Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
BETWEEN
EQUITY ONE, INC.
AND
UNITED INVESTORS REALTY TRUST
Dated as of May 31, 2001
TABLE OF CONTENTS
Page
Article 1 The Merger............................................................................................ 1
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Section 1.1 The Merger.................................................................................... 1
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Section 1.2 Consummation of the Merger.................................................................... 2
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Section 1.3 Effects of the Merger......................................................................... 2
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Section 1.4 Charter and Bylaws............................................................................ 2
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Section 1.5 Directors and Officers........................................................................ 2
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Article 2 Effects of the Merger................................................................................. 2
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Section 2.1 Conversion of Shares.......................................................................... 2
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Section 2.2 Elections..................................................................................... 3
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Section 2.3 Proration..................................................................................... 4
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Section 2.4 Special Meetings.............................................................................. 5
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Section 2.5 Exchange of Certificates...................................................................... 6
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Section 2.6 Rights Under Share Plans...................................................................... 8
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Article 3 Representations and Warranties of the Company......................................................... 8
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Section 3.1 Organization, Standing and Power of the Company............................................... 8
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Section 3.2 Company Subsidiaries.......................................................................... 9
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Section 3.3 Capital Structure............................................................................. 9
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Section 3.4 Authority for this Agreement.................................................................. 10
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Section 3.5 Absence of Certain Changes.................................................................... 11
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Section 3.6 Reports....................................................................................... 11
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Section 3.7 Information Supplied.......................................................................... 12
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Section 3.8 Consents and Approvals; No Violation.......................................................... 12
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Section 3.9 Brokers....................................................................................... 13
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Section 3.10 Properties.................................................................................... 13
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Section 3.11 Litigation, Etc............................................................................... 14
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Section 3.12 Tax Matters................................................................................... 15
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Section 3.13 Compliance with Law........................................................................... 16
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Section 3.14 Environmental Compliance...................................................................... 17
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Section 3.15 Insurance..................................................................................... 17
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Section 3.16 Opinion of Financial Advisor.................................................................. 17
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Section 3.17 Contracts..................................................................................... 18
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Section 3.18 Intangible Property........................................................................... 18
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Section 3.19 Employment Matters; ERISA..................................................................... 19
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Section 3.20 Amendment to Rights Agreement; State Takeover Laws............................................ 20
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Section 3.21 Termination of Share Plans.................................................................... 20
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Section 3.22 Investment Company Act of 1940................................................................ 20
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Section 3.23 Affiliate Transactions........................................................................ 20
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Article 4 Representations and Warranties of Equity One.......................................................... 20
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Section 4.1 Organization and Qualification................................................................ 21
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Section 4.2 Capital Structure............................................................................. 21
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Section 4.3 Authority Relative to this Agreement........................................................ 21
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Section 4.4 Absence of Certain Changes.................................................................. 22
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Section 4.5 Reports..................................................................................... 22
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Section 4.6 Consents and Approvals; No Violation........................................................ 22
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Section 4.7 Financing................................................................................... 24
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Section 4.8 Brokers..................................................................................... 24
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Section 4.9 Litigation, etc............................................................................. 24
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Section 4.10 Information Supplied........................................................................ 24
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Section 4.11 Stockholder Approval........................................................................ 24
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Section 4.12 Opinion of Financial Advisor................................................................ 25
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Article 5 Covenants.......................................................................................... 25
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Section 5.1 Conduct of Business of the Company.......................................................... 25
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Section 5.2 No Solicitation............................................................................. 26
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Section 5.3 Access to Information....................................................................... 27
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Section 5.4 Reasonable Efforts; Filings................................................................. 27
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Section 5.5 Indemnification and Insurance............................................................... 28
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Section 5.6 Joint Proxy Statement and Registration Statement............................................ 29
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Section 5.7 Notification of Certain Matters............................................................. 29
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Section 5.8 Rights Agreement Amendment.................................................................. 29
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Section 5.9 Settlement of Shareholder Litigation........................................................ 30
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Section 5.10 Termination of Advisory Agreement........................................................... 30
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Section 5.11 Stock Exchange Listing...................................................................... 30
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Section 5.12 Consent of Centrefund....................................................................... 30
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Section 5.13 Contribution of Properties to Subsidiary.................................................... 30
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Article 6 Conditions to Consummation of the Merger........................................................... 30
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Section 6.1 Conditions to Each Party's Obligation to Effect the Merger.................................. 31
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Section 6.2 Additional Condition to the Company's Obligation to Effect the Merger....................... 31
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Section 6.3 Additional Conditions to Equity One's Obligations to Effect the Merger...................... 32
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Article 7 Termination; Amendment; Waiver..................................................................... 33
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Section 7.1 Termination; Amendment; Waiver.............................................................. 33
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Section 7.2 Effect of Termination....................................................................... 35
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Section 7.3 Termination Fee............................................................................. 35
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Section 7.4 Amendment................................................................................... 36
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Section 7.5 Extension; Waiver........................................................................... 36
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Article 8 Miscellaneous...................................................................................... 36
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Section 8.1 Survival of Representations and Warranties.................................................. 36
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Section 8.2 Entire Agreement; Assignment................................................................ 36
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Section 8.3 Enforcement of the Agreement; Jurisdiction.................................................. 37
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Section 8.4 Validity.................................................................................... 37
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Section 8.5 Notices..................................................................................... 37
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Section 8.6 Governing Law............................................................................... 38
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Section 8.7 Descriptive Headings........................................................................ 38
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Section 8.8 Parties in Interest......................................................................... 38
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Section 8.9 Counterparts................................................................................ 38
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Section 8.10 Fees and Expenses.......................................................................... 38
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Section 8.11 Certain Definitions........................................................................ 38
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Section 8.12 Disclosure Letter.......................................................................... 40
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Section 8.13 Press Releases............................................................................. 40
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Sections to Disclosure Letter
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Company Subsidiaries - Section 3.2
Capital Structure (Company) - Section 3.3
Absence of Certain Changes (Company) - Section 3.5
Consents and Approvals (Company) - Section 3.8
Company Properties - Section 3.10
Litigation (Company) - Section 3.11
Tax Matters (Company) - Section 3.12
Compliance With Law - Section 3.13
Environmental Compliance - Section 3.14
Insurance - Section 3.15
Material Contracts - Section 3.17
Employment Matters; ERISA - Section 3.19
Affiliate Transactions - Section 3.23
Conduct of Business of the Company - Section 5.1
Properties to be Contributed - Section 5.13
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Agreement and Plan of Merger
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of May 31, 2001,
between Equity One, Inc., a Maryland corporation ("Equity One"), and United
Investors Realty Trust, a Texas real estate investment trust (the "Company").
RECITALS
WHEREAS, the Board of Directors of Equity One and the Board of Trust
Managers of the Company have determined that it is in the best interests of
their respective stockholders or shareholders for Equity One to acquire the
Company upon the terms and subject to the conditions set forth herein;
WHEREAS, the Board of Trust Managers of the Company has adopted resolutions
approving the acquisition of the Company by Equity One, this Agreement and the
transactions contemplated hereby, and has agreed to recommend that the Company's
shareholders approve this Agreement and the transactions contemplated hereby;
WHEREAS, the Board of Directors of Equity One has adopted resolutions
approving the acquisition of the Company by Equity One, this Agreement and the
transactions contemplated hereby, and has agreed to recommend that Equity One's
shareholders approve this Agreement and the transactions contemplated hereby;
WHEREAS, Equity One and the Company have agreed (subject to the terms and
conditions of this Agreement) as soon as practicable to effect the Merger of the
Company with and into Equity One pursuant to Sections 23.10, 23.30, 23.40 and
23.50 of the Texas Real Estate Investment Trust Act (the "REIT Act") and Section
3-114 of the Maryland General Corporation Law (the "MGCL"), as more fully
described herein; and
WHEREAS, Equity One and the Company desire to make certain representations,
warranties, covenants and agreements in connection with this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, the parties hereto agree as follows:
Article 1
The Merger
Section 1.1 The Merger. Upon the terms and subject to the conditions
hereof, and in accordance with the relevant provisions of the REIT Act and the
MGCL, the Company shall be merged with and into Equity One (the "Merger") as
soon as practicable following the satisfaction or waiver, if permissible, of the
conditions set forth in Article 6 hereof. Equity One shall be the surviving
entity in the Merger (the "Surviving Entity") under the name Equity One, Inc.
and shall continue its existence under the laws of Maryland. The separate legal
existence of the Company shall cease. The parties hereto may by mutual agreement
at any time change the method of effecting the combination between Equity One
and the Company (including the provisions of this Article 1) if and to the
extent the parties deem such change to be desirable; provided, however, that no
such change shall (A) alter or change the amount or kind of Merger
Consideration (as defined in Section 2.1(a)) as provided for in this Agreement
or (B) materially impede or delay consummation of the transactions contemplated
by this Agreement.
Section 1.2 Consummation of the Merger. Subject to the provisions of this
Agreement, the parties hereto shall cause the Merger to be consummated by filing
with the County Clerk's Office in Xxxxxx County, Texas duly executed Articles of
Merger as required by the REIT Act and by filing Articles of Merger with State
Department of Assessments and Taxation of Maryland as required by the MGCL, and
shall take all such other and further actions as may be required by law to make
the Merger effective as promptly as practicable. Prior to the filing referred to
in this Section, a closing (the "Closing") for the purpose of confirming all the
foregoing will be held at the offices of Xxxxxxxxx Traurig, P.A., 0000 Xxxxxxxx
Xxxxxx, Xxxxx, Xxxxxxx 00000 (or such other place as the parties may agree) on a
date (the "Closing Date") as soon as practicable, but in no event more than
three (3) business days, after the last of the conditions set forth in Article 6
shall have been satisfied or waived in accordance with the terms of this
Agreement (provided, however, the Closing Date shall not occur prior to
September 16, 2001 without the consent of Equity One). The time the Merger
becomes effective in accordance with applicable law is referred to as the
"Effective Time."
Section 1.3 Effects of the Merger. The Merger shall have the effects set
forth in the applicable provisions of the REIT Act and the MGCL and set forth
herein.
Section 1.4 Charter and Bylaws. The charter and the bylaws of Equity One
immediately prior to the Effective Time shall be the charter and bylaws of the
Surviving Entity.
Section 1.5 Directors and Officers. The directors and officers of Equity
One immediately prior to the Effective Time shall be the directors and officers,
respectively, of the Surviving Entity until their respective successors are duly
elected and qualified.
Article 2
Effects of the Merger
Section 2.1 Conversion of Shares.
(a) Each common share of beneficial interest in the Company, no
par value (the "Shares"), issued and outstanding immediately prior to the
Effective Time (other than Shares owned by Equity One or any subsidiary of
Equity One or held in the treasury of the Company, all of which shall be
canceled and cease to exist, without consideration being payable therefor)
shall, by virtue of the Merger, be converted at the Effective Time into the
following (the "Merger Consideration"), upon the surrender of the certificate
representing such Shares as provided in Section 2.6 and in each case subject to
Section 2.3 hereof:
(i) for each Share with respect to which an election to receive
shares of common stock in Equity One, par value $0.01 per share ("Equity
One Shares"), has been effectively made and not revoked pursuant to
Sections 2.2(c), (d) and (e) ("Electing Shares"), the right to receive a
number of fully paid and nonassessable Equity One Shares equal to the
quotient of $7.30 divided by the Reference Price (the "Price Ratio"); for
the purposes hereof, the "Reference Price" shall mean the weighted average
trading
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price per share of Equity One Shares as quoted on the New York Stock
Exchange for all transactions during the 20 trading days ending on (and
inclusive of) the business day immediately prior to the Closing; provided,
however, that the Reference Price shall not be less than $11.30 per share,
subject to Section 2.1(a)(ii), or greater than $12.50 per share; and
(ii) if, in accordance with the terms of Section 7.1(i), the
Company has elected to terminate this Agreement and Equity One has made a
timely election to proceed to Closing, then each holder of an Electing
Share will have the right to receive the number of Equity One Shares
determined in accordance with Section 2.1(a)(i), plus an additional amount
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(the "Make Whole Amount") equal to (A) $7.30 minus (B) the product of (1)
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the Reference Price, multiplied by (2) the Price Ratio calculated by using
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a Reference Price equal to $11.30; provided, however, that Equity One may
elect, in its sole discretion, to pay the Make Whole Amount in cash or
additional Equity One Shares, or a combination thereof, as follows: (x) an
amount of cash per Share, if any, determined by Equity One, and (y) a
number of Equity One Shares equal to the quotient of (1) the Make Whole
Amount less the amount of cash, if any, paid pursuant to the preceding
clause (x), divided by (2) the Reference Price; provided, further, that
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Equity One may not elect to pay an amount of cash pursuant to this Section
2(a)(ii) that would otherwise cause Equity One Shares issued as merger
consideration to become taxable to the recipient thereof; and
(iii) for each such Share (other than an Electing Share), the right
to receive in cash from the Surviving Entity following the Merger an amount
equal to $7.30 (the "Cash Election Price").
(b) As of the Effective Time, all Shares issued and outstanding
immediately prior to the Effective Time, shall no longer be outstanding and
shall automatically be canceled and retired and shall cease to exist and each
holder of a certificate representing any such Shares shall, to the extent such
certificate represents such Shares, cease to have any rights with respect
thereto, except the right to receive Merger Consideration, including any cash in
lieu of fractional Equity One Shares to be issued in consideration therefor upon
surrender of such certificate in accordance with Section 2.6.
Section 2.2 Elections.
(a) Each person who, on or prior to the Election Date referred to
in paragraph (c) below, is a record holder of Shares will be entitled, with
respect to all or any portion of his Shares, to make an unconditional election
(an "Equity One Share Election") on or prior to such Election Date to receive
Equity One Shares (subject to Section 2.3) on the basis set forth herein.
(b) Prior to the mailing of the Proxy Statement referenced in
Section 5.6 hereof, Equity One shall appoint a bank or trust company acceptable
to the Company to act as paying agent (the "Paying Agent") for the payment of
the Merger Consideration.
