Covenants Relating to Conduct of Business Pending the Merger. Section 5.1 Conduct of Business by Cabot and Cabot LP. (a) During the period from the date of this Agreement to the earlier of the termination of this Agreement or the Merger Effective Time, Cabot shall, and shall cause each of the Cabot Subsidiaries (including Cabot LP) to (i) carry on its businesses in the usual, regular and ordinary course consistent with past practice and in compliance in all material respects with applicable Law, in each case, with no less diligence and effort than would be applied in the absence of this Agreement and (ii) to the extent consistent with the foregoing clause (i), use its commercially reasonable efforts to preserve intact its current business organization, goodwill, ongoing businesses, Cabot's status as a REIT within the meaning of the Code and its relationships with customers, suppliers, distributors, lessors, creditors, employees, contractors and others having business dealings with it with the intention that its goodwill and ongoing businesses shall be unimpaired at the Merger Effective Time. On a regular and frequent basis, and from time to time promptly upon CalWest's reasonable request, Cabot shall confer with CalWest and report on operational matters. Cabot shall promptly (but in any event within two (2) Business Days) advise CalWest orally and in writing of any Cabot Material Adverse Effect or any matter which would constitute a Cabot Material Adverse Effect (including any litigation having potential Liability to Cabot or any Cabot Subsidiary (other than litigation arising out of or relating to personal injury claims that are covered by applicable insurance) in excess of $250,000 or any complaint, investigation or hearing by any Governmental Entity involving Cabot or any Cabot Subsidiary). Cabot shall promptly provide to CalWest (and its counsel) copies of all filings made by Cabot with any Governmental Entity in connection with this Agreement and the transactions contemplated hereby, including any Cabot SEC Document filed after the date of this Agreement. (b) Without limiting the generality of the foregoing, during the period from the date of this Agreement to the earlier of the termination of this Agreement or the Merger Effective Time, except as otherwise expressly provided by this Agreement or the Transaction Documents or to the extent consented to by CalWest in advance and in writing, Cabot shall not and shall not authorize or commit or agree to, and shall cause the Cabot Subsidiaries (including Cabot LP) not to (and not to authorize or commit or agree to): (i) (A) declare, set aside or pay any dividends on, or make any other actual, constructive or deemed distributions (whether in cash, shares, property or otherwise) in respect of, any of Cabot's shares, stock or the partnership interests, shares, stock or other equity interests in any Cabot Subsidiary that is not directly or indirectly wholly-owned by Cabot, except for distributions (i) on the Cabot Common Shares declared with respect to the quarter ended September 30, 2001 and (ii) on the Preferred Units as required by their terms, and provided, that Cabot may make dividend payments it is required to make by the Code in order to maintain REIT status and those that are sufficient to eliminate any federal tax liability, (B) split, combine or reclassify any shares, stock, partnership interests or other equity interests or issue or authorize the issuance of any securities in respect of, in lieu of or in substitution for shares of such shares, stock, partnership interests or other equity interests or (C) purchase, redeem (except for the redemption of LP Units for shares of Public Common Shares in accordance with their terms) or otherwise acquire any Cabot Common Shares, stock, other equity interests or securities of Cabot or the partnership interests, stock, other equity interests or securities of any Cabot Subsidiary or any options, warrants or rights to acquire, or security convertible into, Cabot Common Shares, stock, other equity interest or securities of Cabot or the partnership interests, stock or other equity interests in any Cabot Subsidiary, except in connection with the use of Cabot Common Shares or LP Units to pay the exercise price or Tax withholding obligation upon the exercise of a Cabot Option as presently permitted under any Cabot Option Plan; (ii) (A) classify or re-classify any unissued Cabot Common Shares, shares of stock, units, interests, any other voting or redeemable securities (including LP Units or other partnership interests) or stock based performance units of Cabot or any Cabot Subsidiary; (B) change the number of issued and outstanding Cabot Common Shares, shares of stock, units, interests, any other voting or redeemable securities (including LP Units or other partnership interests) or stock based performance units of Cabot or Cabot Subsidiaries, (C) authorize for issuance, issue, deliver, sell, or grant any option or other right in respect of, any Cabot Common Shares, shares of stock, units, interests, any other voting or redeemable securities (including LP Units or other partnership interests), or stock based performance units of Cabot or any Cabot Subsidiary or any securities convertible into, or any rights, warrants or options to acquire, any such shares, units, interests, voting securities or convertible or redeemable securities (except, with respect to the foregoing clause (A), (B) and (C), (1) as required under the Cabot LP Agreement as presently in effect, (2) in connection with the exercise of outstanding Cabot Options under the Cabot Option Plan or the exchange of units of Cabot LP for Cabot Common Shares or other units of partnership interest of Cabot LP, pursuant to the terms of such units, (3) the issuance of DEUs for the fiscal year ending on the earlier of (a) December 31, 2001 and (b) the Merger Effective Time as required by existing Cabot Options (including DEUs) and (4) as required under the Option Agreement) or (D) amend or waive any option to acquire Cabot Common Shares; (iii) amend the Cabot Charter or the Cabot By-laws, the Cabot LP Agreement or any other comparable charter or organizational documents of any Cabot Subsidiary (including any joint venture agreement to which Cabot or any Cabot Subsidiary is a party), except as otherwise contemplated by this Agreement; (iv) (A) merge, consolidate or enter into any other business combination transaction with any Person, except as provided in Section 6.4, (B) acquire (by merger, consolidation or acquisition) any corporation, partnership or other entity or (C) purchase any equity interest in or all or substantially all of the assets of, any Person or any division or business thereof; (v) (A) enter into any new commitments obligating Cabot or any Cabot Subsidiary to make capital expenditures in excess of $1,500,000 in the aggregate for each successive period of forty-five (45) days following the date hereof, not including tenant allowances under existing leases and the commitments set forth in Section 5.1(b)(v) of the Cabot Disclosure Letter, provided Cabot shall be permitted to enter into a commitment to make repairs and/or prevent damage to any Cabot Properties as is necessary in the event of an emergency situation as long as Cabot provides CalWest with a copy of such commitment within two (2) Business Days after such commitment is entered into, (B) acquire, enter into any option to acquire, or exercise an option or other right or election or enter into any other commitment or contractual obligation (each, a "Commitment") for the acquisition of any real property or other transaction (other than (i) any Commitment referred to in Section 5.1(b)(v) of the Cabot Disclosure Letter, (ii) any exchange of real property pursuant to Section 1031 of the Code referred to in Section 5.1(b)(v) of the Cabot Disclosure Letter or (iii) entering into leases for property of less than 100,000 square feet and incurring any reasonable and customary expenditures related thereto), (C) commence construction of, or enter into any Commitment to develop or construct, other real estate projects involving in excess of $250,000 (other than any Commitment referred to in Section 5.1(b)(v) of the Cabot Disclosure Letter), (D) incur additional indebtedness (secured or unsecured) except for working capital under its revolving line(s) of credit and Commitments for indebtedness described in Section 5.1(b)(v) of the Cabot Disclosure Letter or (E) modify, amend, terminate or enter into any commitment to modify, amend or terminate any indebtedness in existence as of the date hereof; (vi) sell, mortgage, subject to Lien (or, in the case of an involuntary Lien, failed to take action within thirty (30) days of the creation thereof to have such Lien removed) or otherwise dispose of any of the Cabot Properties, except those that are (A) permitted by Section 5.1(b)(v), or (B) made in the ordinary course of business and subject of a binding contract in existence on the date of this Agreement; (vii) sell, lease, mortgage, subject to Lien or otherwise dispose of any of its personal or intangible property, except in transactions made in the ordinary course of business and which are not material, individually or in the aggregate; (viii) except as set forth in Section 5.1(b)(viii) of the Cabot Disclosure Letter, (A) assume or guarantee the indebtedness of another Person, enter into any "keep well" or other agreement to maintain any financial statement condition of another Person or enter into any arrangement having the economic effect of any of the foregoing, (B) prepay, refinance or amend any existing indebtedness, (C) make any loans, advances, capital contributions or investments in any other Person or (D) pledge or otherwise encumber shares of capital stock or securities in Cabot or any Cabot Subsidiary; (ix) (A) make or rescind any express or deemed material election relating to Taxes (unless Cabot reasonably determines, after prior consultation with CalWest, that such action is (i) required by Law; or (ii) necessary or appropriate to preserve Cabot's status as a REIT or the partnership status of Cabot LP or any other Cabot Subsidiary which files Tax Returns as a partnership for federal tax purposes (in which case, Cabot or Cabot LP, as the case may be, shall make such election in a timely manner); provided, that nothing in this Agreement shall preclude Cabot from designating dividends paid by it as "capital gain dividends" within the meaning of Section 857 of the Code (with the prior written consent of CalWest, which will not be unreasonably withheld), or (B) elect to pay tax on any capital gain realized after January 1, 2001; (x) (A) fail to maintain its books and records in all material respects in accordance with GAAP consistently applied, (B) change any of its methods, principles or practices of accounting in effect