judgment,
injunction, order, decree or action by any Governmental Entity of
competent authority preventing the consummation of the Merger shall have
become final and nonappealable (an "Injunction");
(e) by Parent, Buyer or Seller, if the Merger shall not
have been consummated on or before December 31, 1999; provided, however,
that a party may not terminate pursuant to this clause (e) if the
terminating party shall have breached in any material respect its
representations or warranties or its obligations under this Agreement in
any manner that shall have proximately contributed to the occurrence of
the failure referred to in this clause;
(f) by either Seller (unless Seller is in breach of its
obligations under Section 5.1) or Parent or Buyer if, upon a vote at a
duly held Seller Shareholders Meeting or any adjournment thereof, Seller
Shareholder Approvals shall not have been obtained as contemplated by
Section 5.1;
(g) by Seller, prior to the Seller Shareholders
Meeting, if the Board of Directors of Seller shall have withdrawn or
modified its approval or recommendation of the Merger or this Agreement
in connection with, or approved or recommended, a Superior Acquisition
Proposal; provided, however, that no termination shall be effective
pursuant to this Section 7.1(g) under circumstances in which a Break-Up
Fee (as defined in Section 7.2(a)) is payable pursuant to Section
7.2(a)(vi), unless within 15 days after such termination, such Break-Up
Fee is paid in full by the Seller and Seller Partnership in accordance
with Section 7.2(a)(vi);
(h) by Parent or Buyer if (i) prior to the Seller
Shareholders Meeting, the Board of Directors of Seller shall have
withdrawn or modified in any manner adverse to Buyer its approval or
recommendation of the Merger or this Agreement, or approved or
recommended any Acquisition Proposal; or (ii) Seller shall have entered
into a definitive agreement with respect to any Acquisition Proposal;
(i) by Seller, if Buyer has not closed the equity
funding contemplated by the Equity Commitments and the borrowings
contemplated by the Financing Commitments (x) on or prior to the
Satisfaction Date or (y) on or prior to December 29, 1999, if (1) Parent
elects to extend the Closing Date as contemplated by Section 1.2(b), (2)
the conditions set forth in Section 6.1(b) shall have been satisfied and
(3) Seller shall have delivered a written notice to Parent and Buyer
certifying its ability to satisfy the conditions set forth in Section
6.2(g);
(j) by either Seller or Parent or Buyer, if the
stockholders of Seller adopt the Liquidation Vote; or
(k) by Parent or Buyer, if an Acquisition Proposal that
is publicly announced shall have been commenced or communicated in
writing to Seller and contains a proposal as to price and (i) Seller
shall not have rejected such proposal within ten business days after the
date of the receipt thereof by Seller or after the date of its existence
first becomes publicly announced, if sooner, or (ii) Seller shall have
failed to confirm its recommendation described in Section 2.25 within ten
business days after being requested by Buyer to do so.
7.2 Certain Fees and Expenses.
(a) If this Agreement shall be terminated:
(i) pursuant to Section 7.1(b), and the breach
by Seller was willful, then Seller and Seller Partnership will pay Parent
an aggregate amount equal to the Break-Up Fee (defined below) plus the
lesser of $10,500,000 and the Break-Up Expenses (defined below),
(ii) pursuant to Section 7.1(b), and the breach
by Seller was not willful, then Seller and Seller Partnership will pay
Parent an aggregate amount equal to the lesser of $15,000,000 and the
Break-Up Expenses (provided that, in the case of a termination by Buyer
pursuant to Section 7.1(b) on the basis of a breach of the representation
in Section 2.10(b), Buyer shall not be entitled to such amount),
(iii) pursuant to Section 7.1(c), and the
breach by Parent or Buyer was willful, then Parent and Buyer will pay
Seller an aggregate amount equal to the Break-Up Fee plus the lesser of
$4,500,000 and the Break-Up Expenses,
(iv) pursuant to Section 7.1(c), and the breach
by Parent or Buyer was not willful, then Parent and Buyer will pay Seller
an aggregate amount equal to the lesser of $4,500,000 and the Break-Up
Expenses,
(v) pursuant to Section 7.1(f), then Seller and
Seller Partnership will pay Parent an aggregate amount equal to the
lesser of $15,000,000 and the Break-Up Expenses,
(vi) pursuant to Section 7.1(g), 7.1(h) or
7.1(k), then Seller and Seller Partnership will pay Parent an aggregate
amount equal to the Break-Up Fee plus the lesser of $10,500,000 and the
Break-Up Expenses,
(vii) pursuant to Section 7.1(i), then Parent
and Buyer will pay Seller an aggregate amount equal to the Break-Up Fee
plus the lesser of $4,500,000 and the Break-Up Expenses,
(viii) pursuant to Section 7.1(j), then Seller
and Seller Partnership will pay Parent an aggregate amount equal to the
lesser of $10,500,000 and the Break-Up Expenses; and
(ix) pursuant to Section 7.1(d), and the
subject of the Injunction (as defined in Section 7.1(d)) is a stockholder
claim that was the subject of a bona fide settlement proposal with
respect to which Buyer withheld its consent after Seller's request for
same pursuant to Section 5.12, then Parent and Buyer will pay Seller an
aggregate amount equal to the lesser of $4,500,000 and the Break-Up
Expenses.