(c) The Company shall prepare and mail a form of election, which
form shall be subject to the reasonable approval of Equity One (the "Form of
Election"), with the Proxy Statement to the record holders of Shares as of the
record date for the Special Meeting of the
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Company's shareholders (as defined below), which Form of Election shall be used
by each record holder of Shares who wishes to make an Equity One Share Election
for any or all Shares held, subject to the provisions of Section 2.3 hereof, by
such holder. The Company will use commercially reasonable efforts to make the
Form of Election and the Proxy Statement available to all persons who become
holders of Shares during the period between such record date and the Election
Date referred to below. Any such holder's Equity One Share Election shall have
been properly made only if the Paying Agent shall have received at its
designated office, by 5:00 p.m., New York City time on the business day (the
"Election Date") next preceding the day on which the vote on the Shareholder
Approval is taken at the Special Meeting of the Company's shareholders a Form of
Election properly completed and signed and accompanied by certificates for the
Shares to which such Form of Election relates (or by an appropriate guarantee of
delivery of such certificates as set forth in such Form of Election from a firm
which is a member of a registered national securities exchange or of the
National Association of Securities Dealers, Inc. or a commercial bank or trust
company having an office or correspondent in the United States, provided such
certificates are in fact delivered to the Paying Agent within three New York
Stock Exchange trading days after the date of execution of such guarantee of
delivery).
(d) Any Form of Election may be revoked by the shareholder
submitting it to the Paying Agent only by written notice received by the Paying
Agent (i) prior to 5:00 p.m. New York City time on the Election Date or (ii)
after the date of the Special Meeting of the Company's shareholders, if (and to
the extent that) the Paying Agent is legally required to permit revocations and
the Effective Time shall not have occurred prior to such date. In addition, all
Forms of Election shall automatically be revoked if the Paying Agent is notified
in writing by Equity One and the Company that the Merger has been abandoned. If
a Form of Election is revoked, the certificate or certificates (or guarantees of
delivery, as appropriate) for the Shares to which such Form of Election relates
shall be promptly returned to the shareholder submitting the same to the Paying
Agent.
(e) The determination of the Paying Agent shall be binding whether
or not Equity One Share Elections have been properly made or revoked pursuant to
this Section 2.2 with respect to Shares and when elections and revocations were
received by it. If the Paying Agent determines that any Equity One Share
Election was not properly made with respect to Shares, such Shares shall be
treated by the Paying Agent as Shares which were not Electing Shares at the
Effective Time, and such Shares shall be exchanged in the Merger for cash
pursuant to Section 2.1(a)(iii). The Paying Agent shall also make all
computations as to the allocation and the proration contemplated by Section 2.3,
and any such computation shall be conclusive and binding on the holders of
Shares. The Paying Agent may, with the mutual agreement of Equity One and the
Company, make such rules as are consistent with this Section 2.2 for the
implementation of the elections provided for herein as shall be necessary or
desirable fully to effect such elections.
Section 2.3 Proration.
(a) Notwithstanding anything in this Agreement to the contrary,
the aggregate number of Shares to be converted into the right to receive Equity
One Shares as a result of the Merger shall be equal to 50% of the Shares
outstanding immediately prior to the Effective Time (the "Non-Cash Share
Number").
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(b) If the number of Electing Shares exceeds the Non-Cash Share
Number, then each Electing Share shall be converted into the right to receive
Equity One Shares or receive cash in accordance with the terms of Section 2.1(a)
in the following manner:
(i) A proration factor (the "Non-Cash Proration Factor") shall be
determined by dividing the Non-Cash Share Number by the total number of
Electing Shares.
(ii) Subject to Section 2.5(e), the number of Electing Shares
covered by each Equity One Share Election to be entitled to receive Equity
One Shares as a result of the Merger (on a consistent basis among
shareholders who made the election referred to in Section 2.1(a)(i) pro
rata to the number of Shares as to which they made such elections) shall be
equal to the product of the Non-Cash Proration Factor multiplied by the
total number of Electing Shares covered by such Equity One Share Election.
(iii) Subject to Section 2.5(e), each Electing Share other than
those shares to be entitled to receive Equity One Shares as a result of the
Merger in accordance with Section 2.3(b)(ii) shall be converted into the
right to receive the Cash Election Price (on a consistent basis among
shareholders who made the election referred to in Section 2.1(a)(i), pro
rata to the number of shares as to which they made such election) as if
such shares were not Electing Shares in accordance with the terms of
Section 2.1(a)(iii).
(iv) Notwithstanding anything herein to the contrary, if the number
of Electing Shares exceeds the Non-Cash Share Number, then Equity One
reserves the right, in its sole discretion, to increase the Non-Cash Share
Number.
(c) If the number of Electing Shares is less than the Non-Cash
Share Number, then:
(i) All Electing Shares shall be entitled to receive Equity One
Shares as a result of the Merger in accordance with the terms of Section
2.1(a)(i) and 2.1(a)(ii).
(ii) Subject to Section 2.5(e), additional Shares other than
Electing Shares shall be converted into a right to receive Equity One
Shares as a result of the Merger (on a consistent basis among shareholders
who held Shares as to which they did not make the election referred to in
Section 2.1(a)(i) pro rata to the number of such Shares as to which no such
election had been made) in accordance with the terms of Section 2.1(a) in
the following manner: the number of Shares in addition to Electing Shares
to be converted into a right to receive Equity One Shares (the "Non-
Electing Shares") (on a basis consistent among shareholders who held Shares
as to which they did not make the election referred to in Section 2.1(a)(i)
pro rata to the number of such Shares as to which no such election had been
made) shall be equal to the excess of the Non-Cash Share Number over the
number of Electing Shares.
(iii) Each other Share shall be converted into the right to receive
the Cash Election Price.
Section 2.4 Special Meetings. The Company, acting through its Board of
Trust Managers, and Equity One, acting through its Board of Directors, shall, to
the extent required by
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applicable law to approve the Merger, duly call, give notice of, convene and
hold a special meeting (the "Special Meetings") of its shareholders or
stockholders, as applicable, as soon as practicable for the purpose of approving
and adopting this Agreement and the plan of merger (within the meaning of the
REIT Act) set forth in this Agreement and approving the Merger ("Shareholder
Approval"), and, subject to the fiduciary duties of the Company's Board of Trust
Managers and Equity One's Board of Directors under applicable law as advised by
legal counsel, include in the Proxy Statement the recommendation of such boards
that the shareholders of the Company and the stockholders of Equity One, as the
case may be, vote in favor of the adoption of this Agreement and the plan of
merger set forth in this Agreement and approval of the Merger. Equity One and
the Company agree to use their reasonable efforts to cause the Special Meetings
to occur within forty-five (45) days after the Company and Equity One have
responded to all comments from the Securities and Exchange Commission ("SEC")
with respect to the Proxy Statement. Equity One agrees that, at the Special
Meeting of the Company's shareholders, all of the Shares now owned or hereafter
acquired by Equity One or any of its affiliates will be voted in favor of
Shareholder Approval.
Section 2.5 Exchange of Certificates.
(a) Immediately prior to the Effective Time, Equity One shall
deposit funds in trust with the Paying Agent in an aggregate amount equal to the
cash portion of the Merger Consideration (such amount being hereinafter referred
to as the "Payment Fund"). The Paying Agent shall, pursuant to irrevocable
instructions, make the payments of the cash portion of the Merger Consideration
provided for in this Agreement pursuant to the Merger out of the Payment Fund.
The Payment Fund shall not be used for any other purpose, except as provided in
this Agreement.
(b) As of or promptly after the Effective Time, each holder of an
outstanding certificate or certificates which prior thereto represented Shares
shall, upon surrender to the Paying Agent of such certificate or certificates
and acceptance thereof by the Paying Agent, be entitled to a certificate or
certificates representing the number of full Equity One Shares, if any, that
such holder is entitled to receive pursuant to this Agreement and the amount of
cash, if any, into which the number of Shares previously represented by such
certificate or certificates surrendered shall have been converted pursuant to
this Agreement. The Paying Agent shall accept such certificates upon compliance
with such reasonable terms and conditions as the Paying Agent may impose to
effect an orderly exchange thereof in accordance with normal exchange practices.
After the Effective Time, there shall be no further transfer on the records of
the Company or its transfer agent of certificates representing Shares, and if
such certificates are presented to the Surviving Entity for transfer, they shall
be canceled against delivery of cash and, if appropriate, certificates for
Equity One Shares. If any certificate for Equity One Shares is to be issued in,
or if cash is to be remitted to, a name other than that in which the certificate
for Shares surrendered for exchange is registered, it shall be a condition of
such exchange that the certificate so surrendered shall be properly endorsed,
with signature guaranteed or otherwise in proper form for transfer and that the
person requesting such exchange shall pay to the Surviving Entity or its
transfer agent any transfer or other taxes required by reason of the issuance of
certificates for such Equity One Shares in a name other than that of the
registered holder of the certificate surrendered, or establish to the
satisfaction of the Surviving Entity or its transfer agent that such tax has
been paid or is not applicable. Until surrendered as contemplated by this
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Section 2.5(b), each certificate for Shares shall be deemed at any time after
the Effective Time to represent only the right to receive upon such surrender
the Merger Consideration as contemplated by Section 2.1.
(c) No dividends or other distributions with respect to Equity One
Shares with a record date after the Effective Time shall be paid to the holder
of any unsurrendered certificate for Shares with respect to Equity One Shares
that the holder thereof is entitled to receive and no cash payment in lieu of
fractional Equity One Shares shall be paid to any such holder pursuant to
Section 2.5(e) until the surrender of such certificate in accordance with this
Article 2. Subject to the effect of applicable laws, following surrender of any
such certificate, there shall be paid to the holder of the certificate
representing whole Equity One Shares issued in connection therewith, without
interest (i) at the time of such surrender, the amount of any cash payable in
lieu of a fraction of an Equity One Share to which such holder is entitled
pursuant to Section 2.5(e) and the proportionate amount of dividends or other
distributions with a record date after the Effective Time previously paid with
respect to such Equity One Shares, and (ii) at the appropriate payment date, the
proportionate amount of dividends or other distributions with a record date
after the Effective Time but prior to such surrender and a payment date
subsequent to such surrender payable with respect to such whole Equity One
Shares.
(d) All cash paid and Equity One Shares issued upon the surrender for
exchange of certificates representing Shares in accordance with the terms of
this Article 2 (including any cash paid pursuant to Section 2.5(e)) shall be
deemed to have been issued and paid in full satisfaction of all rights
pertaining to the Shares theretofore represented by such certificates.
(e) Notwithstanding any other provision of this Agreement, each
holder of Shares who would otherwise have been entitled to receive a fraction of
an Equity One Share in exchange for Shares in the Merger (after taking into
account all Shares delivered by such holder) shall receive, in lieu thereof, a
cash payment (without interest) equal to such fraction multiplied by the
Reference Price.
(f) Any portion of the Payment Fund which remains undistributed to
the holders of the certificates representing Shares for one year after the
Effective Time shall be delivered to the Surviving Entity and any holders of
Shares prior to the Merger who have not theretofore complied with this Article 2
shall thereafter look to the Surviving Entity (subject to the abandoned
property, escheat or other similar laws) for payment of their claim for the
Merger Consideration per Share, without any interest thereon.
(g) Equity One may cause the Paying Agent to invest the cash included
in the Payment Fund in short-term obligations of, or fully guaranteed by, the
United States of America, investment grade commercial paper or other similar
investments, but in any event Equity One shall ensure that the terms and
conditions of any such investment shall be such as to permit the Paying Agent to
make prompt payments of the Merger Consideration as contemplated by this
Agreement. To the extent that there are losses with respect to such investments,
or the Payment Fund diminishes for other reasons below the level required to
make prompt payments of the Merger Consideration as contemplated hereby, Equity
One shall promptly replace or restore the
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portion of the Payment Fund lost through investments or other events, so as to
ensure that the Payment Fund is, at all times, maintained at a level sufficient
to make such payments.
(h) The Surviving Entity shall pay all charges and expenses of the
Paying Agent.
Section 2.6 Rights Under Share Plans. At the Effective Time, each holder
of a then outstanding option (including share purchase rights and options
granted to trust managers) to purchase Shares, including under any employee
benefit plan or share plan (the "Share Plans"), each holder of any other right
to receive Shares subject to vesting, settlement or other conditions (whether or
not conditioned upon the payment of consideration by such holder), and each
holder of any securities convertible into or exercisable for Shares, whether or
not such options, rights or securities are then vested or exercisable, or such
elections have been fulfilled or honored or such restrictions have lapsed or
terminated (the "Rights"), shall, in settlement thereof, receive for each Share
subject to any such Right an amount in cash equal to the excess of the Merger
Consideration over the per Share exercise or purchase price of such Right, if
any, to the extent such difference is a positive number (such amount being
hereinafter referred to as the "Right Consideration"); provided, however, that
with respect to any person subject to Section 16 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), to the extent that the payment or the
right to receive payment with respect to the Rights (or the Shares relating
thereto) would cause such person to have any liability under Section 16 of the
Exchange Act, the Board of Trust Managers shall take such actions as may be
necessary to exempt such transactions from Section 16(b) pursuant to Rule 16b-3
under the Exchange Act. The Surviving Entity shall cause the Right Consideration
to be paid within 5 business days after the Effective Time. Upon receipt of the
Right Consideration, the Right shall be canceled. The surrender of a Right to
the Company in exchange for the Right Consideration shall be deemed a release of
any and all rights the holder had or may have had in respect of such Right.
Prior to the Effective Time, the Company shall use all reasonable efforts to
obtain all necessary consents or releases from holders of Rights under the Share
Plans or otherwise and take all such other action requested by Equity One,
consistent with applicable law and the terms of the Share Plans and the Rights
as may be necessary to give effect to the transactions contemplated by this
Section 2.6. The foregoing shall not limit or affect any provision of a Share
Plan that would accelerate the vesting of any Right or prevent the acceleration,
settlement, or exercise of any Right that would otherwise be required or
permitted pursuant to the terms of a Share Plan (whether by reason of the
consummation of the Merger or otherwise). Prior to the Effective Time, the
Company shall take all action necessary to terminate the Share Plans, which
termination shall be effective prior to or at the Effective Time.
