AGREEMENT AND PLAN OF MERGER BY AND AMONG FRANKLIN STREET PROPERTIES CORP., PARK TEN PHASE II ACQUISITION CORP., AND FSP PARK TEN DEVELOPMENT CORP. March 19, 2008 AGREEMENT AND PLAN OF MERGER
Exhibit
99.1
BY AND
AMONG
FRANKLIN
STREET PROPERTIES CORP.,
PARK TEN
PHASE II ACQUISITION CORP.,
AND
FSP PARK
TEN DEVELOPMENT CORP.
March 19,
2008
TABLE OF
CONTENTS
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ARTICLE
1 THE MERGER
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1
|
|
1.1 The
Merger
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1
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|
1.2 The
Closing
|
1
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|
1.3 Effective
Time
|
2
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1.4 Additional
Action
|
2
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|
1.5 Dissenting
Shares.
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2
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|
1.6 No
Further Rights
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3
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1.7 Withholding
Rights
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3
|
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ARTICLE
2 MERGER CONSIDERATION
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3
|
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2.1 Cancellation
of Target Stock
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3
|
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2.2 Merger
Consideration.
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3
|
|
ARTICLE
3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
ACQUISITION SUBSIDIARY
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4
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3.1 Due
Organization; Authority
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4
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|
3.2 Authorization;
Validity; Effect of Agreement
|
5
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3.3 No
Violation.
|
5
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|
3.4 Information
in Consent Solicitation
|
6
|
|
3.5 Financing
|
6
|
|
ARTICLE
4 REPRESENTATIONS AND WARRANTIES OF THE TARGET
REIT
|
6
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|
4.1 Due
Organization; Authority.
|
7
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|
4.2 Capitalization
|
7
|
|
4.3 Authorization;
Validity; Effect of Agreement
|
7
|
|
4.4 Financial
Statements.
|
7
|
|
4.5 Contracts
and Commitments
|
8
|
|
4.6 No
Violation.
|
8
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|
4.7 Litigation
|
9
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4.8 Title
to Assets
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9
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4.9 Real
Property.
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9
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4.10 Real
Property Leases
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11
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4.11 Compliance
with Laws; Permits; Environmental Matters.
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12
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4.12 Taxes.
|
13
|
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4.13 No
Existing Discussions
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14
|
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4.14 Full
Disclosure; Information in Consent Solicitation
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14
|
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ARTICLE
5 COVENANTS AND ADDITIONAL AGREEMENTS
|
14
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|
5.1 Conduct
of Business
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14
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5.2 Other
Actions
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14
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5.3 Approval
of Target REIT Stockholders
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14
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|
5.4 Consents
and Approvals
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15
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5.5 No
Solicitation.
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15
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5.6 Dividends
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18
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5.7 Indemnification.
|
18
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5.8 Public
Filing
|
19
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ARTICLE
6 CONDITIONS TO EACH PARTY’S OBLIGATIONS TO EFFECT THE
MERGER.
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19
|
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ARTICLE
7 TERMINATION AND WAIVER
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21
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7.1 Termination
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21
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7.2 Effect
of Termination
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21
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7.3 Extension;
Waiver
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21
|
|
7.4 No
Survival of Representations and Warranties
|
22
|
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7.5 Termination
Fee
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22
|
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ARTICLE
8 MISCELLANEOUS
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22
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8.1 Assignment
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22
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8.2 Risk
of Loss.
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22
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8.3 Fees
and Expenses
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23
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8.4 Entire
Agreement; Modifications; Amendments.
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23
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8.5 Notices
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23
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8.6 Interpretation
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24
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8.7 Captions
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24
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8.8 Counterparts
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24
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8.9 Binding
Effect
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25
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8.10 Attorneys’
Fees
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25
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8.11 No
Waiver; Severability
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25
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8.12 Applicable
Law
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25
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This
AGREEMENT AND PLAN OF MERGER (this “Agreement”) is made
and entered into as of March 19, 2008 by and among FRANKLIN STREET PROPERTIES
CORP., a Maryland corporation (the “Company”), PARK TEN
PHASE II ACQUISITION CORP., a Delaware corporation and a wholly-owned
acquisition subsidiary of the Company (the “Acquisition
Subsidiary”), and FSP PARK TEN DEVELOPMENT CORP., a Delaware corporation
(the “Target
REIT”).
RECITALS
WHEREAS,
the Target REIT is the owner (through a wholly-owned subsidiary) of real
property and improvements (such real property, together with any buildings,
structures or other improvements situated thereon being referred to as the
“Property”)
located in Houston, Texas;
WHEREAS,
the board of directors of the Company (the “Company Board of
Directors”), the board of directors of the Acquisition Subsidiary (the
“Acquisition
Subsidiary Board of Directors”) and the board of the directors of the
Target REIT (the “Target REIT Board of
Directors”) believe that it is in the best interests of the Company, the
Acquisition Subsidiary and the Target REIT, respectively, and their respective
stockholders, to consummate, and have approved, the business combination
transaction provided for herein, pursuant to which the Acquisition Subsidiary
will be merged with and into the Target REIT, with the Target REIT continuing as
the surviving entity (the “Merger”);
WHEREAS,
the Company, the Acquisition Subsidiary and the Target REIT desire to make
certain representations, warranties and agreements in connection with the
Merger.
NOW,
THEREFORE, in consideration of the foregoing and of the representations,
warranties, covenants and agreements contained herein, the parties hereto hereby
agree as follows:
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ARTICLE
1
|
THE
MERGER
|
1.1 The
Merger. Subject to the terms and conditions of this Agreement,
at the Effective Time (as hereinafter defined), the Acquisition Subsidiary will
be merged with and into the Target REIT in accordance with the applicable
provisions of the Delaware General Corporation Law (“DGCL”), and the
separate existence of the Acquisition Subsidiary shall thereupon
cease. The Target REIT shall continue as the surviving entity of the
Merger (the “Surviving
Corporation”). The Merger shall have the effects set forth in
Section 259 of the DGCL.
1.2 The
Closing. Subject to the terms and conditions of this
Agreement, the closing of the Merger (the “Closing”) shall take
place at the offices of Xxxxxx Xxxxxx Xxxxxxxxx Xxxx and
-1-
Xxxx LLP,
00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx at 9:00 a.m., local time, on May 15, 2008
or at such other time and date following the day on which the last of the
conditions set forth in Article 6 shall be fulfilled or waived in accordance
herewith. The holders of preferred stock, par value $0.01 per share,
in the Target REIT (“Target Stock”) are
hereinafter referred to as the “Target REIT
Stockholders.” The date on which the Closing occurs is hereinafter
referred to as the “Closing Date”;
provided, however, that without the agreement of all parties hereto, the Closing
Date shall not occur prior to May 1, 2008. After giving effect to the
Merger, the Company and the Surviving Corporation are hereinafter referred to as
the “Combined
Company.”
1.3 Effective
Time. If all of the conditions to the Merger set forth in
Article 6 shall have been fulfilled or waived in accordance herewith and this
Agreement shall not have been terminated as provided in Article 7 or Section
8.2(b), the parties hereto shall promptly cause to be properly executed,
verified and delivered for filing on the Closing Date a certificate of merger
satisfying the requirements of the DGCL for the Merger (the “Certificate of
Merger”). The Merger shall become effective upon the
acceptance for record of the Certificate of Merger by the Secretary of State of
the State of Delaware in accordance with the DGCL or at such later time upon
which the parties hereto shall have agreed and designated in such filing in
accordance with applicable law as the effective time of the Merger (the “Effective Time”);
provided, however, that the Effective Time shall not be later than ten days
following the Closing Date.
1.4 Additional
Action. The Surviving Corporation may, at any time from and
after the Effective Time, take any action, including executing and delivering
any document, in the name and on behalf of either the Target REIT or the
Acquisition Subsidiary, in order to consummate and give effect to the
transactions contemplated by this Agreement.
1.5
Dissenting
Shares.