other than as required by GAAP; provided, that with the consent of CalWest, which shall not be unreasonably withheld, Cabot may implement a change in method of accounting for federal income tax purposes with respect to classifying certain property as personal property rather than real property, (C) settle or compromise any claim, action, suit, litigation, proceeding, arbitration, investigation, audit or controversy relating to Taxes, except in the case of settlements or compromises relating to Taxes on real property or sales Taxes in an amount not to exceed, individually or in the aggregate, $250,000, or change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ended December 31, 2000, or (D) revalue in any material respect any of its assets, including writing-off accounts receivable, except, in each of the foregoing cases, as may be required by the SEC, applicable Law or GAAP (in which case, Cabot shall promptly inform CalWest of such changes); (xi) other than as set forth in Section 6.6(d) and except as set forth in Section 5.1(b)(xi) of the Cabot Disclosure Letter, (A) adopt any new employee benefit plan, incentive plan, severance plan, bonus plan, compensation, special remuneration, retirement, health, life, disability, stock option or similar plan, grant new stock appreciation rights or amend any existing plan or rights, (B) enter into or amend any employment agreement or similar agreement or arrangement or, except in the ordinary course consistent with past practice, grant or become obligated to grant any increase in the compensation or benefits of officers or employees, (C) grant any severance or termination pay, or any increase thereof, to any trustee, officer or employee, except payments made pursuant to written agreements or plans outstanding on the date hereof, the material terms of which are disclosed in Section 5.1(b)(xi) of the Cabot Disclosure Letter and copies of which have been provided to CalWest, (D) increase the number of its full-time permanent employees by an amount inconsistent with past practice or (E) change any actuarial or other assumption used to calculate funding obligations with respect to any Cabot Pension Plan, or change the manner in which contributions to any Cabot Pension Plan are made or the basis on which such contributions are determined, except, in each of the foregoing cases, as may be required by Law (in which case, Cabot shall promptly inform CalWest of such action); (xii) settle or compromise any material litigation, including any shareholder derivative or class action claims (without regard to materiality), arising out of or in connection with any of the transactions contemplated by this Agreement, or waive, release or assign any material rights or claims; (xiii) enter into or amend or otherwise modify any agreement or arrangement with Persons that are Affiliates or Associates of Cabot or any Cabot Subsidiary or, as of the date of this Agreement, are employees, officers or trustees or directors of Cabot or any Cabot Subsidiary without the prior written consent of CalWest and the approval of a majority of the "independent" members of the Cabot Board of Trustees; (xiv) authorize, recommend, propose or announce an intention to adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of Cabot or any of the Cabot Subsidiaries; (xv) fail to use its commercially reasonable efforts to maintain with financially responsible insurance companies insurance, insurance coverage substantially similar to insurance coverage maintained by Cabot and the Cabot Subsidiaries on the date hereof; (xvi) (A) amend or terminate, or waive compliance with the terms of or breaches under, any material term of any Material Contract or enter into a new contract, agreement or arrangement that, if entered into prior to the date of this Agreement, would have been required to be listed in Section 4.1(u)(i) of the Cabot Disclosure Letter or (B) other than in the ordinary course of business consistent with past practice, waive, release, grant or transfer any rights of material value; (xvii) enter into any Tax Protection Agreement; (xviii) fail to use its commercially reasonable efforts to comply or remain in compliance with all material terms and provisions of any agreement relating to any outstanding indebtedness (as defined in Section 4.1(g)) of Cabot or any Cabot Subsidiary; (xix) take any action that would, or that would reasonably be expected to, result in (A) any of the representations and warranties of Cabot set forth in this Agreement becoming untrue or incorrect or (B) any of the Tender Offer Conditions or Section 7.1 not being satisfied; (xx) fail to (A) duly and timely file all material reports, Tax Returns and other material documents required to be filed with all Governmental Entities and other authorities (including the New York Stock Exchange), subject to extensions permitted by Law, provided Cabot notifies CalWest and its counsel that it is availing itself of such extensions and provided such extensions do not adversely affect Cabot's status as a qualified REIT under the Code or (B) fail to cause all such reports and other documents to be complete and accurate in all material respects when filed; (xxi) fail to pay any Taxes or other material debts when due; (xxii) sell, securitize,
Appears in 1 contract
Covenants Relating to Conduct of Business Pending the Merger. Section 5.1 3.1 Conduct of Business by Cabot Chateau and Cabot LPChateau OP and ROC.