Article 3
Representations and Warranties
of the Company
The Company represents and warrants to Equity One as follows:
Section 3.1 Organization, Standing and Power of the Company. The Company
is a real estate investment trust duly organized and validly existing under the
laws of Texas and has the requisite power and authority to carry on its business
as now being conducted.
8
The Company 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 Material Adverse Effect (as
defined in Section 8.11). The Company has previously delivered to Equity One
complete and correct copies of its First Amended and Restated Declaration of
Trust (the "Declaration") and Bylaws.
Section 3.2 Company Subsidiaries. Section 3.2 of the disclosure
letter, dated the date hereof, delivered by the Company to Equity One prior to
the execution of this Agreement setting forth certain matters referred to in
this Agreement (the "Disclosure Letter"), sets forth each subsidiary of the
Company and the ownership interest therein of the Company. Except as set forth
in Section 3.2 of the Disclosure Letter, (A) all the outstanding shares of
capital stock of each subsidiary of the Company that is a corporation have been
validly issued and are fully paid and nonassessable, are owned by the Company or
by another subsidiary of the Company free and clear of all liens, claims,
encumbrances and limitations on voting rights and (B) all equity interests in
each subsidiary of the Company that is a partnership, joint venture, limited
liability company or trust are owned by the Company, by another subsidiary of
the Company, or by the Company and another subsidiary of the Company, or by two
or more subsidiaries of the Company free and clear of all liens, claims,
encumbrances and limitations on voting rights. Except for the capital stock of
or other equity or ownership interests in the subsidiaries of the Company (the
"Subsidiary Securities"), and except as set forth in Section 3.2 of the
Disclosure Letter, the Company does not own, directly or indirectly, any capital
stock or other equity or ownership interest in any other entity. Each subsidiary
of the Company 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 subsidiary of the Company that is a partnership, joint venture, 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 subsidiary of the Company 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 Material Adverse Effect.
Copies of the Articles of Incorporation, Bylaws, organization documents and
partnership and joint venture agreements of each subsidiary of the Company have
been previously delivered to Equity One.
Section 3.3 Capital Structure. The authorized share capital of the Company
consists of 500,000,000 Shares and 50,000,000 preferred shares of which 20,000
have par value of $100.00 per share and 49,980,000 have no par value (the
"Preferred Shares"), of which 5,000,000 shares of Preferred Stock having no par
value have been designated as Class A Participating Preferred Shares (the
"Junior Preferred Shares"). As of the close of business on April 30, 2001 (the
"Capitalization Date"): 8,650,602 Shares were issued and outstanding; no shares
of Preferred Stock were issued and outstanding; 874,687 Shares were held in the
Company's treasury; and there were outstanding Rights with respect to 492,375
Shares as set forth in Section 3.3 of the Disclosure Letter; and there were
outstanding rights (the "Rights Agreement Rights") under the Rights Agreement
dated January 25, 2001 between the Company
9
and Fleet National Bank, as rights agent (the "Rights Agreement"). Since the
Capitalization Date, except as set forth in Section 3.3 of the Disclosure Letter
or in the SEC Reports (as defined in Section 3.6), the Company (i) has not
issued any Shares other than upon the exercise or vesting of Rights outstanding
on such date, (ii) has not granted any options or rights to purchase or acquire
Shares (under the Company's Share Plans or otherwise) and (iii) has not split,
combined or reclassified any of its shares of beneficial interest. All of the
outstanding Shares have been, and all Shares that may be issued pursuant to
Rights will be, when issued in accordance with the respective terms thereof,
duly authorized and validly issued and are fully paid and nonassessable and are
free of preemptive rights. Except as set forth in this Section 3.3 or in Section
3.3 of the Disclosure Letter or in the SEC Reports, there are outstanding (i) no
shares of beneficial interest or other voting securities of the Company, (ii) no
securities of the Company convertible into or exchangeable for shares of
beneficial interest or voting securities of the Company and (iii) no options,
warrants, rights or other agreements or commitments to acquire from the Company,
and no obligation of the Company to issue, any shares of beneficial interest,
voting securities or securities convertible into or exchangeable for shares of
beneficial interest or voting securities of the Company, and no obligation of
the Company to grant, extend or enter into any subscription, warrant, option,
right, convertible or exchangeable security or other similar agreement or
commitment (the items in clauses (i), (ii) and (iii) being referred to
collectively as the "Company Securities"). Except as set forth in Section 3.3 of
the Disclosure Letter, there are no outstanding obligations of the Company or
any subsidiary to repurchase, redeem or otherwise acquire any Company
Securities.
Section 3.4 Authority for this Agreement.
(a) The Company has the requisite power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby have been
duly and validly authorized by the Board of Trust Managers of the Company and no
other proceedings on the part of the Company are necessary to authorize this
Agreement or to consummate the transactions so contemplated, other than the
approval and adoption of the plan of merger (as such term is used in the REIT
Act) contained in this Agreement and the approval of the Merger by the holders
of not less than 66.% of the outstanding Shares. The approval and adoption of
the plan of merger contained in this Agreement and the approval of the Merger by
holders of not less than 66.% of the outstanding Shares are the only votes of
the holders of the Company's capital stock necessary in connection with the
consummation of the Merger. This Agreement has been duly and validly executed
and delivered by the Company and, assuming this Agreement constitutes a valid
and binding obligation of Equity One, constitutes a valid and binding agreement
of the Company, enforceable against the Company in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally and to general
principles of equity (whether considered in a proceeding in equity or at law).
(b) On or prior to the date hereof, the Board of Trust Managers of
the Company has (i) determined that this Agreement and the Merger are fair to
and in the best interest of the Company and its shareholders (excluding Equity
One and its affiliates), (ii) approved and declared advisable this Agreement and
the Merger and (iii) resolved to recommend that the shareholders of the Company
approve the Merger and adopt the Agreement. Each
10
member of the Board of Trust Managers of the Company has advised the Company and
Equity One that they intend to vote or cause to be voted all of the Shares
beneficially owned by them and their affiliates in favor of approval of the
Merger and adoption of this Agreement.
Section 3.5 Absence of Certain Changes. Except as disclosed in the SEC
Reports filed prior to the date hereof or in Section 3.5 of the Disclosure
Letter, since December 31, 2000, (i) the Company and its subsidiaries have not
suffered any Material Adverse Effect, (ii) the Company and its subsidiaries
have, in all material respects, conducted their respective businesses only in
the ordinary course consistent with past practice, except in connection with the
negotiation and execution and delivery of this Agreement and the solicitation or
receipt of other offers to acquire the Company, and (iii) there has not been (a)
any declaration, setting aside or payment of any dividend or other distribution
in respect of the Shares (other than the regular cash dividend of $0.13 per
share paid to the Company's shareholders on February 28, 2001 and May 15, 2001)
or any repurchase, redemption or other acquisition by the Company or any of its
subsidiaries of any Company Securities or Subsidiary Securities; or (b) any
action by the Company which if taken after the date hereof would constitute a
breach of any of clauses (iii) through (vii) inclusive, or clause (x) of Section
5.1 hereof. Except as disclosed in the SEC Reports or in Section 3.5 of the
Disclosure Letter, since December 31, 2000, there has not been any change by the
Company in accounting methods, principles or practices except as required by
United States generally accepted accounting principles.
Section 3.6 Reports.
(a) The Company has filed with the SEC all forms, reports and
documents required to be filed by it pursuant to the federal securities laws and
the SEC rules and regulations thereunder on and after March 13, 1998, all of
which (the "SEC Reports") have complied in form as of their respective filing
dates, and all SEC Reports filed after the date hereof will comply, in all
material respects with all applicable requirements of the Securities Act, the
Exchange Act and the rules promulgated thereunder applicable thereto. None of
the SEC Reports, at the time filed, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated or incorporated
by reference therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
Company has no outstanding and unresolved comments from the SEC with respect to
any of the SEC Reports.
(b) As of their respective dates, the audited and unaudited
consolidated financial statements of the Company included (or incorporated by
reference) in the SEC Reports complied as to form in all material respects with
the published rules and regulations of the SEC with respect thereto, were
prepared in all material respects in accordance with United States generally
accepted accounting principles applied on a consistent basis during the periods
therein indicated (except as may be indicated in the notes thereto or, in the
case of unaudited statements, as permitted by Rule 10-01 of Regulation S-X of
the SEC) and presented fairly the consolidated financial position of the
Company, and the consolidated results of operations and changes in consolidated
financial position or cash flows for the periods presented therein, subject, in
the case of the unaudited interim financial statements, to normal, recurring
adjustments, none of which are material.
11
(c) Neither the Company nor any of its subsidiaries has any
material liabilities (net of the effect of any insurance, rights to
indemnification from third parties, or similar third party sources of funds) of
any nature, whether accrued, absolute, contingent or otherwise, whether due or
to become due, except (i) as reflected or reserved against or disclosed in the
financial statements of the Company included in the SEC Reports, (ii)
liabilities incurred in the ordinary course of business subsequent to March 31,
2001, which have not had, individually or in the aggregate, and could not
reasonably be expected to have, a Material Adverse Effect, or (iii) as otherwise
disclosed in the SEC Reports filed prior to the date hereof or as set forth in
the Disclosure Letter.
Section 3.7 Information Supplied. None of the information supplied or to
be supplied by the Company for inclusion or incorporation by reference in the
Registration Statement will, at the time the Registration Statement becomes
effective under the Securities Act or at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
none of the information supplied or to be supplied by the Company and included
or incorporated by reference in the Proxy Statement, as supplemented if
necessary, will, at the date mailed to shareholders of the Company or the
stockholders of Equity One, or at the time of the Special Meetings to be held in
connection with the Merger, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. If at any time prior to the time of such Special
Meeting, any event with respect to the Company or any of its subsidiaries, or
with respect to other information supplied by the Company for inclusion in the
Proxy Statement or Registration Statement, shall occur which is required to be
described in an amendment of, or a supplement to, the Proxy Statement or the
Registration Statement, such event shall be so described, and such amendment or
supplement shall be promptly filed with the SEC. The Proxy Statement, insofar as
it relates to other information supplied by the Company for inclusion therein,
will comply as to form in all material respects with the provisions of the
Exchange Act and the rules and regulations thereunder.
Section 3.8 Consents and Approvals; No Violation. Except as disclosed in
Section 3.8 of the Disclosure Letter and except for filings, permits,
authorizations, notices, consents and approvals as may be required under, and
other applicable requirements of, the Exchange Act, the REIT Act, the MGCL, and
the "takeover" or blue sky laws of various states, neither the execution and
delivery of this Agreement by the Company nor the consummation of the
transactions contemplated hereby will (i) conflict with or result in any breach
of any provision of the Declaration or Bylaws of the Company or the governing
entity documents of any of its subsidiaries; (ii) require any consent, approval,
authorization or permit of, or filing with or notification to, any governmental
or regulatory authority, except where the failure to obtain such consent,
approval, authorization or permit, or to make such filing or notification, would
not in the aggregate have a Material Adverse Effect or have a material adverse
effect on the ability of the Company to consummate the transactions contemplated
hereby; (iii) result in a default (or give rise to any right of termination,
cancellation or acceleration) under any of the terms, conditions or provisions
of any material note, license, agreement or other instrument or obligation to
which the Company is a party or by which the Company or any of its assets or
subsidiaries may be bound, except for such defaults (or rights of termination,
cancellation or acceleration) as to which requisite waivers or consents have
been obtained; (iv) result in the
12
creation or imposition of any mortgage, lien, pledge, charge, security interest
or encumbrance of any kind on any asset of the Company or any of its
subsidiaries which, in the aggregate, would have a Material Adverse Effect or
have a material adverse effect on the ability of the Company to consummate the
transactions contemplated hereby; or (v) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to the Company, any of its
subsidiaries or by which any of their respective assets are bound, except for
violations which would not in the aggregate have a Material Adverse Effect or
have a material adverse effect on the ability of the Company to consummate the
transactions contemplated by this Agreement.
Section 3.9 Brokers. No broker, finder or other investment banker (other
than First Union Securities, Inc. ("First Union"), a copy of whose engagement
letters have been furnished to Equity One) is entitled to receive any brokerage,
finder's or other fee or commission in connection with this Agreement or the
transactions contemplated hereby based upon agreements made by or on behalf of
the Company.
Section 3.10 Properties.
(a) Except as set forth in Section 3.10 of the Disclosure Letter,
the Company or one of its subsidiaries owns fee simple title (or where
indicated, leasehold estate) to each of the real properties identified in
Section 3.10 of the Disclosure Letter (the "Company Properties"), which are all
of the real estate properties owned by them, in each case (except as provided
below or as set forth in Section 3.10 of the Disclosure Letter) free and clear
of liens, mortgages or deeds of trust, claims against title, charges which are
liens, security interests or other encumbrances on title ("Encumbrances"). The
Company Properties are not subject to any rights of way, written agreements,
laws, ordinances and regulations affecting building use or occupancy
(collectively, "Property Restrictions"), except for (A) Encumbrances and
Property Restrictions set forth in Section 3.10 of the Disclosure Letter, (B)
Property Restrictions imposed or promulgated by law or any governmental body or
authority with respect to real property, including zoning regulations, provided
that they do not materially adversely affect the present use of any Company
Property, (C) Encumbrances and Property Restrictions disclosed on existing title
policies or existing surveys (in either case copies of which title policies and
surveys have been made available to Equity One and are listed in Section 3.10 of
the Disclosure Letter), and (D) mechanics', carriers', workmen's, repairmen's
and materialmen's liens and other Encumbrances, Property Restrictions and other
limitations of any kind, if any, which, individually or in the aggregate, are
not substantial in amount, do not materially detract from the value of or
materially interfere with the present use of any of the Company Properties
subject thereto or affected thereby, and do not otherwise have a Material
Adverse Effect. Except as provided in Section 3.10 to the Disclosure Letter, (A)
the Company has no knowledge that any material certificate, permit or license,
from any governmental or regulatory authority having jurisdiction over any of
the Company Properties or any agreement, easement or other right which is
necessary to permit the lawful use and operation of the buildings and
improvements on any of the Company Properties or which is necessary to permit
the lawful access to and from any of the Company Properties has not been
obtained and is not in full force and effect, or of any pending threat of
modification or cancellation of any such certificate, permit or license and (B)
none of the Company or its subsidiaries has received written notice of any
violation of any federal, state or municipal law, ordinance, order, regulation
or requirement materially affecting any portion of any of the Company Properties
issued by any governmental or regulatory authority. Except as
13
provided in Section 3.10 of the Disclosure Letter, neither the Company nor any
of its subsidiaries has received any notice to the effect that any material
condemnation or rezoning proceedings are pending or threatened with respect to
any of the Company Properties.