(a) For
purposes of this Agreement, “dissenting shares”
means Target Stock held as of the Effective Time by a Target REIT Stockholder
who has not voted such Target Stock in favor of the adoption of this Agreement
and the Merger and with respect to which appraisal shall have been duly demanded
and perfected in accordance with Section 262 of the DGCL and not effectively
withdrawn or forfeited prior to the Effective Time. Dissenting shares
shall not be converted into or represent the right to receive the Merger
Consideration (as defined below) unless the Target REIT Stockholder holding such
dissenting shares shall have forfeited his or her right to appraisal under the
DGCL or properly withdrawn his or her demand for appraisal. If such
Target REIT Stockholder has so forfeited or withdrawn his or her right to
appraisal of dissenting shares, then (i) as of the occurrence of such event,
such holder’s dissenting shares shall cease to be dissenting shares and shall be
converted into and represent the right to receive the Merger Consideration
payable in respect of such Target Stock pursuant to Section 2.2 hereof, and (ii)
promptly following the occurrence of such event, the Company or the Surviving
Corporation shall deliver to such Target REIT Stockholder the Merger
Consideration to which such holder is entitled pursuant to Section 2.2
hereof.
-2-
(b) The
Target REIT shall give the Company (i) prompt notice of any written demands for
appraisal of any Target Stock, withdrawals of such demands, and any other
instruments that relate to such demands received by the Target REIT and (ii) the
opportunity to direct all negotiations and proceedings with respect to demands
for appraisal under the DGCL. The Target REIT shall not, except with
the prior written consent of the Company, make any payment with respect to any
demands for appraisal of Target Stock or offer to settle or settle any such
demands.
1.6 No Further
Rights. From and after the Effective Time, no Target Stock
shall be deemed to be outstanding, and holders of Target Stock shall cease to
have any rights with respect thereto except as provided herein or by
law.
1.7 Withholding
Rights. Notwithstanding any provision of this Agreement, the
Company and the Acquisition Subsidiary shall be entitled to deduct and withhold
from the payments to be made pursuant to this Agreement, as applicable, such
amounts as they reasonably determine that they are required to deduct and
withhold with respect to the making of such payments under the Internal Revenue
Code of 1986, as amended (the “Code”) or any other
applicable provision of law and to collect Forms W-8 or W-9, as applicable, or
similar information from the Target REIT Stockholders and any other recipients
of payments hereunder. To the extent the amounts are so withheld by
either the Company or the Acquisition Subsidiary, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder of
the Target REIT shares in respect of which such deduction and withholding was
made by the Company or the Acquisition Subsidiary.
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ARTICLE
2
|
MERGER
CONSIDERATION
|
2.1 Cancellation of Target
Stock. As a result of the Merger and without any action on the
part of the Target REIT Stockholders, at the Effective Time all Target Stock in
the Target REIT shall cease to be outstanding, shall be cancelled and retired
and shall cease to exist and each Target REIT Stockholder shall thereafter cease
to have any rights with respect to the Target Stock (other than with respect to
any dissenting shares, and other than the right to receive such Target REIT
Stockholder’s portion of the Merger Consideration (as defined below) without
set-off or counterclaim).
2.2 Merger
Consideration.
(a) At
the Effective Time, by virtue of the Merger and without any further action by
the Company, the Acquisition Subsidiary or the Target REIT, each Target REIT
Stockholder (other than the Company) shall receive for each share of Target
Stock that such Target REIT Stockholder holds of record, cash (without interest)
in an amount equal to $127,290.00 (and for each fractional share of Target Stock
held, $127,290.00 times the applicable fraction, rounded up to the nearest $.01)
(the “Merger
Consideration”). The Company shall pay the Merger
Consideration by check or ACH deposit sent to each Target REIT Stockholder on or
prior to the date 30 days following the Effective Time.
-3-
(b) At
the Effective Time, by virtue of the Merger and without any further action by
any party, (i) the one (1) share of Target REIT common stock, $.01 par value,
shall be converted into one (1) share of common stock, $.01 par value, of the
Surviving Corporation and (ii) the eight-and-one-half (8.5) shares of Target
Stock held by the Company shall be cancelled and shall cease to exist and no
Merger Consideration or other consideration shall be delivered in exchange
therefor, and the Company hereby waives any right that it may have under the
certificate of incorporation of the Target REIT or otherwise to receive any
consideration in the Merger in respect of such shares of Target
Stock.
(c) The
directors and officers of the Acquisition Subsidiary immediately prior to the
Effective Time shall be the directors and officers of the Surviving Corporation,
each to hold office in accordance with the certificate of incorporation and
bylaws of the Surviving Corporation. The certificate of incorporation and bylaws
of the Surviving Corporation immediately following the Effective Time shall be
amended and restated in their entirety so that such certificate of incorporation
and bylaws are identical to the certificate of incorporation and bylaws,
respectively, of the Acquisition Subsidiary, except that the name of the
Surviving Corporation shall be amended to be the name of the Target REIT
immediately prior to the Effective Time and the identity of the incorporator
shall be deleted.
(d) The
Merger Consideration shall be proportionately adjusted to reflect any
reclassification, stock split, reverse split, stock dividend, reorganization,
recapitalization or other like change with respect to the Target Stock occurring
(or for which a record date is established) after the date hereof and prior to
the Effective Time.
|
ARTICLE
3
|
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY AND THE ACQUISITION
SUBSIDIARY
|
Each of
the Company and the Acquisition Subsidiary, jointly and severally, represents
and warrants to the Target REIT that the statements contained in this Article 3
are true and correct, except as set forth in the disclosure schedule delivered
at or prior to the execution hereof to the Target REIT (the “Company Disclosure
Schedule”). The Company Disclosure Schedule shall be arranged
in paragraphs corresponding to the numbered and letter paragraphs contained in
this Article 3, and the disclosures in any paragraph of the Company Disclosure
Schedule shall also be deemed to qualify all other paragraphs in this
Article 3.
3.1 Due Organization;
Authority. Each of the Company and the Acquisition Subsidiary
is a corporation duly organized and validly existing under the laws of the state
of its incorporation. The Company (i) has the authority to conduct
its business as currently conducted and to own and operate the properties that
it now owns and operates, and (ii) is duly licensed or qualified to do business
in, and is in good standing under the laws of, all jurisdictions in which the
transaction of its business makes such qualification necessary, except where the
failure to be so licensed or qualified would not reasonably be expected to have
a material adverse effect on the business, assets, prospects, results of
operations or financial condition of the Company (a “Company Material Adverse
Effect”).
-4-
3.2 Authorization; Validity;
Effect of Agreement. Each of the Company and the Acquisition
Subsidiary has all requisite power, authority and legal right to enter into this
Agreement and to perform its obligations hereunder. The execution and
delivery of this Agreement by the Company and the Acquisition Subsidiary and the
consummation by the Company and the Acquisition Subsidiary of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Company and the Acquisition Subsidiary, respectively, and
this Agreement is a legal, valid and binding obligation of the Company and the
Acquisition Subsidiary, enforceable against them in accordance with its
terms. Without limiting the generality of the foregoing, no vote,
consent or approval of the stockholders of the Company is required under
applicable law, rule or regulation, rule of the American Stock Exchange, or
otherwise, in order for the Company to comply with its obligations
hereunder.
3.3 No
Violation.
(a) Neither
the execution and delivery by the Company or the Acquisition Subsidiary of this
Agreement, nor the consummation by the Company or the Acquisition Subsidiary of
the transactions contemplated hereby and compliance by the Company or the
Acquisition Subsidiary with the provisions hereof, will: (i) conflict with or
violate any provision of the articles or certificates of incorporation or
bylaws, each as amended to date of the Company or the Acquisition Subsidiary;
(ii) require on the part of the Company or the Acquisition Subsidiary any
consent, approval or authorization of, or declaration, filing or registration
with, any governmental or regulatory authority, except (x) the filing of the
Certificate of Merger in accordance with the DGCL or (y) where the failure to
obtain any such consent, approval or authorization of, or declaration, filing or
registration with, any governmental or regulatory authority would not reasonably
be expected to have a Company Material Adverse Effect and would not adversely
affect the consummation of the transactions contemplated hereby; (iii) conflict
with, result in a breach of, constitute (with or without due notice or lapse of
time or both) a default under, result in the acceleration of obligations under,
create in any party the right to terminate, modify or cancel, or require any
notice, consent or waiver under, any contract or instrument to which the Company
is a party or by which the Company is bound or to which any of its assets is
subject, except for (A) any conflict, breach, default, acceleration,
termination, modification or cancellation which would not have a Company
Material Adverse Effect and would not adversely affect the consummation of the
transactions contemplated hereby or (B) any notice, consent or waiver the
absence of which would not have a Company Material Adverse Effect and would not
adversely affect the consummation of the transactions contemplated hereby; or
(iv) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Company or the Acquisition Subsidiary or any of their
properties or assets.