(a) During the period from the date of this Agreement to the earlier of the termination of this Agreement or the Merger Effective Time, Cabot Chateau shall, and shall cause each of the Cabot Chateau Subsidiaries (including Cabot LPChateau OP) to (i) use all commercially reasonable efforts to, carry on its businesses in the usual, regular and ordinary course in substantially the same manner as heretofore conducted and consistent with past practice and in compliance in all material respects with applicable Law, in each case, with no less diligence and effort than would be applied in the absence of this Agreement and (ii) to the extent consistent with the foregoing clause (i), use its commercially reasonable efforts to preserve intact (i) its current business organization, goodwill, assets, ongoing businesses, Cabotand (ii) Chateau's status as a REIT within the meaning of the Code Code. During the period from the date of this Agreement to the Effective Time, Chateau shall, and shall cause each of the Chateau Subsidiaries (including Chateau OP) which has been classified for federal income tax purposes as a partnership to preserve its relationships with customersstatus as a partnership for federal income tax purposes and not enter into or amend a Limited Partner Tax Agreement. Chateau will promptly deliver to Purchaser true and correct copies of any report, suppliersstatement, distributors, lessors, creditors, employees, contractors and others having business dealings with it schedule or other document filed with the intention that its goodwill SEC by Chateau subsequent to the date of this Agreement; and ongoing businesses shall be unimpaired at the Merger Effective Time. On a regular and frequent basis, and from time to time Chateau will promptly upon CalWest's reasonable request, Cabot shall confer with CalWest and report on operational matters. Cabot shall promptly (but in any event within two (2) Business Days) advise CalWest orally and in writing notify Purchaser of any Cabot Material Adverse Effect litigation pending or threatened having, to the knowledge of Chateau, potential liability to Chateau or any matter which would constitute a Cabot Material Adverse Effect (including any litigation having potential Liability to Cabot or any Cabot Subsidiary (other than litigation arising out of or relating to personal injury claims that are covered by applicable insurance) the Chateau Subsidiaries in excess of $250,000 200,000 or any complaint, investigation or hearing hearing, of which Chateau has Knowledge, by any a Governmental Entity involving Cabot Chateau or any Cabot Subsidiary). Cabot shall promptly provide to CalWest (and its counsel) copies of all filings made by Cabot with any Governmental Entity in connection with this Agreement and the transactions contemplated hereby, including any Cabot SEC Document filed after the date of this AgreementChateau Subsidiaries.