(b) Except as set forth in Schedule 3.10 of the Disclosure
Letter, valid policies of title insurance have been issued, insuring the
Company's or its applicable subsidiary's fee simple title or leasehold estate to
the Company Properties in amounts at least equal to the purchase price of such
Company Properties at the time of the issuance of such policy, subject only to
the matters set forth in the Disclosure Schedule, and such policies are in full
force and effect and no material claim has been made against any such policy. An
on-the-ground survey of any of the Company Properties, if made prior to the
Effective Time and prepared in accordance with ALTA/ACSM (or the applicable
state equivalent) standards (it being understood that no such surveys are
required hereunder), would not disclose any Encumbrance, Property Restriction or
other matter affecting title which is not currently shown on an existing survey
of such Company Property and which could materially adversely affect the value
or operation of such Company Property.
(c) Each Company Property (i) complies in all material respects
with the Property Restrictions, or to the extent that such Company Property does
not so comply, a written waiver therefor exists and may be relied upon by Equity
One, (ii) each improvement on each Company Property lies outside of any flood
plain, or if any such improvement lies within a flood plain, adequate insurance
therefor is in full force and effect, and (iii) each Company Property has access
to and from a dedicated public right-of-way.
(d) All properties currently under development or construction by
the Company or its subsidiaries (the "Development Properties") and all
properties currently proposed for acquisition, development or commencement of
construction prior to the Effective Time by the Company and its subsidiaries
(the "Future Development Properties") are listed as such in Section 3.10 of the
Disclosure Letter. All material executory agreements entered into by the Company
or any of its subsidiaries relating to the development or construction of
Development Properties or Future Development Properties are listed in Section
3.10 of the Disclosure Letter. Copies of such agreements have previously been
made available to Equity One.
(e) Section 3.10 of the Disclosure Letter sets forth a complete
and correct list, as of the date of this Agreement, of all leases for the
Company Properties.
Section 3.11 Litigation, Etc. Except as set forth in Section 3.11 of the
Disclosure Letter or as disclosed in the SEC Reports, there is no pending claim,
action, proceeding or governmental investigation to which the Company is a party
or, to the Company's knowledge, no claim, action, proceeding or governmental
investigation has been threatened against the Company or any of its
subsidiaries, any present or former officer, director or employee of the Company
or any of its subsidiaries or any other person for whom the Company or any of
its subsidiaries would be liable before any court or governmental or regulatory
authority which, in the aggregate, (i) could reasonably be expected to have a
Material Adverse Effect or (ii) could reasonably be expected to have a material
adverse effect on the ability of the Company to consummate the transactions
contemplated by this Agreement. Except as set forth in
14
Section 3.11 of the Disclosure Letter or as disclosed in the SEC Reports,
neither the Company nor any subsidiary of the Company is subject to any
outstanding order, writ, injunction or decree that (i) has had, or could
reasonably be expected to have, a Material Adverse Effect or (ii) would have, or
could reasonably be expected to have, a material adverse effect on the ability
of the Company to consummate the transactions contemplated by this Agreement.
Section 3.12 Tax Matters.
(a) The Company and each of its subsidiaries has filed all tax
returns and reports required to be filed by it, or requests for extensions to
file such tax returns or reports have been timely filed and granted and have not
expired and all such tax returns and reports are accurate and complete in all
material respects. The Company and each of its subsidiaries has paid (or the
Company has paid on its behalf) or made provision for all taxes shown as due on
such tax returns and reports. The most recent financial statements contained in
the SEC Reports reflect adequate reserves in all material respects for all taxes
payable by the Company and its subsidiaries for all taxable periods and portions
thereof accrued through the date of such financial statements, and no
deficiencies for any taxes have been proposed, asserted or assessed against the
Company or any of its subsidiaries that are not adequately reserved for in all
material respects. No requests for waivers of the time to assess any taxes
against the Company or any of its subsidiaries have been granted or are pending,
except for requests with respect to such taxes that have been adequately
reserved for in the most recent financial statements contained in the SEC
Reports, or, to the extent not adequately reserved, the assessment of which
would not, in the aggregate, have a Material Adverse Effect. As used in this
Agreement the term "taxes" includes all federal, state, local and foreign
income, franchise, property, sales, use, excise and other taxes, including
without limitation obligations for withholding taxes from payments due or made
to any other person and any interest, penalties or additions to tax.
(b) All taxes which the Company or its subsidiaries are required
by law to withhold or collect, including taxes required to have been withheld in
connection with amounts paid or owing to any officer, independent contractor,
creditor, stockholder or other third party and sales, gross receipts and use
taxes, have been duly withheld or collected and, to the extent required, have
been paid over to the proper governmental authorities or are held in separate
bank accounts for such purpose. There are no liens for taxes upon the assets of
the Company or its subsidiaries except for statutory liens for taxes not yet
due.
(c) Except as set forth in Section 3.12 of the Disclosure Letter,
the tax returns of the Company and its subsidiaries are not being and have not
been examined or audited by any taxing authority for any past year or periods.
(d) Neither the Company nor its subsidiaries (i) have filed a
consent under Section 341(f) of the Internal Revenue Code of 1986, as amended
(the "Code"), concerning collapsible corporations, or (ii) are a party to any
tax allocation or sharing agreement.
(e) Neither the Company nor its subsidiaries have any liability
for the taxes of any person other than the Company and its subsidiaries (i)
under Treasury Regulation Section 1.1502-6 (or any similar provision of state,
local or foreign law), (ii) as a transferee or successor, (iii) by contract, or
(iv) otherwise.
15
(f) Neither the Company nor its subsidiaries have made any
payments, are obligated to make any payments, or are parties to an agreement
that could obligate them to make any payments that will not be deductible under
Section 280G of the Code.
(g) Neither the Company nor any of its subsidiaries 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 (i)
that has as one of its purposes to permit a person or entity to take the
position that such person or entity could defer federal taxable income that
otherwise might have been recognized upon a transfer of property to any
subsidiary of the Company that is treated as a partnership for federal income
tax purposes, and (ii) that (A) prohibits or restricts in any manner the
disposition of any assets of the Company or any of its subsidiaries (including,
without limitation, requiring the Company or any of its subsidiaries to
indemnify any person for tax liabilities resulting from any such disposition),
(B) requires that the Company or any of its subsidiaries maintain, or put in
place, or replace, indebtedness, whether or not secured by one or more of the
Company Properties, or (C) requires that the Company or any of its subsidiaries
offer to any person or entity 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 the Company or any of its
subsidiaries.
(h) The Company (A) for all taxable years commencing with the
taxable year ended December 31, 1996 through December 31, 2000, has been
organized in conformity with the requirements for qualification as a real estate
investment trust (a "REIT") (within the meaning of the Code) under the Code and
has been subject to taxation as a REIT and has satisfied all requirements to
qualify as a REIT for such years, (B) has operated, and intends to continue to
operate, in such a manner as to qualify as a REIT for the taxable year ending at
the Effective Time, and (C) 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 to the Company's knowledge, no such challenge is pending or threatened. Each
subsidiary of the Company which is a partnership, joint venture or limited
liability company has been treated during and since its formation and continues
to be treated for federal income tax purposes as a partnership or disregarded as
an entity separate from its owner and not as a corporation or an association
taxable as a corporation. Each subsidiary of the Company which is a corporation
for federal income tax purposes and with respect to which all of the outstanding
capital stock is owned solely by the Company (or solely by a subsidiary of the
Company that is a corporation wholly owned by the Company) is a "qualified REIT
subsidiary," as defined in Section 856(i) of the Code.
Section 3.13 Compliance with Law. Except as set forth in Section 3.13 of
the Disclosure Letter or in the SEC Reports, neither the Company nor any of its
subsidiaries is in conflict with, or in default or violation of, any material
law, rule, regulation, order, judgment or decree applicable to the Company or
any subsidiary or by which any property or asset of the Company or any
subsidiary is bound or affected. Except as set forth in Section 3.13 of the
Disclosure Letter or in the SEC Reports, the Company and its subsidiaries have
all material permits, licenses, authorizations, consents, approvals and
franchises from governmental agencies required to conduct their businesses as
now being conducted (the "Company Permits"). Except as set forth in Section 3.13
of the Disclosure Letter or in the SEC Reports, the Company and its subsidiaries
are in material compliance with the terms of the Company Permits.
16
Section 3.14 Environmental Compliance. Except as set forth in Section 3.14
of the Disclosure Letter or in the SEC Reports, (i) the assets, properties,
businesses and operations of the Company and its subsidiaries have been and are
in material compliance with applicable Environmental Laws (as defined in Section
8.11 hereof); (ii) the Company and its subsidiaries have obtained and are
operating in material compliance with all material permits necessary under any
Environmental Law for the conduct of the business and operations of the Company
and its subsidiaries in the manner now conducted; (iii) neither the Company nor
any of its subsidiaries nor any of their respective assets, properties,
businesses, or operations has received or is subject to any outstanding order,
decree, judgment, complaint, agreement, claim, citation, notice, or proceeding
indicating that the Company or any of its subsidiaries is or may be (A) liable
for a material violation of any Environmental Law, (B) liable for any material
Environmental Liabilities and Costs (as defined in Section 8.11 hereof) of any
person, corporation or other entity or (C) required to take material Remedial
Action (as defined in Section 8.11 hereof); (iv) the Company and its
subsidiaries have not received any written communication alleging, with respect
to any such party, the material violation of or material liability under any
Environmental Law; (v) neither the Company nor any of its subsidiaries has any
material contingent liability in connection with a Release (as defined in
Section 8.11 hereof) of any Hazardous Material (as defined in Section 8.11
hereof) into the indoor or outdoor environment (whether on-site or off-site) or
employee or third party exposure to Hazardous Materials; (vi) the operations of
the Company and its subsidiaries involving the generation, transportation,
treatment, storage or disposal of hazardous or solid waste, as defined and
regulated under 40 C.F.R. Parts 260-270 (in effect as of the date hereof) or any
applicable state equivalent, are in material compliance with applicable
Environmental Laws; (vii) there is not on or in any property of the Company or
its subsidiaries or any property for which the Company or its subsidiaries are
potentially liable any of the following: (A) any underground storage tanks or
surface impoundments or (B) any on-site disposal of Hazardous Material; and
(viii) no Company Property is included or, to the knowledge of the Company,
proposed for inclusion on the National Priorities List issued pursuant to the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, a
amended ("CERCLA"), by the United States Environmental Protection Agency (the
"EPA") or on the Comprehensive Environmental Response, Compensation and
Liability Information System database maintained by the EPA, and the Company has
no knowledge that any Company Property has otherwise been identified in a
published writing by the EPA as a potential CERCLA removal, remedial or response
site or, to the knowledge of the Company, proposed for inclusion on any similar
list of potentially contaminated sites pursuant to any other Environmental Law.
Section 3.15 Insurance. Section 3.15 of the Disclosure Letter sets forth
an insurance schedule of the Company and its subsidiaries. The Company and its
subsidiaries maintain insurance with financially responsible insurers in such
amounts and covering such risks as are in accordance with normal industry
practice for companies engaged in businesses similar to those of the Company and
its subsidiaries (taking into account the cost and availability of such
insurance). Except as set forth in Section 3.15 of the Disclosure Letter,
neither the Company nor any of its subsidiaries has received any notice of
cancellation or termination with respect to any existing insurance policy of the
Company or any of its subsidiaries.
Section 3.16 Opinion of Financial Advisor. The Company has received the
oral opinion of First Union to the effect that on the basis of and subject to
the assumptions set
17
forth therein, the Merger Consideration to be paid to the holders of Shares in
the transactions contemplated hereby is fair from a financial point of view to
such holders.