(b) Except
as expressly contemplated by this Agreement, no other action is required to be
taken by the Company or the Acquisition Subsidiary to permit the execution,
delivery and performance of (i) this Agreement, (ii) all other
documents and certificates expressly contemplated hereby, and (iii) the
transactions contemplated hereby, and no consent or approval of any third party
or Governmental Entity (as defined below) is or was required in connection with
the execution of this Agreement, or to consummate the transactions expressly
contemplated hereunder, except such as have been obtained or will be obtained
prior to the Closing.
-5-
3.4 Information in Consent
Solicitation. None of the information supplied or to be
supplied by the Company for inclusion in the Consent Solicitation to be
distributed to Target REIT Stockholders pursuant to Section 5.3 hereof (the
“Consent
Solicitation”) contains any untrue statement of a material fact or omits
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
are made, not misleading. If at any time prior to the Closing Date
any event relating to the Company should occur that is required to be described
in an amendment of or supplement to the Consent Solicitation, the Company shall,
together with the Target REIT, prepare and disseminate such amendment or
supplement. To the Company’s knowledge, all of the representations
and warranties of the Target REIT set forth in this Agreement are true and
correct as of the date hereof, including without limitation for purposes of
Sections 6(f) and 7.1(c) below, it being understood and agreed that for all
purposes of this Agreement the knowledge of R. Xxxxx XxxXxxx, Xxxxxxx X.
Xxxxxxxx and Xxxxx Xxxxxxxx shall not be imparted to the Company.
3.5 Financing. From
the date hereof through and including the Closing Date, the Company has and will
have sufficient cash, including without limitation through drawing on available
credit facilities, in order to consummate the transactions contemplated by this
Agreement and to fulfill its obligations hereunder, including without limitation
payment of the Merger Consideration. Immediately after giving effect
to the transactions contemplated by this Agreement, the Company will be solvent
under applicable law.
|
ARTICLE
4
|
REPRESENTATIONS
AND WARRANTIES OF THE TARGET REIT
|
The
Target REIT represents and warrants to the Company that the statements contained
in this Article 4 are true and correct, except as set forth in the disclosure
schedule delivered at or prior to the execution hereof by the Target REIT to the
Company (the “Target
REIT Disclosure Schedule”). The Target REIT Disclosure
Schedule shall be arranged in paragraphs corresponding to the numbered and
letter paragraphs contained in this Article 4, and the disclosures in any
paragraph of the Target REIT Disclosure Schedule shall also be deemed to qualify
all other paragraphs in this Article 4. In the event that at the time of the
execution of this Agreement the Company has knowledge that any of the
representations or warranties of the Target REIT contained herein are not true
and correct, the Target REIT shall not be deemed to be in breach of this
Agreement in respect thereof, including without limitation for purposes of
Sections 6(f) and 7.1(c) below, it being understood and agreed that for all
purposes of this Agreement the knowledge of R. Xxxxx XxxXxxx, Xxxxxxx X.
Xxxxxxxx and Xxxxx Xxxxxxxx shall not be imparted to the Company.
-6-
4.1 Due Organization;
Authority.
(a) The
Target REIT is a corporation duly organized and validly existing under the laws
of the State of Delaware. The Target REIT (i) has the authority to
conduct its business as currently conducted and to own and operate the
properties that it now owns and operates, and (ii) is duly licensed or qualified
to do business in, and is in good standing under the laws of, all jurisdictions
in which the transaction of its business makes such qualification necessary,
except where the failure to be so licensed or qualified would not reasonably be
expected to have a material adverse effect on the business, assets, prospects,
results of operations or financial condition of the Target REIT (a “Target REIT Material Adverse
Effect”).
(b) The
Target REIT has provided the Company with a true and complete copy of its
certificate of incorporation and bylaws, each as amended to date.
4.2 Capitalization. The
authorized capital stock of the Target REIT consists of one share of common
stock, $.01 par value per share (“Target REIT Common
Stock”), and 278.5 shares of Target Stock. The rights and
privileges of each class of the Target REITs capital stock are as set forth in
the Target REIT’s Certificate of Incorporation. As of the date of
this Agreement there are, and as of the Closing Date and immediately prior to
the Effective Time there will be, (i) one share of Target REIT Common Stock
issued and outstanding and (ii) 278.5 shares of Target Stock issued and
outstanding.
4.3 Authorization; Validity;
Effect of Agreement. The Target REIT has all requisite power,
authority and legal right to enter into this Agreement and to consummate the
Merger. The execution and delivery of this Agreement by the Target
REIT and, subject to the approval of this Agreement by the Target REIT’s
stockholders, the consummation by the Target REIT of the Merger have been duly
authorized by all necessary corporate action on the part of the Target REIT, and
this Agreement is a legal, valid and binding obligation of the Target REIT,
enforceable against the Target REIT in accordance with its terms.
4.4 Financial
Statements.
(a) The
Target REIT has previously delivered or made available to the Company or will
deliver to the Company on or before the Closing Date the following financial
statements (collectively, the “Target REIT Financial
Statements”): (i) statement of income for the twelve months ended
December 31, 2007 (audited); (ii) statement of cash flows from date of
inception through December 31, 2007 (audited), and
(iii) a balance sheet as of December 31, 2007 (audited) (the
“Target REIT Balance
Sheet”). The Target REIT Financial Statements have been
prepared in accordance with generally accepted accounting principles (“GAAP”), applied on a
basis consistent with prior periods (except as otherwise noted therein), and
present fairly the financial position and results of operations of the Target
REIT as of their respective dates and for the periods presented
therein.
-7-
(b) The
Target REIT has no liability of any nature, whether known or unknown, accrued or
unaccrued, absolute or contingent, asserted or unasserted, except liabilities
(i) stated or adequately reserved against on the Target REIT Balance Sheet or
the notes thereto, (ii) incurred in the ordinary course of business and not
required under GAAP to be reflected on the Target REIT Balance Sheet, (iii)
incurred after the date of the Target REIT Balance Sheet in the ordinary course
of business consistent with the terms of this Agreement or (iv) which would not
reasonably be expected to have a Target REIT Material Adverse
Effect.
4.5 Contracts and
Commitments. The Target REIT has delivered or made available
to the Company a correct and complete copy of each contract to which the Target
REIT is a party that is material to the Target REIT (each a “Target REIT Material
Contract”). Each Target REIT Material Contract is in full
force and effect and neither the Target REIT nor, to the knowledge of the Target
REIT, the other party thereto is in breach or default thereunder, other than
breaches or defaults which would not, individually or in the aggregate,
reasonably be expected to have a Target REIT Material Adverse
Effect.
4.6 No
Violation.
(a) Neither
the execution and delivery by the Target REIT of this Agreement, nor the
consummation by the Target REIT of the Merger and compliance by the Target REIT
with the provisions hereof, will: (i) conflict with or violate any
provision of its certificate of incorporation or bylaws; (ii) require on the
part of the Target REIT any consent, approval or authorization of, or
declaration, filing or registration with, any governmental or regulatory
authority, except (x) the filing of the Certificate of Merger or (y) where the
failure to obtain any such consent, approval or authorization of, or
declaration, filing or registration with, any governmental or regulatory
authority would not reasonably be expected to have a Target REIT Material
Adverse Effect and would not adversely affect the consummation of the
transactions contemplated hereby; (iii) conflict with, result in a breach of,
constitute (with or without due notice or lapse of time or both) a default
under, result in the acceleration of obligations under, create in any party the
right to terminate, modify or cancel, or require any notice, consent or waiver
under, any contract or instrument to which the Target REIT is a party or by
which the Target REIT is bound or to which any of its assets is subject, except
for (A) any conflict, breach, default, acceleration, termination, modification
or cancellation which would not have a Target REIT Material Adverse Effect and
would not adversely affect the consummation of the transactions contemplated
hereby or (B) any notice, consent or waiver the absence of which would not have
a Target REIT Material Adverse Effect and would not adversely affect the
consummation of the transactions contemplated hereby; (iv) result in the
imposition of any mortgage, pledge, security interest, encumbrance, charge or
other lien (whether arising by contract or by operation of law) upon any
property or assets of the Target REIT; or (v) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Target REIT or
any of its properties or assets.