(b) Without limiting the generality of the foregoing, during the period from the date of this Agreement to the earlier of the termination of this Agreement or the Merger Effective Time, except as set forth in Section 3.1(b) of the Chateau Disclosure Letter, as otherwise expressly provided contemplated by this Agreement or the Transaction Documents or to the extent consented to by CalWest in writing in advance by Purchaser, Chateau and in writing, Cabot Chateau OP and each other Chateau Subsidiary shall not and shall not engage in, authorize or commit or agree to, and shall cause to any of the Cabot Subsidiaries (including Cabot LP) not to (and not to authorize or commit or agree to):following:
(i) take any action that would prevent or delay the consummation of the transactions contemplated by this Agreement or the other Transaction Documents;
(ii) (A) declare, set aside or pay any dividends on, or make any other actual, constructive or deemed distributions (whether in cash, shares, property or otherwise) in respect of, any of CabotChateau's shares, capital stock or the partnership interests, shares, stock or other equity interests in any Cabot Chateau Subsidiary that is not directly or indirectly wholly-owned by Cabotwholly ow▇▇▇ ▇▇ ▇▇▇▇▇▇▇, except for distributions ▇▇▇▇▇▇ (i▇) on the Cabot Common Shares declared authorization and payment of quarterly dividends with respect to the quarter ended September 30Chateau Common Stock on any quarterly anniversaries of prior dividend record and payment dates in accordance with past practice, 2001 and at the same rate per share as the most recent quarterly dividend, (2) at the Closing, in an amount equal to (x) the fraction equal (A) the number of days following the most recent such dividend payment date up to but not including the Closing Date divided by (B) 91.25, multiplied by (y) the same quarterly dividend rate, provided that, with respect to clauses (1) and (ii2), Chateau shall notify Purchaser in writing of the proposed record date for any such distribution at least 10 days prior to such date, (3) a distribution per OP Unit in the same amount as a dividend per share of Chateau Common Stock permitted pursuant to clauses (1), and (2) above, with the same record and payment dates as such dividends on Chateau Common Stock, (4) quarterly distributions with respect to the Preferred Chateau Series A OP Units as which are required by their termsthe terms of the Chateau OP Agreement, and provided, (5) any distribution (or an increase in a distribution) by Chateau that Cabot may make dividend payments it is required to make by the Code in order minimum amount necessary for Chateau to maintain REIT status status, or avoid the incurrence of any Taxes under Section 857 of the Code, avoid the imposition of any excise Taxes under Section 4981 of the Code; provided, however, that any such distribution or increase referred to in this clause (5) shall reduce the Merger Consideration dollar for dollar, and those shall be determined by taking into account that are sufficient to eliminate any federal tax liabilitythe Common Stock Merger Consideration is a distribution qualifying for the dividends paid deduction under Sections 561 and 562 of the Code, (B) split, combine or reclassify any shares, capital stock, partnership interests or other equity interests or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of such shares, capital stock, partnership interests or other equity interests interests, or take any similar action described in Section 1.7(d) or Section 1.9(d) or (C) purchase, redeem (except for the redemption of LP OP Units for shares of Public Common Shares in accordance with their terms) or otherwise acquire any Cabot Common Shares, stock, other equity interests or securities shares of Cabot Chateau's capital stock or the partnership interests, stock, stock or other equity interests or securities of in any Cabot Chateau Subsidiary or any options, warrants or rights to acquire, or security convertible into, Cabot Common Shares, stock, other equity interest or securities shares of Cabot Chateau's capital stock or the partnership interests, stock or other equity interests in any Cabot Chateau Subsidiary, except to repurchase shares of Chateau Common Stock issued under any Chateau Option Plan or in connection with the use of Cabot Chateau Common Shares or LP Units Stock to pay the exercise price or Tax withholding obligation upon the exercise of a Cabot Chateau Option as presently permitted under any Cabot the Chateau Option PlanPlans;