Section 3.17 Contracts. Section 3.17 of the Disclosure Letter lists all
Material Contracts of the Company. Except as set forth on Section 3.17 of the
Disclosure Letter or in the SEC Reports, each Material Contract is valid,
binding and enforceable and in full force and effect, except where such failure
to be so valid, binding and enforceable and in full force and effect would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Except as set forth in Section 3.17 of the Disclosure Letter,
(a) the Company is in compliance with the material obligations of the Material
Contracts, (b) none of the Material Contracts is in default by its terms or has
been canceled by the other party, (c) to the Company's knowledge, no other party
is in breach or violation of, or default under, any Material Contract, (d) the
Company and its subsidiaries are not in receipt of any claim of default under
any such agreement, and (e) neither the execution of this Agreement nor the
consummation of any transaction contemplated hereby shall constitute a default,
give rise to cancellation rights, or otherwise adversely affect any of the
Company's or any of its subsidiaries' rights under any Material Contract. For
purposes of this Agreement, "Material Contracts" shall mean (i) any loan
agreement, indenture, note, bond, debenture or any other document or agreement
evidencing a capitalized lease obligation or other indebtedness to any person,
other than indebtedness in a principal amount less than $50,000, (ii) each
material commitment, contractual obligation, borrowing, capital expenditure or
transaction entered into by the Company or a subsidiary of the Company that may
result in total payments by or liability of the Company or such subsidiary in
excess of $50,000, (iii) any other agreements filed or required to be filed as
exhibits to the SEC Reports pursuant to Item 601(b)(10) of Regulation S-K of
Title 17, Part 229 of the Code of Federal Regulations, (iv) all mortgages on any
of the assets of the Company or its subsidiaries, (v) any contract or agreement
that purports to limit in any material respect the names or the geographic
location in which the Company or any of its subsidiaries may conduct its
respective business, (vi) any agreement entered into by the Company or a
subsidiary of the Company relating to the management of any of the Company
Properties that may result in total payments by or liability of the Company or
such subsidiary in excess of $50,000, (vii) any agreements entered into by the
Company or any of its subsidiaries providing for the sale of, or option to sell,
any Company Properties or the purchase of, or option to purchase, any real
estate which are currently in effect, (viii) any agreement under which the
Company or any of its subsidiaries has any continuing material contractual
liability (A) for indemnification or otherwise under any agreement relating to
the sale of real estate previously owned, (B) to pay any additional purchase
price for any of the Company Properties, or (C) to make any prorations or
adjustments to prorations involving an amount in excess of $25,000 (other than
real estate taxes) that may previously have been made with respect to any
property currently or formerly owned by the Company or its subsidiaries, and
(ix) indemnification agreements entered into by and between the Company and any
Trust Manager, trustee or officer of the Company or any of its subsidiaries;
provided, however, any contract, agreement or other arrangement that, by its
terms, is terminable within 30 days (without penalty) of the date of this
Agreement shall not be deemed to be a Material Contract.
Section 3.18 Intangible Property. The Company and its subsidiaries own,
possess or have adequate rights to use all material trademarks, trade names,
patents, service marks, brand marks, brand names, computer programs, databases,
industrial designs and
18
copyrights necessary for the operation of the businesses of each of the Company
and its subsidiaries as currently conducted (collectively, the "Company
Intangible Property"), except where the failure to possess or have adequate
rights to use such properties has not had, and could not reasonably be expected
to have, a Material Adverse Effect. All of the Company Intangible Property is
owned or licensed by the Company or its subsidiaries free and clear of any and
all liens, claims or encumbrances, except those that have not had, and could not
reasonably be expected to have, a Material Adverse Effect, and neither the
Company nor any such subsidiary has forfeited or otherwise relinquished any
Company Intangible Property which forfeiture has resulted, or could reasonably
be expected to result, in a Material Adverse Effect. To the knowledge of the
Company, the use of the Company Intangible Property by the Company or its
subsidiaries does not, in any material respect, conflict with, infringe upon,
violate or interfere with or constitute an appropriation of any right, title,
interest or goodwill, including, without limitation, any intellectual property
right, trademark, trade name, patent, service xxxx, brand xxxx, brand name,
computer program, database, industrial design, copyright or any pending
application therefor, of any other person, and there have been no claims made,
and neither the Company nor any of its subsidiaries has received any notice of
any claim or otherwise knows that any of the Company Intangible Property is
invalid or conflicts with the asserted rights of any other person or has not
been used or enforced or has failed to have been used or enforced in a manner
that would result in the abandonment, cancellation or unenforceability of any of
the Company Intangible Property, except for any such conflict, infringement,
violation, interference, claim, invalidity, abandonment, cancellation or
unenforceability that has not had and could not reasonably be expected to have a
Material Adverse Effect.
Section 3.19 Employment Matters; ERISA.
(a) Neither the Company nor any of its subsidiaries has any
employees.
(b) Except as set forth in Section 3.19 of the Disclosure Letter,
neither the Company nor any of its subsidiaries maintains or contributes to, nor
has it or its subsidiaries at any time maintained or contributed to, any Share
Plan or any other "employee benefit plan" as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), "employee
pension benefit plan" as defined in Section 3(3) of ERISA or "multiemployer
plan" as defined in Section 3(37) of ERISA. The Company has delivered to Equity
One true and complete copies of all of the Share Plans, employee benefit plans,
employee pension benefit plans or multiemployer plans listed in Section 3.19 of
the Disclosure Letter.
(c) Neither the Company nor any of its subsidiaries has any
obligation to provide health or other welfare benefits to former, retired or
terminated employees, officers or trust managers.
(d) Each Share Plan, employee benefit plan, employee pension
benefit plan or multiemployer plan listed in Section 3.19 of the Disclosure
Letter, has been maintained, in all material respects, in accordance with their
terms and with all provisions of ERISA, if applicable, and other applicable
Federal and state law, there is no material liability for breaches of fiduciary
duty in connection with those plans and there is no material action, suit or
claim pending or, to the knowledge of the Company, threatened against, or with
respect to, such plans.
19
Section 3.20 Amendment to Rights Agreement; State Takeover Laws.
(a) The Board of Trust Managers of the Company has adopted a
resolution approving an amendment to the Rights Agreement to provide that none
of the execution and delivery of this Agreement, the conversion of Shares into
the right to receive the Merger Consideration in accordance with Article 2 of
this Agreement, the consummation of the Merger or any other transaction
contemplated by this Agreement will cause (i) the Rights Agreement Rights to be
exercisable under the Rights Agreement, (ii) Equity One or any of its
subsidiaries or any of their respective stockholders or holders of partnership
interests to be deemed an "Acquiring Person" (as defined in the Rights
Agreement), or (iii) any such event to be deemed a "Distribution Date" (as
defined in the Rights Agreement).
(b) The Company (i) has taken all action necessary to exempt the
Merger and the transactions contemplated by this Agreement from the operation of
any "fair price," "moratorium," "control share acquisition," "business
combination," or any other anti-takeover statute or similar statute enacted
under the state or federal laws of the United States or similar statute or
regulation applicable to the transactions contemplated by this Agreement (a
"Takeover Statute") and (ii) has delivered to Equity One true and complete
copies of all resolutions of the Board of Trust Managers of the Company, any
documents necessary to exempt such transactions pursuant to clause (i) above.
Section 3.21 Termination of Share Plans. Prior to the Effective Time, the
Company and its Board of Trust Managers will have taken all actions necessary to
provide that the Company's Share Plans, including but not limited to the
Company's 1997 Incentive Compensation Plan, shall terminate, effective as of the
Effective Time.
Section 3.22 Investment Company Act of 1940. Neither the Company nor any
of its Subsidiaries is, or at the Effective Time will be, required to be
registered as an investment company under the Investment Company Act of 1940, as
amended (the "Investment Company Act").
Section 3.23 Affiliate Transactions. Except as set forth in Section 3.23
of the Disclosure Letter, (a) there are no liabilities between the Company or
any of its subsidiaries on the one hand, and any trust manager, director,
officer, employee, shareholder or affiliate (or any relative, spouse,
beneficiary or affiliate of any such person) of the Company or any of its
subsidiaries on the other hand, (b) no trust manager, director, officer,
employee, shareholder or affiliate (or any relative, spouse, beneficiary or
affiliate of any such person) of the Company or any of its subsidiaries
provides, or causes to be provided, any services to the Company or any of its
subsidiaries, and (c) neither the Company nor any of its subsidiaries provides
or causes to be provided services to any director, officer, employee,
shareholder or affiliate (or any relative, spouse, beneficiary or affiliate of
any such person) of the Company or any of its subsidiaries.
Article 4
Representations and Warranties
of Equity One
Equity One represents and warrants to the Company as follows:
20
Section 4.1 Organization and Qualification. Equity One is a duly organized
and validly existing corporation in good standing under the laws of the state of
its incorporation, with all requisite corporate power and authority to own its
properties and conduct its business. Equity One 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 Material Adverse Effect. Each subsidiary of Equity One 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 subsidiary
of Equity One that is a partnership, joint venture, 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 subsidiary of Equity One 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 Material Adverse Effect.
Section 4.2 Capital Structure. The authorized share capital of Equity One
consists of 40,000,000 Equity One Shares and 5,000,000 shares of preferred
stock, $0.01 par value per share. As of the close of business on the date
hereof: (a) 13,011,901 Equity One Shares were issued and outstanding, (b) no
shares of preferred stock were issued or outstanding and (c) 1,128,331 Equity
One Shares were reserved for issuance pursuant to outstanding, unexercised stock
options ("Equity One Options") granted pursuant to Equity One's stock option
plans ("Equity One Stock Option Plans") or otherwise. All of the outstanding
Equity One Shares have been duly authorized and validly issued and are fully
paid and nonassessable and are free of preemptive rights, and all of Equity One
Shares issuable in exchange for Shares in connection with the Merger have been
duly authorized and will be validly issued and fully paid and nonassessable and
free of preemptive rights. Except as set forth herein and in the Equity One SEC
Reports, as of the date hereof, there are outstanding (i) no shares of capital
stock or other voting securities of Equity One, (ii) no securities of Equity One
convertible into or exchangeable for shares of capital stock or voting
securities of Equity One and (iii) no options, warrants, rights or other
agreements or commitments to acquire from Equity One, and no obligation of
Equity One to issue, any shares of capital stock, voting securities or
securities convertible into or exchangeable for shares of capital stock or
voting securities of Equity One, and no obligation of Equity One to grant,
extend or enter into any subscription, warrant, option, right, convertible or
exchangeable security or other similar agreement or commitment (the items in
clauses (i), (ii) and (iii) being referred to collectively as the "Equity One
Securities"). There are no outstanding obligations of Equity One or any
subsidiary to repurchase, redeem or otherwise acquire any Equity One Securities.
Section 4.3 Authority Relative to this Agreement. (a) Equity One has full
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Equity One and the consummation by Equity One of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action. This Agreement has been duly and validly executed
and delivered by Equity One and, assuming this Agreement constitutes the valid
21
and binding obligation of the Company, this Agreement constitutes a valid and
binding agreement of Equity One, enforceable against Equity One in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency and similar laws affecting creditors' rights generally
and to general principles of equity (whether considered in a proceeding in
equity or at law).
(b) On or prior to the date hereof, the Board of Directors of
Equity One has (i) determined that this Agreement and the Merger are fair to and
in the best interest of Equity One and its stockholders, (ii) approved and
declared advisable this Agreement and the Merger and (iii) resolved to recommend
that the stockholders of Equity One approve the Merger and adopt the Agreement
if the approval of the Merger by Equity One's stockholders is required by
applicable law or otherwise. Each member of the Board of Directors of Equity One
has advised the Company and Equity One that they intend to vote or cause to be
voted all of the Equity One Shares beneficially owned by them and their
affiliates in favor of approval of the Merger and adoption of this Agreement at
the Special Meeting of Equity One's stockholders, if any.
Section 4.4 Absence of Certain Changes. Except as disclosed in the Equity
One SEC Reports filed prior to the date hereof, since December 31, 2000, Equity
One has not suffered any Material Adverse Effect.
Section 4.5 Reports.
(a) Equity One has filed with the SEC all forms, reports and
documents required to be filed by it pursuant to the federal securities laws and
the SEC rules and regulations thereunder on and after December 31, 2000, all of
which (the "Equity One SEC Reports") have complied in form as of their
respective filing dates in all material respects with all applicable
requirements of the Exchange Act and the rules promulgated thereunder applicable
thereto. None of the Equity One SEC Reports, at the time filed, contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated or incorporated by reference therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
(b) As of their respective dates, the audited and unaudited
consolidated financial statements of Equity One included (or incorporated by
reference) in the Equity One SEC Reports were prepared in all material respects
in accordance with United States generally accepted accounting principles
applied on a consistent basis during the periods therein indicated (except as
may be indicated in the notes thereto or, in the case of unaudited statements,
as permitted by Rule 10-01 of Regulation S-X of the SEC) and presented fairly
the consolidated financial position of Equity One, and the consolidated results
of operations and changes in consolidated financial position or cash flows for
the periods presented therein, subject, in the case of the unaudited interim
financial statements, to normal, recurring adjustments, none of which are
material.
Section 4.6 Consents and Approvals; No Violation. The execution and
delivery of this Agreement by Equity One and the consummation of the
transactions contemplated hereby will not (i) conflict with or result in any
breach of any provision of the charter or bylaws (or other similar governing
documents) of Equity One or any of its
22
subsidiaries; (ii) require any consent, approval, authorization or permit of, or
filing with or notification to, any governmental or regulatory authority, except
(A) pursuant to the Exchange Act, (B) the filing of articles of merger pursuant
to the REIT Act and the MGCL, (C) any applicable filings under state securities,
blue sky or "takeover" laws, or (D) where the failure to obtain such consent,
approval, authorization or permit, or to make such filing or notification, would
not in the aggregate have a Material Adverse Effect or have a material adverse
effect on the ability of Equity One to consummate the transactions contemplated
hereby; (iii) result in a default (or give rise to any right of termination,
cancellation or acceleration) under any of the terms, conditions or provisions
of any note, license, agreement or other instrument or obligation to which
Equity One or any of its subsidiaries is a party or by which any of its
subsidiaries or any of their respective assets may be bound, except for such
defaults (or rights of termination, cancellation or acceleration) as to which
requisite waivers or consents have been obtained or which would not in the
aggregate have a Material Adverse Effect or have a material adverse effect on
the ability of Equity One to consummate the transactions contemplated hereby;
(iv) result in the creation or imposition of any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind on any asset of Equity One or any
of its subsidiaries which, individually or in the aggregate, would have a
material adverse effect on the ability of Equity One to consummate the
transactions contemplated hereby; or (v) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Equity One or any of its
subsidiaries or any of their respective assets, except for violations which
would not in the aggregate have a Material Adverse Effect or have a material
adverse effect on the ability of Equity One to consummate the transactions
contemplated hereby.
23
Section 4.7 Financing. Equity One has all funds necessary to purchase
all outstanding Shares pursuant to the Merger, to refinance any indebtedness or
other obligation to the Company and its subsidiaries which may become due as a
result of this Agreement or any of the transactions contemplated hereby, and to
pay all related fees and expenses.