-8-
(b) Except
as expressly contemplated by this Agreement, no other action is required to be
taken by the Target REIT to permit the execution, delivery
and performance of (i) this Agreement, (ii) all other documents and
certificates expressly contemplated hereby, and (iii) the Merger, and no consent
or approval of any third party or court, arbitrational tribunal, administrative
agency or commission or other governmental or regulatory authority or agency (a
“Governmental
Entity”) is or was required in connection with the execution of this
Agreement, or to consummate the transactions expressly contemplated hereunder,
except such as have been obtained or will be obtained prior to the
Closing.
4.7 Litigation. There
are (i) no continuing orders, injunctions or decrees of any court, arbitrator or
Governmental Entity to which the Target REIT is a party or by which it is bound
or, to the knowledge of the Target REIT, to which any of its directors,
officers, employees or agents, in such capacity, is a party or, to the knowledge
of the Target REIT, by which any of them is bound, and (ii) no actions, suits,
investigations or proceedings pending against the Target REIT, or, to the
knowledge of the Target REIT, against any of its directors, officers, employees
or agents, in such capacity, or, to the knowledge of the Target REIT, threatened
against the Target REIT or any of its directors, officers, employees or
agents, in such capacity, at law or in equity, or before or by any federal,
state or local commission, board, bureau, agency or instrumentality, in each
case that would, individually or in the aggregate, reasonably be expected to
have a Target REIT Material Adverse Effect.
4.8 Title to
Assets. The Target REIT has good and marketable title to the
assets reflected in the Target REIT Balance Sheet and will hold good and
marketable title to such assets, and any assets acquired by the Target REIT
prior to the Effective Time, except for assets disposed of in the ordinary
course of business (which assets do not include the Property) and except as the
failure of the Target REIT to have such good and marketable title is not, in the
aggregate, material to the Target REIT. The assets reflected on the
Target REIT Balance Sheet include the Property. Except as otherwise
disclosed in the Target REIT Balance Sheet or related notes accompanying it, all
the assets referred to in the first sentence of this Section 4.8 are owned free
and clear of any and all material adverse claims, security interests, charges or
other encumbrances or restrictions of every nature, except liens for current
taxes not yet due and payable, mechanics’ or similar liens, or landlords’ liens
as provided for in the relevant leases or by applicable law (“Permitted
Liens”).
4.9 Real
Property.
With
respect to each parcel of Property owned by the Target REIT through a
wholly-owned subsidiary:
(a) the
Target REIT has good and clear record and marketable title to such parcel,
insurable by a recognized national title insurance company at standard rates,
free and clear of any security interest, easement, covenant or other
restriction, except for recorded easements, covenants and other restrictions
which do not impair the uses, occupancy or value of such parcel for its existing
use as an office building (the “Intended Uses”),
other than Permitted Liens;
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(b) there
are no (i) pending or, to the knowledge of the Target REIT, threatened
condemnation proceedings relating to such parcel, (ii) pending or, to the
knowledge of the Target REIT, threatened litigation or administrative actions
relating to such parcel, or (iii) other matters materially adversely
affecting the Intended Uses or occupancy or value thereof;
(c) the
legal description for such parcel contained in the deed thereof describes such
parcel fully and adequately; the buildings and improvements for the Intended
Uses is permitted under applicable zoning and land use laws, and such buildings
and improvements are located within the boundary lines of the described parcels
of land, are not in violation of, or are affirmatively covered by title
insurance with respect to, setback requirements applicable to them, zoning laws
and ordinances and do not encroach on any easement which may burden the land;
the land does not serve any adjoining property for any purpose inconsistent with
the use of the land; and no building is located within a special flood hazard
area, or subject to any similar type restriction for which any permits or
licenses necessary to the use thereof have not been obtained;
(d) there
are no leases, subleases, licenses or agreements, written or oral, granting to
any party or parties (other than the Target REIT and those tenants under leases
described in Section 4.10) the right of use or occupancy of any portion of
such parcel, except for leases, subleases, licenses or agreements which do not
impair the Intended Uses;
(e) there
are no outstanding options or rights of first refusal to purchase such parcel,
or any portion thereof or interest therein;
(f) all
facilities located on such parcel are supplied with utilities and other services
necessary for the operation of such facilities, including gas, electricity,
water, telephone, sanitary sewer and storm sewer, all of which services are
adequate for the Intended Uses and in accordance with all applicable laws,
ordinances, rules and regulations and are provided via public roads or via
permanent, irrevocable, appurtenant easements benefiting such
parcel;
(g) such
parcel abuts on and has direct vehicular access to a public road or access to a
public road via a permanent, irrevocable, appurtenant easement benefiting such
parcel;
(h) the
Target REIT has received no notice of any, and, to the knowledge of the Target
REIT, there is no, proposed or pending proceeding to change or redefine the
zoning classification of all or any portion of the parcels;
(i) the
improvements constructed on the parcels are in good condition and proper order,
free of material roof leaks, untreated material insect infestation, and material
construction defects, and all mechanical and utility systems servicing such
improvements are in good condition and proper working order, free of material
defects; and
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(j) each
parcel is an independent unit which does not rely on any facilities (other than
the facilities of public utility and water companies or facilities as to which a
permanent, irrevocable appurtenant easement exists benefiting such parcel
granting the use of such facilities) located on any other property (i) to
fulfill any zoning, building code or other municipal or governmental
requirement, (ii) for structural support or the furnishing of any essential
building systems or utilities, including, but not limited to electric, plumbing,
mechanical, heating, ventilating, and air conditioning systems, or (iii) to
fulfill the requirements of any lease. No building or other
improvement not included in the parcels relies on any part of the parcels to
fulfill any zoning, building code or other municipal or governmental requirement
or for structural support or the furnishing of any essential building systems or
utilities except with respect to utility or storm water facilities pursuant to
recorded easement agreements or declarations of common easements the use of
which do not impair the Intended Uses. Each of the parcels is
assessed by local property assessors as a tax parcel or parcels separate from
all other tax parcels.
4.10 Real Property
Leases. The Target REIT has delivered or made available to the
Company complete and accurate copies of the leases and subleases (as amended to
date) of the Property. With respect to each such lease and
sublease:
(a) the
lease or sublease is legal, valid, binding, enforceable and in full force and
effect;
(b) the
lease or sublease will continue to be legal, valid, binding, enforceable and in
full force and effect immediately following the Effective Time in accordance
with the terms thereof as in effect immediately prior to the Effective
Time;
(c) neither
the Target REIT nor, to the knowledge of the Target REIT, any other party, is in
breach or violation of, or default under, any such lease or sublease, and no
event has occurred, is pending or, to the knowledge of the Target REIT, is
threatened, which, after the giving of notice, with lapse of time, or otherwise,
would constitute a breach or default by the Target REIT or, to the knowledge of
the Target REIT, any other party under such lease or sublease;
(d) the
Target REIT has not assigned, transferred, conveyed, mortgaged, deeded in trust
or encumbered any interest in the leasehold or sublease-hold that has not been
discharged; and
(e) the
Target REIT is not aware of any security interest, easement, covenant or other
restriction applicable to the real property subject to such lease, except for
recorded easements, covenants, Permitted Liens and other restrictions which do
not materially impair the current uses or the occupancy by the Target REIT of
the property subject thereto.
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4.11 Compliance with Laws;
Permits; Environmental Matters.
(a) The
Target REIT has complied with all applicable Environmental Laws (as defined
below), except for violations of Environmental Laws that do not and will not,
individually or in the aggregate, have a Target REIT Material Adverse
Effect. There is no pending or, to the knowledge of the Target REIT,
threatened civil or criminal litigation, written notice of violation, formal
administrative proceeding, or investigation, inquiry or information request by
any Governmental Entity, relating to any Environmental Law involving the Target
REIT, except for litigation, notices of violations, formal administrative
proceedings or investigations, inquiries or information requests that will not,
individually or in the aggregate, have a Target REIT Material Adverse
Effect. For purposes of this Agreement, “Environmental Law”
means any federal, state or local law, statute, rule or regulation or the common
law relating to the environment or occupational health and safety, including
without limitation any statute, regulation, administrative decision or order
pertaining to (i) treatment, storage, disposal, generation and
transportation of industrial, toxic or hazardous materials or substances or
solid or hazardous waste; (ii) air, water and noise pollution;
(iii) groundwater and soil contamination; (iv) the release or
threatened release into the environment of industrial, toxic or hazardous
materials
or substances, or solid or hazardous waste, including without limitation
emissions, discharges, injections, spills, escapes or dumping of pollutants,
contaminants or chemicals; (v) the protection of wild life, marine life and
wetlands, including without limitation all endangered and threatened species;
(vi) storage tanks, vessels, containers, abandoned or discarded barrels,
and other closed receptacles; (vii) health and safety of employees and
other persons; and (viii) manufacturing, processing, using, distributing,
treating, storing, disposing, transporting or handling of materials regulated
under any law as pollutants, contaminants, toxic or hazardous materials or
substances or oil or petroleum products or solid or hazardous
waste. As used above, the terms “release” and “environment” shall
have the meaning set forth in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (“CERCLA”).