Notwithstanding anything in this Agreement to the contrary, the
right of a party to receive payment of the Break-Up Fee, Break-Up
Expenses or other amounts in accordance with this Section 7.2(a) shall be
the exclusive remedy of such party for the loss suffered by such party as
a result of the failure of the Merger and the Partnership Merger to be
consummated, and no party shall have any other liability to any other
party after the payment of the Break-Up Fee, Break-Up Expenses or other
amounts (as applicable). The Break-Up Fee, Break-Up Expenses or other
amounts payable by Seller and Seller Partnership in accordance with this
Section 7.2(a) shall be paid by Seller and Seller Partnership to Buyer,
in immediately available funds within fifteen (15) days after the date
the event giving rise to the obligation to make such payment occurred.
Except as provided in Section 7.2(b), the Break-Up Fee, the Break-Up
Expenses or other amounts payable by Parent and Buyer to Seller in
accordance with this Section 7.2(a) shall be paid by Parent or Buyer to
Seller, in immediately available funds within fifteen (15) days after the
day the event giving rise to the obligation to make such payment
occurred. As used in this Agreement, "Break Up Fee" shall be an amount
equal to $25,000,000; provided that if the Cash Collateral has been
increased by $25,000,000, or the Letter of Credit has been amended to
increase the amount available thereunder by $25,000,000, each as provided
in Section 4.7(b), the Break-Up Fee payable to Seller shall be an amount
equal to $50,000,000. The "Break-Up Expenses" payable to Parent or
Seller, as the case may be, shall be an amount equal to the out-of-pocket
expenses of such party (and, in the case of Parent, including Buyer and
Parent's general partners and limited partners) incurred in connection
with this Agreement and the transactions contemplated hereby (including,
without limitation, all fees and expenses payable to financing sources or
hedging counterparties, attorneys', accountants' and investment bankers'
fees and expenses). Such Break-Up Expenses shall be reflected on
invoices or other means verifying the incurrence of such Break-Up
Expenses.
(b) If this Agreement shall be terminated by Seller
and, as provided in Section 7.2(a), Parent and Buyer are required to pay
to Seller a Break-Up Fee or Break-Up Expenses, then Seller shall be
entitled to direct the Escrow Agent (i) to terminate Parent's rights to
receive any part of the Cash Collateral or (ii) if the Letter of Credit
has been delivered to the Escrow Agent in substitution for the Cash
Collateral, to draw on the Letter of Credit in accordance with the terms
thereof. Except as described in the preceding sentence, in no other
circumstances shall Seller have any right to receive any part of the Cash
Collateral or to draw on the Letter of Credit. If this Agreement is
terminated in any circumstance other than as described in the first
sentence of this Section 7.2(b), Seller shall direct the Escrow Agent to
return the Cash Collateral or Letter of Credit, as applicable, to Parent
within one business day of any such termination. Notwithstanding
anything in this Agreement to the contrary, the right of Seller to
receive amounts with respect to which Parent's rights to receive any part
of the Cash Collateral is terminated or which are drawn on the Letter of
Credit in accordance with this Section 7.2(b) shall be the exclusive
remedy of Seller, and its stockholders, the Seller Partnership and the OP
Unitholders for any and all losses suffered as a result of the failure of
the Merger and the Partnership Merger to be consummated and upon payment
of such amounts neither Parent nor Buyer shall have any other liability
to Seller hereunder (including under Section 7.2(a)). Any amounts which
Seller has the right to receive pursuant to this Section 7.2(b) shall be
applied as set forth in the Escrow Agreement.
(c) Except as specifically provided in this
Section 7.2, each party shall bear its own expenses in connection with
this Agreement and the Transactions.
7.3 Effect of Termination. In the event of termination of this
Agreement by Seller, Buyer or Parent as provided in Section 7.1, this
Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of Parent, Buyer, or Seller, other
than in accordance with Section 7.2, this Section 7.3 and Article 8.
7.4 Amendment. This Agreement may be amended by Parent, Buyer
and Seller in writing by action of their respective Boards of Directors
at any time before or after any Seller Shareholder Approvals are obtained
and prior to the Effective Time; provided, however, that, after the
Seller Shareholder Approvals are obtained, no such amendment,
modification or supplement shall be made which by law requires the
further approval of stockholders without obtaining such further approval.
The parties agree to amend this Agreement in the manner provided in the
immediately preceding sentence to the extent required to continue the
status of Seller as a REIT.
7.5 Extension: Waiver. At any time prior to the Effective
Time, the parties may (a) extend the time for the performance of any of
the obligations or other acts of any other party, (b) waive any
inaccuracies in the representations and warranties of any other party
contained in this Agreement or in any document delivered pursuant to this
Agreement or (c) subject to the proviso of Section 7.4, waive compliance
with any of the agreements or conditions of any other party contained in
this Agreement. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise
shall not constitute a waiver of those rights.