Section 4.8 Brokers. No broker, finder or other investment banker (other
than First Union and The Xxxxxxxx-Xxxxxxxx Company, LLC) is entitled to receive
any brokerage, finder's or other fee or commission in connection with this
Agreement or the transactions contemplated hereby based upon agreements made by
or on behalf of Equity One.
Section 4.9 Litigation, etc. Except as disclosed in the Equity One SEC
Reports, there is no pending claim, action, proceeding or governmental
investigation as of the date hereof as to which Equity One or any of its
subsidiaries have been formally served or, to the best of Equity One's
knowledge, no claim, action, proceeding or governmental investigation has been
threatened as of the date hereof against Equity One or any of its subsidiaries
before any court or governmental or regulatory authority which, in the
aggregate, (i) could reasonably be expected to have a Material Adverse Effect or
(ii) could reasonably be expected to have a material adverse effect on the
ability of Equity One to consummate the transactions contemplated by this
Agreement. Except as disclosed in the Equity One SEC Reports, as of the date
hereof, neither Equity One nor any subsidiary of Equity One is subject to any
outstanding order, writ, injunction or decree that (i) has had a Material
Adverse Effect or (ii) would have a material adverse effect on the ability of
Equity One to consummate the transactions contemplated by this Agreement.
Section 4.10 Information Supplied. None of the information supplied or to
be supplied by Equity One for inclusion or incorporation by reference in the
Registration Statement will, at the time the Registration Statement becomes
effective under the Securities Act or at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
none of the information supplied or to be supplied by Equity One and included or
incorporated by reference in the Proxy Statement, as supplemented if necessary,
will, at the date mailed to the shareholders of the Company or the stockholders
of Equity One, or at the time of the Special Meetings to be held in connection
with the Merger, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. If at any time prior to the time of such Special Meeting,
any event with respect to Equity One or any of its subsidiaries, or with respect
to other information supplied by Equity One for inclusion in the Proxy Statement
or Registration Statement, shall occur which is required to be described in an
amendment of, or a supplement to, the Proxy Statement or the Registration
Statement, such event shall be so described, and such amendment or supplement
shall be promptly filed with the SEC. The Proxy Statement, insofar as it relates
to other information supplied by Equity One for inclusion therein, will comply
as to form in all material respects with the provisions of the Exchange Act and
the rules and regulations thereunder.
Section 4.11 Stockholder Approval. The approval and adoption of this
Agreement and the plan of merger contained in this Agreement and the approval of
the Merger by holders of the requisite number of the outstanding Equity One
Shares are the only votes of the holders of Equity One's capital stock that may
be required under Equity One's charter and
24
bylaws, applicable law or stock exchange rules or otherwise to authorize the
consummation of the Merger.
Section 4.12 Opinion of Financial Advisor. Equity One has received the
oral opinion of The Xxxxxxxx-Xxxxxxxx Company, LLC, financial advisor to Equity
One, to the effect that on the basis of and subject to the assumptions set forth
therein, the Merger Consideration to be paid to the holders of Shares in the
transactions contemplated hereby is fair from a financial point of view to the
stockholders of Equity One.
Article 5
Covenants
Section 5.1 Conduct of Business of the Company. Except as contemplated by
this Agreement, during the period from the date of this Agreement until the
Effective Time, the Company and its subsidiaries will each conduct its
operations according to its ordinary and usual course of business and consistent
with past practice and will use all reasonable efforts consistent with prudent
business practice to preserve intact the business organization of the Company
and each of its subsidiaries, to keep available the services of its and their
current officers and key employees and to maintain existing relationships with
those having significant business relationships with the Company and its
subsidiaries, in each case in all material respects. Without limiting the
generality of the foregoing, except as set forth in Section 5.1 of the
Disclosure Letter and except as otherwise expressly provided in or contemplated
by this Agreement or the Disclosure Letter, prior to the Effective Time, neither
the Company nor any of its subsidiaries, as the case may be, will, without the
prior written consent of Equity One (not to be unreasonably withheld), (i)
issue, sell or pledge, or authorize or propose the issuance, sale or pledge of
(A) Company Securities or Subsidiary Securities, in each case, other than Shares
issuable upon exercise or vesting of the Rights outstanding on the date hereof
or the exercise of rights under any plan or any agreement referred to in Section
3.3 of the Disclosure Letter and which are outstanding on the date hereof, or
(B) any other securities in respect of, in lieu of or in substitution for Shares
outstanding on the date hereof; (ii) otherwise acquire or redeem, directly or
indirectly, any Company Securities or Subsidiary Securities (including the
Shares); (iii) split, combine or reclassify its shares of beneficial interest or
capital stock or declare, set aside, make or pay any dividend or distribution
(whether in cash, stock or property) on any shares of beneficial interest or
capital stock of the Company or any of its subsidiaries (other than cash
dividends paid to the Company by its wholly owned subsidiaries with regard to
their capital stock) provided, however, that the Company may declare and pay one
regular quarterly dividend to shareholders of record as of a date no later than
September 15, 2001 in an amount not to exceed $0.13 per share plus any dividends
in the minimum amount necessary based on a written opinion of the Company's
independent certified public accountants to avoid (x) jeopardizing the Company's
REIT status under the Code and (y) having positive real estate investment trust
taxable income for the taxable year ending on the Effective Date; provided
further that, the Company may declare a dividend (other than a regular quarterly
dividend) and fix the record date of that dividend on a date prior to the
Effective Time to allow Equity One to cause a subsequent year dividend to be
paid to the Company shareholders of record pursuant to Section 858 of the Code
in the minimum amount necessary to avoid (x) jeopardizing the Company's REIT
status under the Code, and (y) having positive real estate investment trust
taxable income for the taxable year ending at the Effective Time; (iv) (1) make
any acquisition, by means of a
25
merger or otherwise, of assets or securities, or any sale, lease, encumbrance or
other disposition of assets or securities, in each case involving the payment or
receipt of consideration of in excess of $50,000 in any single instance or
$250,000 in the aggregate other than leases of Company Properties to tenants in
the ordinary and usual course of business consistent with past practice in all
material respects, or (2) other than in the ordinary course of business, enter
into any Material Contract or grant any release or relinquishment of any
material contract rights; (v) incur or assume any long-term debt for borrowed
money except for debt incurred in the ordinary course of business consistent
with past practice and except for debt that may be incurred pursuant to existing
contractual arrangements as in effect on the date hereof not in excess of
$50,000 in any single instance or $150,000 in the aggregate; (vi) assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person except wholly
owned subsidiaries of the Company, except in the ordinary course of business
consistent with past practice and except in connection with liabilities or
responsibilities that may be incurred pursuant to existing contractual
arrangements in effect on the date hereof not in excess of $50,000 in any single
instance or $150,000 in the aggregate; (vii) except in connection with
transactions permitted by (iv) above, make any loans, advances or capital
contributions to, or investments in, any other person (other than wholly owned
subsidiaries of the Company) in each case in excess of $50,000 in any single
instance or $150,000 in the aggregate; (viii) change any of the accounting or
tax principles, practices or elections used by it or any of its subsidiaries,
except as required by the SEC or required by United States generally accepted
accounting principles; (ix) adopt any amendments to the Declaration or Bylaws of
the Company or governing entity documents of any subsidiary; (x) except as may
be required under any previously existing agreement or plan, grant any share
related awards; (xi) enter into any new employment, severance, consulting or
salary continuation agreements with any of its officers, trust managers or
employees or grant any increases in the compensation or benefits to its
officers, trust managers and employees or otherwise reimburse or agree to
reimburse any property manager or such property manager's employees, including
the employees of FCA Corp., for a similar new agreement or increase; (xii)
settle any outstanding litigation, other than as set forth in Section 5.9;
(xiii) adopt, make any amendment to or terminate any employee benefit plan
except as required by law or to maintain tax qualified status or as requested by
the Internal Revenue Service in order to receive a determination letter for such
employee benefit plan; or (xiv) agree in writing or otherwise to take any of the
foregoing actions.
Section 5.2 No Solicitation. Upon execution and delivery of this
Agreement by the parties, the Company shall notify those other persons with
which it is, at the time of such execution and delivery, discussing an
Acquisition Transaction (as defined below) that it has entered into this
Agreement and is terminating discussions with such person regarding any
potential Acquisition Transaction. The Company and its subsidiaries and their
respective officers, trust managers, directors and employees shall not, and the
Company and its subsidiaries will use all reasonable efforts to cause their
representatives, agents or affiliates not to, directly or indirectly, (i) enter
into or participate in any discussions or negotiations with, furnish any non-
public information relating to the Company or any of its subsidiaries or
otherwise provide assistance to any corporation, partnership, person or other
entity or group (other than Equity One or any affiliate or associate of Equity
One or any of its respective directors, officers, employees, representatives or
agents) concerning any merger, consolidation, business combination, liquidation,
reorganization, sale of substantially all of its assets, sale of shares of
beneficial interest or capital stock or similar transactions involving the
Company or any material subsidiary
26
of the Company (each an "Acquisition Transaction"); (ii) knowingly encourage,
solicit, or initiate the submission of an Acquisition Proposal; or (iii) enter
into any agreement requiring it to abandon, terminate or fail to consummate the
Merger or any other transaction contemplated by this Agreement; provided,
however, that if Company's Board of Trust Managers determines after consultation
with counsel, that it is required to do so in the exercise of the fiduciary
duties of the Company's Trust Managers to the Company or its shareholders, the
Board of Trust Managers may take any of the foregoing actions and shall so
notify Equity One; and provided further that nothing contained in this Section
5.2 shall prohibit the Company or its Board of Trust Managers from taking and
disclosing to the Company's shareholders a position with respect to a tender
offer by a third party pursuant to Rules 14d-9 and 14e-2(a) promulgated under
the Exchange Act or from making such other disclosure to the Company's
shareholders which, as advised by outside counsel, is required under applicable
law.
Section 5.3 Access to Information.
(a) Between the date of this Agreement and the Effective Time, the
Company will, upon reasonable notice to an executive officer of the Company, (i)
give Equity One and its authorized representatives access (during regular
business hours), in a manner so as not to interfere with the normal operations
of the Company and its subsidiaries and subject to reasonable restrictions
imposed by an executive officer of the Company, to all key employees, property
managers, offices, real estate properties and other facilities and to all books
and records of the Company and its subsidiaries and seek to cause the Company's
and its subsidiaries' independent public accountants to provide access to their
work papers and such other information as Equity One may reasonably require,
(ii) permit Equity One to make such inspections as it may reasonably require and
(iii) cause its officers and those of its subsidiaries to furnish Equity One
with such financial and operating data and other information with respect to the
business, properties and personnel of the Company and its subsidiaries as Equity
One may from time to time reasonably require; provided, however, that no
investigation or information furnished pursuant to this Section 5.3 shall affect
any representations or warranties made by the Company herein or the conditions
to the obligations of Equity One to consummate the Merger.
(b) Information obtained by Equity One or its representatives
pursuant to this Section 5.3 shall be subject to the provisions of the letter
agreement, dated October 31, 2000, as amended, between Equity One and the
Company (the "Confidentiality Agreement") the terms of which are incorporated
herein by reference.
Section 5.4 Reasonable Efforts; Filings. Subject to the terms and
conditions herein provided for and to the fiduciary duties of the Board of Trust
Managers of the Company and the Board of Directors of Equity One under
applicable law as advised by legal counsel, each of the parties hereto agrees to
use all reasonable efforts to take, or cause to be taken, all appropriate
action, and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make
effective, as soon as practicable, the transactions contemplated by this
Agreement. In connection with and without limiting the foregoing, (a) to respond
as promptly as practicable to all inquiries and requests received from any State
Attorney General or other governmental authority in connection with antitrust
matters, (b) Equity One and the Company will take all such action as may be
reasonably necessary under federal and state securities laws applicable or
necessary for, and will file and, if appropriate, use
27
all reasonable efforts to have declared effective or approved all documents and
notifications with the SEC and other governmental or regulating bodies which
Equity One and the Company determines, in each case, is necessary for the
consummation of the Merger and the transactions contemplated hereby and each
party shall give the other information required by it which is reasonably
necessary to enable it to take such action, and (c) Equity One and the Company
will, and will cause each of their respective subsidiaries to, use all
reasonable efforts to obtain consents of all third parties and government bodies
necessary or, in the reasonable opinion of Equity One or the Company, advisable
to consummate the Merger and the transactions contemplated by this Agreement. In
case at any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement, Equity One shall cause
the proper officers and directors of the Surviving Entity or Equity One, as the
case may be to take all such necessary action.
Section 5.5 Indemnification and Insurance.
(a) Equity One agrees that all rights to indemnification existing
in favor of the present or former trust managers, officers and employees of the
Company (as such) or any of its subsidiaries or present or former trust managers
of the Company or any of its subsidiaries serving or who served at the Company's
or any of its subsidiaries' request as a trust manager, director, officer,
employee or agent of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, as provided in the Company's
Declaration or Bylaws, or the governing entity documents of any of the Company's
subsidiaries and the indemnification agreements with such present and former
trust managers, officers and employees as in effect as of the date hereof with
respect to matters occurring at or prior to the Effective Time shall survive the
Merger and shall continue in full force and effect and without modification
(other than modifications which would enlarge the indemnification rights) for a
period of not less than the statutes of limitations applicable to such matters,
and Equity One agrees to cause the Surviving Entity to comply fully with its
obligations hereunder and thereunder. Without limiting the foregoing, the
Company shall, and after the Effective Time, the Surviving Entity shall
periodically advance expenses as incurred with respect to the foregoing
(including with respect to any action to enforce rights to indemnification or
the advancement of expenses) to the fullest extent permitted under applicable
law; provided, however, that the person to whom the expenses are advanced
provides an undertaking (without delivering a bond or other security) to repay
such advance if it is ultimately determined that such person is not entitled to
indemnification.