(b) There
have been no releases in violation of Environmental Laws of any Materials of
Environmental Concern (as defined below) into the environment at any parcel of
real property or any facility formerly or currently owned, operated or
controlled by the Target REIT. With respect to any such releases of
Materials of Environmental Concern, the Target REIT has given all required
notices to Governmental Entities (copies of which have been provided to the
Company). The Target REIT is not aware of any releases of Materials
of Environmental Concern at parcels of real property or facilities other than
those owned, operated or controlled by the Target REIT that could reasonably be
expected to have an impact on the real property or facilities owned, operated or
controlled by the Target REIT. For purposes of this Agreement, “Materials of Environmental
Concern” means any chemicals, pollutants or contaminants, hazardous
substances (as such term is defined under CERCLA), solid wastes and hazardous
wastes (as such terms are defined under the Resource Conservation and Recovery
Act), toxic materials, oil or petroleum and petroleum products or any other
material subject to regulation under any Environmental Law.
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(c) A
complete and accurate copy of all documents (whether in hard copy or electronic
form) that contain any environmental reports, investigations and audits relating
to premises currently or previously owned or operated by the Target REIT
(whether conducted by or on behalf of the Target REIT or a third party, and
whether done at the initiative of the Target REIT or directed by a Governmental
Entity or other third party) which were issued or conducted during the past five
years and which the Target REIT has possession of or access to has been provided
or made available to the Company.
(d) The
Target REIT is not aware of any material environmental liability of any solid or
hazardous waste transporter or treatment, storage or disposal facility that has
been used by the Target REIT.
4.12 Taxes.
(a) The
Target REIT has paid, caused to be paid or accrued all federal, state, local,
foreign and other Taxes, required to be paid or accrued by it through the date
hereof;
(b) The
Target REIT has timely filed or requested an extension of the time to file all
federal, state, local and foreign Tax returns required to be filed by it through
the date hereof, and all such returns completely and accurately set forth the
amount of any Taxes relating to the applicable period;
(c) The
Target REIT has withheld and paid all Taxes required to have been withheld and
paid in connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder or other party;
(d) For
all periods since its inception, the Target REIT has qualified to be treated as
a REIT within the meaning of Sections 856-860 of the Code. For the
periods described in the preceding sentence, the Target REIT has met all
requirements necessary to be treated as a REIT for purposes of the income Tax
provisions of those states in which the Target REIT is subject to income Tax and
which provide for the taxation of a REIT in a manner similar to the treatment of
REITs under Sections 856-860 of the Code; and
(e) Neither
the IRS nor any other Governmental Entity is now asserting by written notice to
the Target REIT or, to the knowledge of the Target REIT, threatening to assert
against the Target REIT any deficiency or claim for additional
Taxes. There is no dispute or claim concerning any Tax liability of
the Target REIT either claimed or raised in writing by the IRS. There
is no dispute or claim of a material nature concerning any Tax liability of the
Target REIT either claimed or raised in writing by any Governmental Entity other
than the IRS, or, to the knowledge of the Target REIT, which may be claimed or
raised by any federal or state Governmental Entity. No written claim
has ever been made by a Taxing authority in a jurisdiction where the Target REIT
does not file reports and returns asserting that the Target REIT is or may be
subject to Taxation by that jurisdiction.
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4.13 No Existing
Discussions. As of the date of this Agreement, the Target REIT
is not engaged, directly or indirectly, in any discussions or negotiations with
any other party with respect to an Acquisition Proposal (as defined in Section
5.5(e)).
4.14 Full Disclosure; Information
in Consent Solicitation. The representations of the Target
REIT contained in this Agreement do not contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements made herein not misleading, and none of the information supplied or
to be supplied by the Target REIT for inclusion in the Consent Solicitation
contains any untrue statement of a material fact or omits 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 are made, not
misleading. If at any time prior to the Closing Date any event
relating to the Target REIT should occur that is required to be described in an
amendment of or supplement to the Consent Solicitation, the Target REIT promptly
shall inform the Company and assist in the preparation and dissemination of such
amendment or supplement.
|
ARTICLE
5
|
COVENANTS
AND ADDITIONAL AGREEMENTS
|
5.1 Conduct of
Business. Prior to the Effective Time, or the earlier
termination of this Agreement, the Target REIT shall use its reasonable efforts
to (i) carry on its business in the ordinary course in substantially the same
manner as previously conducted, (ii) preserve intact its present business
organization and goodwill, (iii) maintain permits, licenses and authorizations,
(iv) preserve its relationships with third parties and (v) take all actions
necessary to continue to qualify as a REIT, including, without limitations, the
payment of dividends.
5.2 Other
Actions. The Target REIT shall not take or omit to take any
action that would result in any of the representations and warranties of the
Target REIT made in or pursuant to this Agreement becoming untrue or incomplete,
in any of the covenants and agreements of the Target REIT being breached, or in
any of the conditions to the Closing required to be satisfied by the Target REIT
not being satisfied. Neither the Company nor the Acquisition
Subsidiary shall take or omit to take any action that would result in any of the
representations and warranties of the Company, the Acquisition Subsidiary or the
Target REIT made in or pursuant to this Agreement becoming untrue or incomplete,
in any of the covenants and agreements of the Company, the Acquisition
Subsidiary or the Target REIT being breached, or in any of the conditions to the
Closing not being satisfied.
5.3 Approval of Target REIT
Stockholders. Promptly following the execution of this
Agreement, the Company, together with the Target REIT, shall prepare and
distribute to the Target REIT Stockholders the Consent Solicitation, asking the
Target REIT Stockholders to vote upon the adoption of this Agreement and the
Merger and including, among other things, a summary of the Merger and this
Agreement, all of the information that either party determines is required or
advisable under applicable law and all required information regarding appraisal
rights. Except as permitted by Section 5.5 below, (a) the Consent
Solicitation shall state that the Target REIT Board of Directors adopted a
resolution approving this Agreement and the Merger
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and
declaring its advisability and (b) the Target REIT, subject to and in accordance
with applicable law and this Section 5.3, shall use its reasonable best efforts
to obtain the necessary stockholder approval required by the Target REIT’s
governing documents to adopt this Agreement and the Merger, including without
limitation, by timely mailing the Consent Solicitation to the Target REIT
Stockholders. In accordance with that certain Voting Agreement dated
September 29, 2005 by and between the Company and the Target REIT, the Company
agrees to (i) vote or cause to be voted the eight and one half (8.5) shares of
Target Stock that it holds in a manner that approximates as closely as possible
the votes cast in favor of and opposed to the Merger and the adoption of this
Agreement by the holders of the Target Stock other than the Company and (ii) not
transfer or cause or allow to be transferred any such shares from the date
hereof until following the earlier of the Effective Time or the termination of
this Agreement. In addition, the Company agrees to (i) vote or cause
to be voted the one (1) share of Target REIT Common Stock that it holds in favor
of the Merger and the adoption of this Agreement and (ii) not transfer or cause
or allow to be transferred, and not acquire, any shares of capital stock of the
Target REIT from the date hereof until following the earlier of the Effective
Time or the termination of this Agreement. If Target REIT stockholder
approval is to be by means of written consent, then the Consent
Solicitation shall provide that any stockholder’s written consent may be
withdrawn by such stockholder at any time prior to the Closing Date by written
notice received by the Target REIT prior to the Closing Date. If
Target REIT stockholder approval is obtained by means of a written consent, the
Surviving Corporation shall send within ten days after the Effective Time of the
Merger, pursuant to Sections 228 and 262(d) of the DGCL, a written notice
to all stockholders of the Target REIT that did not execute such written consent
informing them that this Agreement and the Merger were adopted and approved by
the stockholders of the Target REIT and that appraisal rights are available for
their Target Stock pursuant to Section 262 of the DGCL (which notice shall
include a copy of such Section 262).