ARTICLE 8
GENERAL PROVISIONS
8.1 Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement confirming the representations and
warranties in this Agreement shall survive the Effective Time. This
Section 8.1 shall not limit any covenant or agreement of the parties
which by its terms contemplates performance after the Effective Time.
8.2 Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be
delivered personally, sent by overnight courier (providing proof of
delivery) to the parties or sent by telecopy (providing confirmation of
transmission) at the following addresses or telecopy numbers (or at such
other address or telecopy number for a party as shall be specified by
like notice):
(a) if to Parent or Buyer, to:
Berkshire Realty Holdings, L.P.
Xxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Fax: (000) 000-0000
with a copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxx, Esq.
Xxxxxxx X. Xxxxxxxxx, Esq.
Fax: (000) 000-0000
and
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Fax: (000) 000-0000
and
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
Xxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
(b) if to Seller, to:
Berkshire Realty Company, Inc.
Xxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: President
Fax: (000) 000-0000
with a copy to:
Xxxx and Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
and Xxxxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
and
Xxxxx & Xxxxxxxxx LLP
0000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
All notices shall be deemed given only when actually received.
8.3 Interpretation. When a reference is made in this Agreement
to a Section, such reference shall be to a Section of this Agreement
unless otherwise indicated. The table of contents and headings contained
in this Agreement are for reference purposes only and shall not affect in
any way the meaning or Interpretation of this Agreement. Whenever the
words "include," "includes" or "including" are used in this Agreement,
they shall be deemed to be followed by the words "without limitation."
8.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed
by each of the parties and delivered to the other parties.
8.5 Entire Agreement; No Third-Party Beneficiaries. This
Agreement, the Seller Disclosure Letter, the Buyer Disclosure Letter, the
Confidentiality Agreement dated September 16, 1998 between Xxxxxxxxx &
Co., LLC and Lazard on behalf of Seller, the Partnership Merger Agreement
and the other agreements entered into in connection with the Merger
(a) constitute the entire agreement and supersede all prior agreements
and understandings, both written and oral, among the parties with respect
to the subject matter of this Agreement and (b) except as provided in
Section 5.8 (the "Third Party Provision") are not intended to confer upon
any Person other than the parties hereto any rights or remedies. The
Third Party Provision may be enforced by the beneficiaries thereof or on
behalf of the beneficiaries thereof by the directors of Seller who had
been members of the Board of Directors of Seller prior to the Effective
Time.
8.6 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE,
REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE
PRINCIPLES OF CONFLICT OF LAWS THEREOF.
8.7 Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned or
delegated, in whole or in part, by operation of law or otherwise by any
of the parties without the prior written consent of the other parties.
Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of, and be enforceable by, the parties and their
respective successors and assigns.
8.8 Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Agreement
were not performed by Seller in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that Parent and Buyer
shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement by Seller and to enforce specifically the terms and
provisions of this Agreement in any federal court located in Delaware or
in Chancery Court in Delaware, this being in addition to any other remedy
to which they are entitled at law or in equity. The parties acknowledge
that Seller shall not be entitled to an injunction or injunctions to
prevent breaches of this Agreement by Parent or Buyer or to enforce
specifically the terms and provisions of this Agreement and that Seller's
sole and exclusive remedy with respect to any such breach shall be the
remedy set forth in Section 7.2. In addition, each of the parties hereto
(a) consents to submit itself (without making such submission exclusive)
to the personal jurisdiction of any federal court located in Delaware or
Chancery Court located in Delaware in the event any dispute arises out of
this Agreement or any of the transactions contemplated by this Agreement
and (b) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court.
8.9 Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining
terms and provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this Agreement in any
other jurisdiction. If any provision of this Agreement is so broad as to
be unenforceable, the provision shall be interpreted to be only so broad
as is enforceable.
IN WITNESS WHEREOF, Parent, Buyer and Seller have caused this
Agreement to be signed by their respective officers thereunto duly
authorized all as of the date first written above.
BERKSHIRE REALTY HOLDINGS, L.P.,
a Delaware limited partnership
By: /s/ XXXXXXX X. XXXXX
------------------------------
Xxxxxxx X. Xxxxx
Authorized Signatory
BRI ACQUISITION, LLC,
a Delaware limited liability company
By: /s/ XXXXXXX X. XXXXX
------------------------------
Xxxxxxx X. Xxxxx
Authorized Signatory
BERKSHIRE REALTY COMPANY, INC.,
a Delaware corporation
By: /s/ XXXXX X. XXXXXXXX
------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Chief Executive Officer
BRI OP LIMITED PARTNERSHIP,
a Delaware limited partnership
joins in this Agreement solely with
respect to Section 7.2
By: Berkshire Apartments, Inc.
By: /s/ XXXXX X. XXXXXXXX
------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Chief Executive Officer