(b) Equity One shall, subject to the approval of the Company prior
to the Effective Time (which approval shall not be unreasonably withheld),
either (i) obtain continuation coverage for runoff liability with respect to the
Company's existing officers' and trust managers' or fiduciary liability
insurance policies, provided that Equity One shall not be obligated to pay more
than $135,000 in the aggregate for premiums for such coverage, or (ii) continue
to provide officers' and trust managers' and fiduciary liability insurance with
limits not less than existing policies for a period of not less than three (3)
years, provided that Equity One shall not be obligated to pay premiums in excess
of $45,000 per year for such insurance, in any case for the benefit of those
persons covered by such existing insurance.
28
(c) Equity One shall pay all costs and expenses, including
attorneys' fees, that may be incurred by any indemnified parties in enforcing
the indemnity and other obligations provided for in this Section 5.5.
(d) In the event Equity One or any of its respective successors or
assigns (i) consolidates with or merges into any other person and is not 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, proper provisions shall be made so that the successors and assigns of
Equity One, assume the obligations set forth in this Section 5.5.
(e) This Section 5.5, which shall survive the consummation of the
Merger at the Effective Time and shall continue without limit, is intended to
benefit the Company, the Surviving Entity, and any person or entity to be
indemnified hereunder, each of whom may enforce the provisions of this Section
5.5 (whether or not parties to this Agreement).
Section 5.6 Proxy Statement and Registration Statement. The Company and
Equity One shall promptly prepare and file with the SEC, as soon as practicable,
a proxy statement for the Company or, if approval of the Merger by Equity One's
stockholders is required by applicable law or otherwise, a joint proxy statement
(in either case, the "Proxy Statement") relating to the Merger and a
Registration Statement on Form S-4 in connection with the issuance of Equity One
Shares in the Merger (the "Registration Statement") as required by the Exchange
Act, the Securities Act and the rules and regulations thereunder. Each of Equity
One and the Company shall use commercially reasonable efforts to have the
Registration Statement declared effective under the Securities Act as promptly
as practicable after such filing. The Company and Equity One will cooperate with
each other in the preparation of the Proxy Statement. The Company and Equity One
shall use all reasonable efforts to respond promptly to any comments made by the
SEC with respect to the Proxy Statement, and to cause the Proxy Statement to be
mailed to the Company's Shareholders and Equity One's stockholders at the
earliest practicable date.
Section 5.7 Notification of Certain Matters. The Company shall give prompt
notice to Equity One, and Equity One shall give prompt notice to the Company, of
(i) the occurrence, or non-occurrence, of any event the effect of which is
likely to cause any representation or warranty of such party contained in this
Agreement to be untrue or inaccurate in any material respect at or prior to the
Effective Time, (ii) any material failure of such party to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder and (iii) the submission to the Company by any person of an inquiry
or proposal related to an Acquisition Transaction; provided, however, that the
delivery of any notice pursuant to this Section 5.7 shall not limit or otherwise
affect the remedies available hereunder to any of the parties receiving such
notice.
Section 5.8 Rights Agreement Amendment. Subject to the terms and
conditions of this Agreement, the Company shall promptly enter into an amendment
to the Rights Agreement (the "Rights Agreement Amendment") pursuant to which the
Rights Agreement and the Rights Agreement Rights will not be applicable to the
Merger, and consummation of the Merger shall not result in a "Distribution Date"
under the Rights
29
Agreement or in Equity One or its affiliates being an "Acquiring Person" or in
the Rights Agreement Rights becoming exercisable.
Section 5.9 Settlement of Shareholder Litigation. The Company shall use
its reasonable efforts to settle the lawsuit against the Company and others by
Southwest Securities, Inc., which is pending in the 00/xx/ Xxxxxxxx Xxxxxxxx
Xxxxx xx Xxxxxx Xxxxxx, Texas, Cause No. 00-6206 (the "Shareholder Litigation")
prior to the Effective Time. The Company shall not agree to pay any amounts in
excess of $500,000 in settlement of the Shareholder Litigation or make a
settlement, compromise, admission or acknowledgment which could give rise to
liability in excess of such amount or otherwise have an adverse effect on the
Company without the prior written consent of Equity One, which consent shall not
be unreasonably withheld. The Company agrees to stay the Shareholder Litigation
and the lawsuit styled Southwest Securities, Inc. v. United Investors Realty
Trust; In the 61/st/ Judicial District Court; Xxxxxx County, Texas, Cause No.
2001-15170 until the earlier of (i) the Effective Time and (ii) the termination
of this Agreement pursuant to Article 7.
Section 5.10 Termination of Advisory Agreement. On or before June 15,
2001, the Company shall have given notice to FCA Corp. pursuant to Section 3(b)
of the First Amended and Restated Advisory Agreement dated as of June 9, 1997,
as amended, between the Company and FCA Corp. (the "Advisory Agreement") of its
intention to terminate that agreement on the date six months after the date of
such notice and shall not thereafter amend such notice to extend the termination
date of the Advisory Agreement.
Section 5.11 Stock Exchange Listing. Equity One shall promptly prepare and
submit to the New York Stock Exchange (the "NYSE") a listing application
covering Equity One Shares issuable upon consummation of the Merger, and shall
use its reasonable efforts to obtain, prior to the Effective Time, approval for
listing of such Equity One Shares, subject to official notice of issuance to the
NYSE, and the Company shall cooperate with Equity One with respect to such
listing.
Section 5.12 Consent of Centrefund. Equity One shall use its commercially
reasonable efforts to obtain the consent of Centrefund Realty Corporation, an
Ontario corporation ("Centrefund"), to this Agreement and the transactions
contemplated hereby, including the Merger, pursuant to the Stock Exchange
Agreement among Equity One, Centrefund, and First Capital America Holding Corp.
dated May 18, 2001 (the "Centrefund Agreement"), on or before June 12, 2001.
Section 5.13 Contribution of Properties to Subsidiary. Prior to the
Effective Time, the Company shall form a new wholly owned subsidiary or
subsidiaries and contribute the properties listed in Section 5.13 of the
Disclosure Letter to such subsidiary or subsidiaries, or otherwise reorganize in
a manner acceptable to Equity One such that such properties are owned by a
wholly owned subsidiary of the Company and not directly by the Company.
Article 6
Conditions to Consummation of the Merger
30
Section 6.1 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligations of each party to effect the Merger are subject to the
satisfaction or waiver, where permissible, prior to the proposed Effective Time,
of the following conditions:
(a) this Agreement, the plan of merger (as such term is used in the
REIT Act) contained in this Agreement and the Merger shall have been approved
and adopted by the affirmative vote of the shareholders and stockholders of the
Company and Equity One, respectively, required by and in accordance with
applicable law and the Declaration and the charter of Equity One, as the case
may be;
(b) no statute, rule, regulation, executive order, decree or
injunction shall have been enacted, entered, promulgated or enforced by any
court or governmental authority against Equity One or the Company and be in
effect that prohibits or restricts the consummation of the Merger or makes such
consummation illegal (each party agreeing to use all reasonable efforts to have
any such prohibition lifted);
(c) The Registration Statement shall have been declared effective, and
no stop order suspending the effectiveness of the Registration Statement shall
be in effect; and
(d) Equity One Shares issuable upon consummation of the Merger shall
have been authorized for listing on the NYSE, subject to official notice of
issuance.
Section 6.2 Additional Condition to the Company's Obligation to Effect the
Merger. The obligation of the Company to effect the Merger is subject to the
satisfaction or waiver by the Company, prior to the proposed Effective Time, of
the following conditions:
(a) subject to Section 5.4, no action shall have been taken and be
continuing, and no statute, rule, regulation, judgment, administrative
interpretation, order or injunction shall have been enacted, promulgated,
entered, enforced or deemed applicable to the Merger, which would (i) make
illegal or otherwise prohibit the consummation of the Merger or (ii) result in a
significant delay in or materially restrict the ability of the Company, or
render the Company unable, to effect the Merger.
(b) Equity One shall not have breached or failed to comply in any
material respect with any of its obligations under this Agreement (other than as
a result of a breach by the Company of any of its obligations under this
Agreement) and such breach or failure shall continue unremedied for ten (10)
business days after Equity One has received written notice from the Company of
the occurrence of such breach or failure, except such breaches or failures (i)
which, individually and in the aggregate, would not have a Material Adverse
Effect and (ii) which, individually and in the aggregate, would not materially
impair or significantly delay the ability of Equity One and the Company to
effect the Merger; and
(c) the representations and warranties of Equity One contained in this
Agreement shall be true and correct in all material respects as of the Effective
Time; provided,
31
that the Company shall have notified Equity One promptly upon learning of such
failure of such representation or warranty to be true and correct.
(d) M.G.N. (USA), Inc., an affiliate of Equity One that on or before
the date hereof has entered into a letter agreement with the Company agreeing to
make an Equity One Share Election with respect to all of the 860,370 Shares
owned directly or indirectly by it (the "MGN Shares") and to vote the MGN Shares
in favor of the Merger, shall have properly made (and not revoked) prior to the
Effective Time a valid Equity One Share Election for all of the MGN Shares.
(e) Xxxxxxxxx Xxxxxxx, P.A., counsel to Equity One, shall have
delivered a legal opinion, dated as of the date of the Closing and addressed to
the Company and Equity One, to the effect that Equity One has qualified to be
treated as a REIT pursuant to the Code for each of its taxable years commencing
with its taxable year ending December 31, 1995 and at all times since that
initial taxable year. In rendering such opinions, Xxxxxxxxx Traurig, P.A. may
rely upon (and Equity One shall be required to make) representations requested
of Equity One by Xxxxxxxxx Xxxxxxx, P.A.
(f) The Board of Trust Managers of the Company shall have received
from First Union Securities, Inc., financial advisor to the Company, a written
opinion, dated as of the date of this Agreement, to the effect that the Merger
Consideration to be issued for each Share pursuant to the Merger is fair to the
stockholders of the Company from a financial point of view, which opinion shall
have been confirmed in writing to such Board as of the date the Proxy Statement
is first mailed to the shareholders of the Company and shall not have been
subsequently withdrawn.
Section 6.3 Additional Conditions to Equity One's Obligations to Effect the
Merger. The obligations of Equity One to effect the Merger shall be subject to
the satisfaction or waiver by Equity One, prior to the proposed Effective Time,
of the following conditions:
(a) subject to Section 5.4, no action shall have been taken and be
continuing, and no statute, rule, regulation, judgment, administrative
interpretation, order or injunction shall have been enacted, promulgated,
entered, enforced or deemed applicable to the Merger, which would (i) make
illegal or otherwise prohibit the consummation of the Merger or (ii) result in a
significant delay in or materially restrict the ability of Equity One, or render
Equity One unable, to effect the Merger.
(b) there shall not have occurred and be continuing (i) any general
suspension of trading in, or limitation on prices for, securities on any
national securities exchange or in the over-the-counter market in the United
States, (ii) the declaration of any banking moratorium or any suspension of
payments in respect of banks or any material limitation (whether or not
mandatory) on the extension of credit by lending institutions in the United
States, (iii) the commencement of a war, material armed hostilities or any other
material international or national calamity involving the United States, or (iv)
in the case of any of the foregoing existing at the time of the execution of the
Merger Agreement, a material acceleration or worsening thereof;
32
(c) the Company shall not have breached or failed to comply in any
material respect with any of its obligations under this Agreement (other than as
a result of a breach by Equity One of any of its obligations under this
Agreement) and such breach or failure shall continue unremedied for ten (10)
business days after the Company has received written notice from Equity One of
the occurrence of such breach or failure, except such breaches or failures (i)
which, individually and in the aggregate, would not have a Material Adverse
Effect and (ii) which, individually and in the aggregate, would not materially
impair or significantly delay the ability of Equity One and the Company to
effect the Merger; and
(d) the representations and warranties of the Company contained in
this Agreement shall be true and correct in all material respects as of the
Effective Time; provided, that Equity One shall have notified the Company
promptly upon learning of such failure of such representation or warranty to be
true and correct.
(e) Xxxxxxx & Xxxxx L.L.P., counsel to the Company, shall have
delivered a legal opinion, dated as of the date of the Closing and addressed to
the Company and Equity One, to the effect that the Company has qualified to be
treated as a REIT pursuant to the Code for each of its taxable years ending
December 31, 1995 through December 31, 2000, and the short taxable year
beginning January 1, 2001 and ending at the date that the Closing occurs. In
rendering such opinions, Xxxxxxx & Xxxxx L.L.P. may rely upon (and the Company
shall be required to make) representations requested of the Company by Xxxxxxx &
Xxxxx L.L.P.
(f) The Board of Directors of Equity One shall have received from The
Xxxxxxxx-Xxxxxxxx Company, LLC, financial advisor to Equity One, a written
opinion, dated as of the date of this Agreement, to the effect that the Merger
Consideration to be issued for each Share pursuant to the Merger is fair to the
stockholders of Equity One from a financial point of view, which opinion shall
have been confirmed in writing to such Board as of the date the Proxy Statement
is first mailed to the stockholders of Equity One (if approval of the Merger by
Equity One's stockholders is required by applicable law or otherwise) and shall
not have been subsequently withdrawn.