5.4 Consents and
Approvals. The Company and the Target REIT shall each use all
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all other things necessary, proper or advisable to consummate
and make effective as promptly as practicable the transactions contemplated by
this Agreement, to obtain in a timely manner all necessary consents,
waivers, approvals, authorizations and orders and to make all necessary
registrations and filings, and otherwise to satisfy or cause to be satisfied all
conditions precedent to its obligations under this Agreement.
5.5 No
Solicitation.
(a) Except
as set forth in this Section 5.5, the Target REIT shall not, nor shall it
authorize or permit any of its directors, officers, employees, investment
bankers, attorneys, accountants or other advisors or representatives (such
directors, officers, employees, investment bankers, attorneys, accountants,
other advisors and representatives, collectively, “Representatives”) to,
directly or indirectly:
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(i) solicit,
initiate, encourage or take any other action to facilitate any inquiries or the
making of any proposal or offer that constitutes, or could reasonably be
expected to lead to, any Acquisition Proposal, including without limitation (A)
approving any transaction under Section 203 of the DGCL that would require such
approval in the absence of Article TENTH of the Target REIT’s charter, (B)
approving any person becoming an “interested
stockholder” under Section 203 of the DGCL that would require such
approval in the absence of Article TENTH of such Target REIT’s charter and (C)
amending or granting any waiver or release under any standstill or similar
agreement with respect to any Target Stock; or
(ii) enter
into, continue or otherwise participate in any discussions or negotiations
regarding, furnish to any person any information with respect to, assist or
participate in any effort or attempt by any person with respect to, or otherwise
cooperate in any way with, any Acquisition Proposal.
Notwithstanding
the foregoing, prior to the Closing Date, the Target REIT may, to the extent
necessary to act in a manner consistent with the fiduciary obligations of the
Target REIT Board of Directors, as determined in good faith by the Target REIT
Board of Directors, after consultation with outside counsel, in response to a
Superior Proposal or a bona fide, unsolicited written Acquisition
Proposal made or received after the date of this Agreement that the Target REIT
Board of Directors determines in good faith after consultation with outside
counsel and a nationally recognized independent financial advisor is reasonably
likely to lead to a Superior Proposal, in each case that did not result from a
breach by the Target REIT of this Section 5.5, and subject to compliance with
Section 5.5(c), (x) furnish information with respect to the Target REIT to the
person making such Acquisition Proposal and its Representatives pursuant to a
customary confidentiality agreement and (y) participate in discussions or
negotiations (including solicitation of a revised Acquisition Proposal) with
such person and its Representatives regarding any Acquisition
Proposal. Without limiting the foregoing, it is agreed that any
violation of the restrictions set forth in this Section 5.5(a) by any
Representative of the Target REIT, whether or not such person is purporting to
act on behalf of the Target REIT or otherwise, shall be deemed to be a breach of
this Section 5.5(a) by the Target REIT.
(b) Neither
the Target REIT Board of Directors nor any committee thereof shall:
(i) except
as set forth in this Section 5.5, withdraw or modify, or publicly (or in a
manner designed to become public) propose to withdraw or modify, in a manner
adverse to the Company, its approval or recommendation with respect to the
adoption of this Agreement and approval of the Merger contemplated
hereby;
(ii) cause
or permit the Target REIT to enter into any letter of intent, memorandum of
understanding, agreement in principle, acquisition agreement, merger agreement
or similar agreement constituting or relating to any Acquisition Proposal (other
than a confidentiality agreement referred to in Section 5.5(a) entered into in
the circumstances referred to in Section 5.5(a)); or
-16-
(iii) adopt,
approve or recommend, or publicly propose to adopt, approve or recommend, any
Acquisition Proposal.
Notwithstanding
the foregoing, to the extent necessary to act in a manner consistent with the
fiduciary obligations of the Target REIT Board of Directors, as determined in
good faith by the Target REIT Board of Directors, after consultation with
outside counsel, the Target REIT Board of Directors may, in response to a
Superior Proposal that did not result from a breach by the Target REIT of this
Section 5.5, take any actions described in clauses (i), (ii) or (iii) of the
first sentence of this Section 5.5(b) or cause the Target REIT to not solicit
consents pursuant to clause (b) of Section 5.3.
(c) The
Target REIT shall promptly advise the Company orally, with written confirmation
to follow promptly (and in any event within 24 hours of the receipt of the
applicable Acquisition Proposal or request for information), of any Acquisition
Proposal or any request for nonpublic information in connection with any
Acquisition Proposal, or of any inquiry with respect to, or that could
reasonably be expected to lead to, any Acquisition Proposal, the material terms
and conditions of any such Acquisition Proposal or inquiry and the identity of
the person making any such Acquisition Proposal or
inquiry. The Target REIT shall not provide any information to or
participate in discussions or negotiations with the person or entity making any
Superior Proposal until one business day after the Target REIT has first
notified the Company of such Acquisition Proposal as required by the preceding
sentence. If the Company shall make a counterproposal to an
Acquisition Proposal, the Target REIT shall consider such counterproposal in
good faith and shall cause its financial and legal advisors to negotiate in good
faith on its behalf the terms of such counterproposal.
(d) On
the date hereof, the Target REIT shall, and shall cause its Representatives to,
cease immediately all discussions and negotiations regarding any proposal that
constitutes, or could reasonably be expected to lead to, an Acquisition
Proposal. The Target REIT shall use commercially reasonable efforts
to have all copies of all nonpublic information it and its Representatives have
distributed on or prior to the date of this Agreement to other potential
purchasers returned to the Target REIT as soon as possible.
(e) For
purposes of this Agreement:
“Acquisition Proposal”
means, with respect to the Target REIT, (i) any inquiry, proposal or offer for a
merger, consolidation, dissolution, sale of substantial assets, tender offer,
recapitalization, share exchange or other business combination involving the
Target REIT, (ii) any proposal for the issuance by the Target REIT of over 10%
of its equity securities or (iii) any proposal or offer to acquire in any
manner, directly or indirectly, over 10% of the equity securities or
consolidated total assets of the Target REIT, in each case other than the Merger
contemplated by this Agreement.
-17-
“Superior Proposal”
means, with respect to the Target REIT, any unsolicited, bona fide written
proposal made by a third party to acquire substantially all of the equity
securities or assets of the Target REIT, pursuant to a tender or exchange offer,
a merger, a consolidation or a sale of its assets, (i) on terms which the Target
REIT Board of Directors determines in its good faith judgment to be more
favorable from a financial point of view to the stockholders of the Target REIT
than the transactions contemplated by this Agreement (after taking into account
the written opinion with respect thereto of a nationally recognized independent
financial advisor), taking into account all the terms and conditions of such
proposal and this Agreement (including any proposal by either the Company or the
Target REIT to amend the terms of this Agreement) and (ii) that in the good
faith judgment of the Target REIT Board of Directors is reasonably capable of
being completed on the terms proposed, taking into account all financial,
regulatory, legal and other aspects of such proposal; provided, however, that no
Acquisition Proposal shall be deemed to be a Superior Proposal if any financing
required to consummate the Acquisition Proposal is not committed.
5.6 Dividends. From
and after the date of this Agreement, the Target REIT shall not declare or make
any dividend or distribution to its stockholders without the prior written
consent of the Company; provided, however, that the written consent of the
Company shall not be required for the declaration and payment by the Target REIT
of a quarterly dividend (in an amount not to exceed $969.48
per share of Target Stock) in the second quarter of 2008 in respect of the first
quarter of 2008. The foregoing restriction shall not apply, however,
to the extent a distribution by the Target REIT is necessary for the Target REIT
to maintain its REIT status. The Company shall assume the obligation
to pay any dividend declared by the Target REIT in accordance with this
Section 5.6, but not paid by a Target REIT prior to the Effective
Date.
5.7 Indemnification.
(a) The
Company shall not, for a period of six years after the Closing, take any action
to alter or impair any exculpatory or indemnification provisions now existing in
the Certificate of Incorporation or bylaws of the Target REIT for the benefit of
any individual who served as a director or officer of the Target REIT at any
time prior to the Closing (the “Indemnified
Executives”), except for any changes which may be required to conform
with changes in applicable law and any changes which do not affect the
application of such provisions to acts or omissions of such individuals prior to
the Closing. Notwithstanding the foregoing, the Target REIT
acknowledges and agrees that the certificate of incorporation of the Target REIT
will be amended and restated immediately following the Effective Time as
provided in Section 2.2(c) hereof.
(b) Notwithstanding
anything in this Agreement to the contrary, and without limiting any other
provisions of this Section 5.7, as of the Effective Time, the Surviving
Corporation shall comply with the obligations of the Target REIT under Article
EIGHTH of the Target REIT’s Certificate of Incorporation with respect to any
action, suit, proceeding or investigation arising out of or relating to any
actions, transactions or facts occurring prior to the Effective Time, whether
asserted or claimed prior to, at or after the Effective Time.
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(c) For
a period of six years after the Closing, the Company shall maintain in effect a
directors’ and officers’ liability insurance policy covering the Indemnified
Executives who are currently covered by the Company’s directors’ and officers’
liability insurance policy, including without limitation the directors of the
Target REIT, with coverage in amount and scope at least as favorable to such
persons as the Company’s existing coverage and with coverage and scope covering
such Indemnified Executives’ service for the Target REIT.
(d) From
and after the Closing, the Company agrees that it will, and will cause the
Surviving Corporation to, indemnify and hold harmless each Indemnified Executive
against any costs or expenses (including attorneys’ fees), judgments, fines,
losses, claims, damages, liabilities or amounts paid in settlement incurred in
connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, arising out of or pertaining
to matters existing or occurring at or prior to the Effective Time, whether
asserted or claimed prior to, at or after the Effective Time, to the fullest
extent provided for the Company’s officers in the Company’s articles of
incorporation as in effect on the date hereof (in the case of the Company) and
as provided for the Surviving Corporation’s officers in the Surviving
Corporation’s certificate of incorporation (and the Company and the Surviving
Corporation shall also advance expenses as incurred to the fullest extent
permitted thereunder, provided the Indemnified Executive to whom expenses
are advanced provides an undertaking to repay such advances if it is ultimately
determined that such Indemnified Executive is not entitled to
indemnification).
(e) The
Indemnified Executives are third party beneficiaries with respect to the
provisions of this Section 5.7. The provisions of this Section 5.7
are intended to be in addition to the rights otherwise available to the officers
and directors of the Target REIT by law, charter, statute, by-law or
agreement.
5.8 Public
Filing. Promptly, and in any event within two (2) business
days following the date of this Agreement, the Company shall (i) file with the
Securities and Exchange Commission on Form 8-K a complete and unredacted copy of
this Agreement (not including the Target REIT Disclosure Schedule) and (ii)
issue a press release in accordance with its customary practice providing notice
of such Form 8-K filing. In the event of any amendment to this
Agreement, the Company shall promptly, and in any event within two (2) business
days following the date thereof, file with the Securities and Exchange
Commission on Form 8-K or 8-K/A a complete and unredacted copy of such
amendment.
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ARTICLE
6
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CONDITIONS
TO EACH PARTY’S OBLIGATIONS TO EFFECT THE
MERGER.
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The
respective obligations of the parties hereto to consummate the Merger pursuant
to the terms of this Agreement are subject to satisfaction of the following
conditions precedent on or prior to the Closing Date. In the event that one or
more of these conditions are not satisfied on or prior to the Closing Date, the
party or parties whose obligations hereunder are subject to the satisfaction of
such condition or conditions may either elect to terminate this Agreement or
waive the satisfaction of such condition. The conditions
are:
-19-
(a) this
Agreement and the Merger shall have been approved by (i) the holders of a
majority of the shares of Target Stock and (ii) a majority of the shares of
Target Stock and Target REIT Common Stock, voting together as a
class;
(b) all
necessary consents, waivers, approvals, authorizations or orders required to be
obtained and the making of all filings required to be made by any of the parties
for the authorization, execution and delivery of this Agreement and the
consummation of the transactions contemplated thereby shall have been obtained
or made, as the case may be, on or prior to (and remaining in effect at) the
Closing Date;
(c) the
Company and the Target REIT shall have received, on or prior to the Closing
Date, an opinion from Xxxxxx Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP to the effect
that the Merger will not constitute a “prohibited transaction” within the
meaning of Section 857(b)(6)(B)(iii) of the Code (it being agreed that if Xxxxxx
Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP does not render such opinion, this condition
shall nonetheless be satisfied if another nationally recognized law firm renders
such opinion, and that the Company and the Target REIT shall use their
respective reasonable best efforts to obtain the opinion required by this
subsection). The Company and the Target REIT agree to provide
customary representations to Xxxxxx Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP (or such
other law firm) in connection with the issuance of such opinion;
(d) the
President or the Chief Operating Officer of the Target REIT shall have delivered
to the Company a certificate on behalf of the Target REIT, dated as of the
Closing Date, to the effect that there have been no material adverse changes in
the financial condition of the Target REIT between the date of the most recent
Target REIT Financial Statements and the Closing Date;
(e) there
shall have been no statute, rule, order or regulation enacted or issued by the
United States or any State thereof, or by a Governmental Entity, that prohibits
the consummation of the Merger; and
(f) the
representations set forth in Section 3 and Section 4 hereof are true and
complete in all material respects; provided, however, that the
party whose representation was not true and correct shall have no right to not
consummate the Closing as a result thereof.
The
conditions described in clause (b) above may be waived by either the Company or
the Target REIT, as the case may be, in whole or in part if, in the opinion of
either the Company or the Target REIT, as the case may be, such waiver does not
materially affect the terms of the transaction, which waiver shall not be
unreasonably withheld. The conditions described in clause (d) above
may be waived by the Company in its sole discretion. The conditions
described in clause (f) above may be waived, in whole or in part, by the party
to which the representation that is not true and correct is made.
-20-
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ARTICLE
7
|
TERMINATION
AND WAIVER
|
7.1 Termination. This
Agreement may be terminated, and the Merger may be abandoned, at any time before
the Closing Date, notwithstanding approval of the Merger by the Target REIT
Stockholders:
(a) by
the mutual written consent of the parties;
(b) by
the Company or the Target REIT if the Merger has not been consummated by July
31, 2008 (which date may be extended by mutual agreement of the
parties);
(c) by
the Company or the Target REIT if the Target REIT or the Company, respectively,
is in material breach of its representations, warranties, covenants or
agreements contained in this Agreement, such breach would cause any condition to
the Merger set forth in Article 6 of this Agreement not to be satisfied and such
breach is not cured within 20 days following delivery by the terminating party
to the breaching party of written notice of such breach;
(d) by
the Target REIT, in the instance where the Target REIT has received a Superior
Proposal, to the extent necessary to act in a manner consistent with the
fiduciary obligations of the Target REIT Board of Directors, as determined in
good faith by the Target REIT Board of Directors, after consultation with
outside counsel; and
(e) by
the Company if the Target REIT Board of Directors or any committee thereof takes
any of the actions set forth in Sections 5.5(b)(i), (ii) or (iii)
hereof.
If a
casualty occurs with respect to the Property, the Company has the right to
terminate the Agreement as provided in Section 8.2(b) hereof.
7.2 Effect of
Termination. In the event of termination of this Agreement as
provided in Section 7.1 hereof, this Agreement shall become void and
there shall be no liability or obligation on the part of any party hereto or its
respective affiliates, partners, directors or officers, except (i) with respect
to payment of expenses as described in Section 8.3 and (ii) to the extent that
such termination results from the willful breach of a party hereto of any of its
representations, warranties, covenants or agreements made in or pursuant to this
Agreement.
7.3 Extension;
Waiver. At any time prior to the Closing Date, the parties
hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties of the other
parties hereto contained herein or made in connection herewith, and (iii) waive
compliance with any of the agreements of the other parties hereto contained
herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party.
-21-
7.4 No Survival of
Representations and Warranties. None of the representations
and warranties contained in this Agreement shall survive the Closing
Date.
7.5 Termination
Fee. If this Agreement is terminated by the Target REIT
pursuant to Section 7.1(d) or by the Company pursuant to Section 7.1(e), the
Target REIT shall pay the Company a fee of $709,000. The Target REIT
shall pay such fee in immediately available funds within fifteen (15) days after
the date of the event giving rise to the obligation to make such
payment.