Article 7
Termination; Amendment; Waiver
Section 7.1 Termination; Amendment; Waiver. This Agreement may be
terminated and the Merger may be abandoned at any time notwithstanding approval
thereof by the shareholders of the Company, but prior to the Effective Time:
(a) by mutual written consent of the Board of Trust Managers of the
Company and the Board of Directors of Equity One;
(b) by Equity One or the Company if the Effective Time shall not have
occurred on or before November 30, 2001 (the "Termination Date") (provided that
the right to terminate this Agreement under this Section 7.1(b) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of or resulted in the failure of the Effective Time
to occur on or before such date);
33
(c) subject to Section 5.4, by Equity One or the Company if any court
of competent jurisdiction in the United States or other United States
governmental body shall have issued an order, decree or ruling, or taken any
other action restraining, enjoining or otherwise prohibiting the Merger and such
order, decree, ruling or other action shall have become final and non-
appealable;
(d) prior to Shareholder Approval, by Equity One if the Board of Trust
Managers of the Company withdraws or modifies in a manner adverse to Equity One
its favorable recommendation of the Merger or shall have recommended an
Acquisition Transaction with a party other than Equity One or any of its
affiliates;
(e) by Equity One if (i) any of the representations and warranties of
the Company contained in this Agreement were untrue in any material respect when
made or have since become, and at the time of termination remain, untrue in any
material respect, or (ii) the Company shall have breached or failed to comply in
any material respect with any of its obligations under this Agreement, and, in
either circumstance, the failure of such representation and warranty to be true
or the breach or failure shall continue unremedied for ten (10) business days
after the Company has received written notice from Equity One of the occurrence
of such failure to be true, breach or failure; provided, however, that in no
event shall such 10-day period extend beyond the Termination Date;
(f) by the Company if (i) any of the representations and warranties of
Equity One contained in this Agreement were untrue in any material respect when
made or have since become, and at the time of termination remain, untrue in any
material respect, or (ii) Equity One shall have breached or failed to comply in
any material respect with any of its obligations under this Agreement, and, in
either circumstance, the failure of such representation and warranty to be true
or the breach or failure shall continue unremedied for ten (10) business days
after Equity One has received written notice from the Company of the occurrence
of such failure to be true, breach or failure; provided, however, that in no
event shall such 10-day period extend beyond the Termination Date;
(g) prior to Shareholder Approval, by the Company if the Company
receives a written offer with respect to any Acquisition Transaction with a
party other than Equity One or its affiliates or such other party has commenced
a tender offer which, in either case, the Board of Trust Managers of the Company
believes in good faith is more favorable to the Company's shareholders than the
transactions contemplated by this Agreement;
(h) by Equity One or the Company if this Agreement and the Merger
shall not have been approved and adopted in accordance with the REIT Act or the
MGCL, as applicable, by the Company's shareholders and Equity One's stockholders
(if required under the MGCL) at their respective Special Meetings (or any
adjournments thereof);
(i) by the Company if (x) the Determination Price on the date that is
three (3) business days prior to the Closing Date is less than $11.30 per share
and the Company provides notice within one business day thereafter of its intent
to terminate in accordance with this Section 7.1(i) and (y) Equity One does not
provide notice to the Company and elect in writing, within one business day
following such notice of termination by the Company, to proceed in
34
compliance with the provisions of Section 2.1(a)(ii); for the purposes hereof,
the "Determination Price" shall mean the weighted average trading price per
share of Equity One Shares as quoted on the New York Stock Exchange for all
transactions during the 20 trading days ending on (and inclusive of) the
applicable date;
(j) by the Company if (i) the Determination Price is at any time less
than $9.50 per share, (ii) the Company provides notice within seven (7) days
thereafter of its intent to terminate in accordance with this Section 7.1(j),
and (iii) on the date of the notice described in the foregoing clause, the
Determination Price remains below $9.50 per share; or
(k) without any action on the part of either party hereto, if Equity
One has complied with its obligations hereunder and not obtained the consent of
Centrefund as described in Section 5.12 by 5:00 p.m. Eastern time on June 12,
2001.
Section 7.2 Effect of Termination. If this Agreement is terminated and
the Merger is abandoned pursuant to Section 7.1 hereof, this Agreement, except
for the provisions of Sections 5.3(b), 7.3 and 8.10 hereof shall forthwith
become void and have no effect, without any liability on the part of any party
or its trust managers, directors, officers or shareholders. The Confidentiality
Agreement shall remain in full force and effect following any termination of
this Agreement. Nothing in this Section 7.2 shall relieve any party to this
Agreement of liability for breach of this Agreement.
Section 7.3 Termination Fee. If this Agreement is terminated (i) by Equity
One under Section 7.1(e) and the Company is not entitled (and would not be
entitled upon Equity One's failure to remedy an existing breach or failure to
comply within ten business days) to terminate this Agreement pursuant to Section
7.1(f), (ii) by Equity One under Section 7.1(d), (iii) by Equity One or the
Company pursuant to Section 7.1(h) as a result of the failure of the Company's
shareholders to approve and adopt the plan of merger and this Agreement if at
the time of the failure to approve this Agreement and the Merger there shall
exist a bona fide proposal for an Acquisition Transaction and within twelve (12)
months after the date of termination the Company enters into a definitive
agreement with any third party with respect to an Acquisition Transaction, or
(iv) by the Company under Section 7.1(g), then the Company shall promptly, but
in no event later than ten business days after written request by Equity One,
deposit in escrow with an escrow agent selected by Equity One, as Equity One's
sole and exclusive remedy, a termination fee (the "Termination Fee") equal to
$2,000,000. The escrow agent shall pay to Equity One an amount equal to the
lesser of (i) the Termination Fee and (ii) the maximum amount that can be paid
to Equity One without causing Equity One to fail to meet the requirements of
Sections 856(c)(2) and (3) of the Code determined as if the payment of such
amount did not constitute income described in Sections 856(c)(2)(A)-(H) and
856(c)(3)(A)-(I) of the code ("Qualifying Income"), as determined by the
independent accountants of Equity One. In the event that all or any portion of
the Termination Fee remains in escrow after payment of the amount, if any,
required by the preceding sentence, the escrow agreement shall provide that
Equity One shall not be entitled to the remainder of the Termination Fee and no
amount thereof shall be released to Equity One unless and until the escrow agent
receives any one or combination of the following: (i) a letter from Equity One's
outside counsel indicating that it has received a ruling from the IRS the effect
of which holds that Equity One's receipt of the Termination Fee would not
jeopardize its status as a REIT ("REIT Requirements"), and that
35
receipt by Equity One of the remaining balance of the Termination Fee following
the receipt of and pursuant to such ruling would not be deemed constructively
received prior thereto (in which case the escrow agent shall release the
remainder of the Termination Fee in escrow to Equity One) or (ii) a letter (or a
series of letters) from the independent accountants of Equity One, each
indicating any additional amounts that Equity One can be entitled to and can be
paid at that time without causing it to fail to meet the REIT Requirements (in
which case the escrow agent shall release such additional amounts from escrow to
Equity One). The obligation of the Company to pay any unpaid portion of the
Termination Fee shall terminate three years from the date hereof, and any unpaid
portion of the Termination Fee remaining in escrow three years from the date
hereof shall be released to the Company and the escrow shall terminate at that
time.
Section 7.4 Amendment. To the extent permitted by applicable law, this
Agreement may be amended by action taken by or on behalf of the Board of Trust
Managers of the Company and the Boards of Directors of Equity One at any time
before or after adoption of this Agreement by the shareholders of the Company
but, after any such shareholder approval, no amendment shall be made which
decreases the Merger Consideration or which adversely affects the rights of the
Company's shareholders hereunder without the approval of the shareholders of the
Company. This Agreement may not be amended except by an instrument in writing
signed on behalf of all of the parties.
Section 7.5 Extension; Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken by or on behalf of the Board of Trust Managers
of the Company and the Boards of Directors of Equity One, may (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 contained herein by any other applicable party or in any document,
certificate or writing delivered pursuant hereto by any other applicable party
or (iii) waive compliance with any of the agreements or conditions contained
herein. Any agreement on the part of any 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.
Article 8
Miscellaneous
Section 8.1 Survival of Representations and Warranties. The
representations and warranties made in Articles 3 and 4 shall not survive beyond
the Effective Time. This Section 8.1 shall not limit any covenant or agreement
of the parties hereto which by its terms contemplates performance after the
Effective Time.
Section 8.2 Entire Agreement; Assignment. Except for the Confidentiality
Agreement and the Disclosure Letter, this Agreement (a) constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof and (b) shall not
be assigned by operation of law or otherwise; provided, however, that Equity One
may assign any of its rights and obligations to any wholly-owned subsidiary of
Equity One incorporated under the laws of a state of the United States the
corporate laws of which provide for mergers of corporations of such state with a
Texas real estate
36
investment trust, but no such assignment shall relieve Equity One, as the case
may be, of its obligations hereunder.
Section 8.3 Enforcement of the Agreement; Jurisdiction. The parties
hereto agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions hereof in
any federal or state court located in Broward County, Florida, this being in
addition to any other remedy to which they are entitled at law or in equity.
The parties hereto consent and agree that the state or federal courts
located in Broward County, Florida, shall have exclusive jurisdiction to hear
and determine any claims or disputes pertaining to this Agreement or to any
matter arising out of or related to this Agreement and each party hereto waives
any objection that it may have based upon lack of personal jurisdiction,
improper venue or forum non conveniens and hereby consents to the granting of
such legal or equitable relief as is deemed appropriate by such court.
Section 8.4 Validity. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
Section 8.5 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered in person, by facsimile transmission with confirmation
of receipt, or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties as follows:
if to Equity One:
Equity One, Inc.
0000 X.X. Xxxxx Xxxxxxx Xxxxx
Xxxxx Xxxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxxxxxx
with a copy to:
Xxxxxxxxx Traurig, P.A.
0000 Xxxxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
if to the Company:
United Investors Realty Trust
0000 Xxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
00
with copies to:
Xxxxxxx & Xxxxx L.L.P.
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxx
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
Section 8.6 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida (except with
respect to matters relating to the Company that are governed by the REIT Act, as
to which the REIT Act shall apply and with respect to matters relating to Equity
One that are governed by the MGCL, as to which the MGCL shall apply) regardless
of the laws that might otherwise govern under principles of conflicts of laws
applicable thereto.
Section 8.7 Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
Section 8.8 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to confer upon any other person any rights or
remedies of any nature whatsoever under or by reason of this Agreement except
for Sections 2.7 and 5.5 (which are intended to be for the benefit of the
persons referred to therein, and may be enforced by any such persons).
Section 8.9 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which shall
constitute one and the same agreement.
Section 8.10 Fees and Expenses. Whether or not the Merger is consummated,
all costs and expenses incurred in connection with the transactions contemplated
by this Agreement shall be paid by the party incurring such expenses, except as
provided expressly to the contrary herein.
Section 8.11 Certain Definitions.
(a) "business day" shall mean any day that is not a Saturday, Sunday
or other day on which banking institutions in New York City, New York are
authorized or required by law or executive order to close;
(b) "Environmental Law" means any law, regulation, decree, judgment,
permit or authorization relating to the environment, including, without
limitation, pollution, contamination, cleanup and protection of the environment;
38
(c) "Environmental Liabilities and Costs" means all damages, penalties
or clean-up costs assessed or levied pursuant to any Environmental Law;
(d) "Hazardous Materials" means (i) any petroleum or petroleum
products, radioactive materials (including naturally occurring radioactive
materials), asbestos in any form that is or could become friable, urea
formaldehyde foam insulation, polychlorinated biphenyls or transformers or other
equipment that contain dielectric fluid containing polychlorinated biphenyls,
(ii) any chemicals, materials or substances which are now defined as or included
in the definition of "solid wastes," "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous substances," "restricted hazardous
wastes," "toxic substances" or "toxic pollutants," or words of similar import,
under any Environmental Law and (iii) any other chemical, material, substance or
waste, exposure to which is now prohibited, limited or regulated under any
Environmental Law in a jurisdiction in which the Company or any of its
subsidiaries operates);
(e) "knowledge" shall mean, with respect to any entity, the actual
knowledge, after due inquiry, of the executive officers of such entity,
provided, however, that the Company's knowledge shall also include the actual
knowledge, after due inquiry, of the officers of FCA Corp.;
(f) "Material Adverse Effect" shall mean any adverse change in the
business, operations, prospects, financial condition or results of operations of
the Company or Equity One, as applicable, and its subsidiaries that is material
to the Company or Equity One, as applicable, and its subsidiaries taken as a
whole, excluding any such adverse change that is due to events, occurrences,
facts, conditions, changes, developments or effects which affect the economy or
the Company's or Equity One's, as applicable, industry generally;
(g) "Release" means any spill, effluent, emission, leaking, pumping,
pouring, emptying, escaping, dumping, injection, deposit, disposal, discharge,
dispersal, leaching or migration into the indoor or outdoor environment, or into
or out of any property owned, operated or leased by the applicable party or its
subsidiaries;
(h) "Remedial Action" means all actions, including, without
limitation, any capital expenditures, required by a governmental authority or
required under any Environmental Law, or voluntarily undertaken to (i) clean up,
remove, treat, or in any other way ameliorate or address any Hazardous Materials
or other substance in the indoor or outdoor environment; (ii) prevent the
Release or threat of Release, or minimize the further Release of any Hazardous
Material so it does not endanger or threaten to endanger the public or employee
health or welfare of the indoor or outdoor environment; (iii) perform pre-
remedial studies and investigations or post-remedial monitoring and care
pertaining or relating to a Release; or (iv) bring the applicable party into
compliance with any Environmental Law; and
(i) "subsidiary" shall mean, when used with reference to an entity,
any other entity of which securities or other ownership interests having
ordinary voting power to elect a majority of the board of directors or other
persons performing similar functions, or a majority of the outstanding voting
securities of which, are owned directly or indirectly by such entity.
39
Section 8.12 Disclosure Letter. Disclosure of any matter in the
Disclosure Letter or Equity One Disclosure Letter shall not constitute an
expression of a view that such matter is material or is required to be disclosed
pursuant to this Agreement.
Section 8.13 Press Releases. Equity One and the Company will consult with
each other before issuing any press release or otherwise making any public
statements with respect to the transactions contemplated hereby and shall not
issue any such press release or make any such public statement prior to such
consultation, provided, however, that a party may issue a press release without
such prior consultation if required by law or by obligations pursuant to the
rules of NASDAQ and any other appropriate exchange.
40
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all at or on
the day and year first above written.
EQUITY ONE, INC.
/s/ Xxxxx Xxxxxxx
By:_________________________________________
Xxxxx Xxxxxxx, Chairman of the Board and
Chief Executive Officer
UNITED INVESTORS REALTY TRUST
/s/ Xxxxxx X. Xxxxxxx
By:_________________________________________
Xxxxxx X. Xxxxxxx
President