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ARTICLE
8
|
MISCELLANEOUS
|
8.1 Assignment. The
Company may not assign its rights or obligations under this Agreement without
the consent of the Target REIT. The Target REIT may not assign its
rights or obligations under this Agreement.
8.2 Risk of
Loss.
(a) Risk
of loss or damage to the assets owned by the Target REIT (the “Assets”) by
condemnation, eminent domain or similar proceedings (or deed in lieu thereof),
or by fire or any other casualty, from the date hereof through the Closing Date,
will be on the Target REIT, and thereafter will be on the Combined
Company.
(b) In
the event of loss or damage to the Assets that occurs prior to the Closing Date,
the Target REIT shall use its commercially reasonable efforts to effect a timely
cure of such loss or damage prior to the Closing Date. If the Target
REIT is unable to effect such a timely cure, the Target REIT shall so notify the
Company, and thereafter, if such loss or damage results in a Target REIT
Material Adverse Effect, the Company and the Target REIT shall use good faith
efforts to amend this Agreement to (A) reflect a decrease in the amount of
Merger Consideration to be issued with respect to the Target Stock based on such
loss or damage and (B) extend the term of this Agreement as reasonably necessary
taking into account all financial, regulatory, legal and other aspects of such
amendment to this Agreement, including, but not limited to, the need to
resolicit the stockholders of the Target REIT with respect to participation in
the Merger with the Merger Consideration adjusted to reflect such loss or damage
and consummate the Merger as soon as practicable thereafter; provided, however,
that in the event the Company and the Target REIT, after a good faith effort,
cannot agree on a decrease in the amount of Merger Consideration to be issued
with respect to the Target Stock based on such loss or damage within a
reasonable period of time following notice of such loss or damage, the Company
shall have the right to terminate this Agreement (which shall be in addition to
each party’s termination rights set forth in Section 7.1).
-22-
8.3 Fees and
Expenses. The costs associated with any independent
third-party appraisal of the fair market value of the Target REIT’s real estate
(“Appraisal”)
obtained by the Target REIT Board of Directors shall be paid by the Target
REIT. The fees and expenses of the Target REIT’s legal counsel and
accountants or other professionals retained by the Target REIT shall be paid by
the Target REIT. All other expenses related to the Merger and the
transactions contemplated hereby, including, without limitation, consulting,
legal, tax opinion, accounting, administrative expenses and any Appraisal
obtained by the Company Board of Directors, shall be paid by the
Company.
8.4 Entire Agreement;
Modifications; Amendments.
(a) This
Agreement embodies and constitutes the entire understanding between the parties
with respect to the transactions contemplated herein, and all prior or
contemporaneous agreements, understandings, representations and statements, oral
or written, are merged into this Agreement. Except as expressly
otherwise provided herein, neither this Agreement nor any provision hereof may
be waived, modified, amended, discharged or terminated except by an instrument
in writing signed by the party against which the enforcement of such waiver,
modification, amendment, discharge or termination is sought, and then only to
the extent set forth in such instrument.
(b) Subject
to applicable law, this Agreement may be amended by the Company and the Target
REIT at any time prior to the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware; provided, however, that after
approval by Target REIT Stockholders as provided in Section 6 above, without
further approval of the Target REIT Stockholders of the Target REIT, no
amendment may be made that alters or changes (i) the amount or kind of Merger
Consideration which the Target REIT Stockholders shall be entitled to receive,
(ii) the certificate of incorporation or bylaws of the Target REIT or (iii) the
terms and conditions of this Agreement, if such alteration or change would have
a material adverse effect on the Target REIT Stockholders.
8.5 Notices. All
notices, demands or other writings in this Agreement provided to be
given or made or sent, or which may be given or made or sent, by either party
hereto to the other may be given personally or may be delivered by depositing
the same in the U.S. mail, certified, return receipt requested, postage prepaid
or by delivering the same to an air courier service, postage prepaid, properly
addressed and sent to the address of such party as set forth below,
or such other address as either party may from time to time designate by written
notice to the other. Notice given by mail shall be considered effective upon the
expiration of five business days after deposit. Notice given in any
other manner shall be effective only if and when received by the
addressee.
-23-
If to the
Company:
Franklin
Street Properties Corp.
000
Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx,
Xxxxxxxxxxxxx 00000
Attention: Xxxxxx
X. Xxxxxx
President
and Chief Executive Officer
Fax: (000)
000-0000
with a
copy to:
Xxxxxx
Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP
00 Xxxxx
Xxxxxx
Xxxxxx,
Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx
X. Xxxxxx, Esq.
Fax:
(000) 000-0000
If to the
Target REIT:
x/x
Xxxxxxxx Xxxxxx Properties Corp.
000
Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx,
Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx
X. Xxxxxxxx and R. Xxxxx
XxxXxxx,
Members of the Special Committee
of the
Board of Directors
Fax: (000)
000-0000
with a
copy to:
Xxxxxx
& Xxxxx LLP
Two
Faneuil Hall Marketplace
South
Market Building, 4th
Floor
Xxxxxx,
Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx
X. Xxxxxx, Esq.
Fax:
(000) 000-0000
8.6 Interpretation. Words
of any gender used in this Agreement shall be held and construed to include any
other gender, and words of a singular number shall be held to include the plural
and vice versa, unless the context requires otherwise.
8.7 Captions. The
captions used in this Agreement are for convenience only and shall not be deemed
to construe or to limit the meaning of the language of this
Agreement.
8.8 Counterparts. This
Agreement may be executed in any number of identical counterparts. If
so executed, each of such counterparts is to be deemed an original for all
purposes, and all such counterparts shall collectively constitute one agreement,
but in making proof of this Agreement it shall not be necessary to produce or
account for more than one such counterpart.
-24-
8.9 Binding
Effect. Subject to the restrictions on assignment contained in
Section 8.1 hereof, this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, legal representatives,
successors and assigns.
8.10 Attorneys’
Fees. Should any party hereto employ an attorney or attorneys
to enforce any of the provisions hereof or to protect its interest in any manner
arising under this Agreement, or to recover damages for the breach hereof, the
nonprevailing party or parties in any action pursued in courts of competent
jurisdiction (the finality of which action is not legally contested) agrees to
pay to the prevailing party or parties all reasonable costs, damages and
expenses, including attorneys’ fees, expended or incurred in connection
therewith; provided, however, that if more
than one item is disputed and the final decision is against each party as to one
or more of the disputed items, then such costs, expenses and
attorneys’ fees shall be apportioned in accordance with the monetary values of
the items decided against each party.
8.11 No Waiver;
Severability. The failure of any party hereto to enforce at
any time any of the provisions of this Agreement shall in no way be construed to
be a waiver of any such provision, and shall in no way affect the validity of
this Agreement or any part hereof or the right of any party thereafter to
enforce each and every such provision. No waiver of any breach of
this Agreement shall be held to be a waiver of any other or subsequent
breach. If any provision of this Agreement, or the application
thereof to any person or circumstances shall, for any reason and to any extent,
be invalid or unenforceable, but the extent of the invalidity or
unenforceability does not destroy the basis of the bargain between the parties
as contained herein, the remainder of this Agreement and the application of such
provision to other persons or circumstances shall not be affected thereby but
rather shall be enforced to the greatest extent permitted by law.
8.12 Applicable
Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
[Remainder
of Page Intentionally Left Blank]
-25-
IN
WITNESS WHEREOF, this Agreement has been executed by each of the parties as of
the date first set forth above.
|
COMPANY:
FRANKLIN
STREET PROPERTIES CORP.
By:
/s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx
X. Xxxxxx
Title: President
and Chief Executive Officer
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|
|
ACQUISITION
SUBSIDIARY:
PARK
TEN PHASE II ACQUISITION CORP.
By:
/s/ Xxxxxx X. Xxxxxx
Name:
Xxxxxx X. Xxxxxx
Title:
President
|
|
|
TARGET
REIT:
FSP
PARK TEN DEVELOPMENT CORP.
By:
/s/ Xxxxxx X.
Xxxxxx
Name: Xxxxxx
X. Xxxxxx
Title: President
|
-26-
EXHIBIT
A
General
Information
|
Name and
Address
|
Property
|
|
FSP
PARK TEN DEVELOPMENT CORP.
00000
Xxxx Xxx Xxxxx
Xxxxxxx,
Xxxxx 00000
|
Office
Building in Houston, Texas
|