(iiiii) (A) classify issue, deliver, sell or re-classify grant any unissued Cabot Common Shares, option or other material right in respect of any shares of capital stock, units, interests, any other voting or redeemable securities (including LP OP Units or other partnership interests) or stock based performance units of Cabot Chateau or any Cabot Subsidiary; (B) change the number of issued and outstanding Cabot Common Shares, shares of stock, units, interests, any other voting or redeemable securities (including LP Units or other partnership interests) or stock based performance units of Cabot or Cabot Subsidiaries, (C) authorize for issuance, issue, deliver, sell, or grant any option or other right in respect of, any Cabot Common Shares, shares of stock, units, interests, any other voting or redeemable securities (including LP Units or other partnership interests), or stock based performance units of Cabot or any Cabot Chateau Subsidiary or any securities convertible into, or any rights, warrants or options to acquire, any such shares, units, interests, voting securities or convertible or redeemable securities (exceptsecurities, with respect to the foregoing clause except (A)) to Chateau or a Chateau Subsidiary, (B) and (C), (1) as permitted or required under the Cabot LP Chateau OP Agreement as presently in effecteffect of the date hereof, (2C) in connection with the exercise of outstanding Cabot Chateau Stock Options under the Cabot Chateau Option Plan or the exchange of units OP Units for shares of Cabot LP for Cabot Chateau Common Shares or other units of partnership interest of Cabot LPStock, pursuant to the terms of such units, (3) the issuance of DEUs for the fiscal year ending on the earlier of (a) December 31, 2001 and (b) the Merger Effective Time as required by existing Cabot Options (including DEUs) and (4) as required under the Option Agreement) or (D) amend in connection with conversion of any of Chateau or waive any option to acquire Cabot Common SharesChateau OP convertible securities outstanding as of the date hereof;
(iiiiv) amend the Cabot Chateau Charter or the Cabot Chateau By-laws, the Cabot LP Chateau OP Agreement or any other comparable charter or organizational documents of any Cabot Subsidiary (including any joint venture agreement to which Cabot or any Cabot Subsidiary is a party)Chateau Subsidiary, except as otherwise contemplated by this Agreement;
(ivv) (Aexcept as set forth in Section 3.1(b)(v) of the Chateau Disclosure Letter, merge, consolidate or enter into any other business combination transaction with any Person, except as provided in Section 6.4, (B) acquire (by merger, consolidation or acquisition) any corporation, partnership or other entity or (C) purchase any equity interest in or all or substantially all of the assets of, any Person or any division or business thereof;
(vvi) (A) enter into any new commitments obligating Cabot or any Cabot Subsidiary to make capital expenditures in excess of $1,500,000 in the aggregate for each successive period of forty-five (45) days following the date hereof, not including tenant allowances under existing leases and the commitments except as set forth in Section 5.1(b)(v3.1(b)(vi) of the Cabot Chateau Disclosure Letter, provided Cabot shall be permitted to enter into a commitment to make repairs and/or prevent damage to any Cabot Properties as is necessary in the event of an emergency situation as long as Cabot provides CalWest with a copy of such commitment within two (2) Business Days after such commitment is entered into, (BA) acquire, enter into any option to acquire, or exercise an option or other right or election or enter into any other commitment or contractual obligation (each, a "Commitment") for the acquisition of any real property or other transaction (other than (i) any Commitment referred to in Section 5.1(b)(v3.1(b)(vi) of the Cabot Chateau Disclosure Letter) involving nonrefundable deposits; (B) make any capital expenditures, (ii) any exchange of real property pursuant to Section 1031 of the Code referred to in Section 5.1(b)(v) of the Cabot Disclosure Letter or (iii) entering into leases for property of less than 100,000 square feet and incurring any reasonable and customary expenditures related thereto), (C) commence construction of, or enter into any Commitment to develop or construct, construct other real estate projects involving in excess of $250,000 (other than any Commitment referred to in or contemplated by Section 5.1(b)(v3.1(b)(vi) of the Cabot Chateau Disclosure Letter), or (DC) incur additional indebtedness (secured Indebtedness or unsecured) guarantee the Indebtedness of another Person, except for working capital under its revolving line(s) of credit and Commitments for indebtedness described Indebtedness incurred in accordance with Section 5.1(b)(v3.1(b)(vi) of the Cabot Chateau Disclosure Letter or (E) modify, amend, terminate or enter into any commitment to modify, amend or terminate any indebtedness in existence as of the date hereof;
(vi) sell, mortgage, subject to Lien (or, in the case of an involuntary Lien, failed to take action within thirty (30) days of the creation thereof to have such Lien removed) or otherwise dispose of any of the Cabot Properties, except those that are (A) permitted by Section 5.1(b)(v), or (B) made in the ordinary course of business and subject of a binding contract in existence on the date of this AgreementLetter;
(vii) sell, mortgage, lease, mortgage, subject to Lien or otherwise encumber or dispose of any of its personal the Chateau Properties, or intangible propertyother assets, or assign or encumber the right to receive income, dividends, distributions and the like or agree to do any of the foregoing, except as referred to in transactions made in or contemplated by Section 3.1(b)(vii) of the ordinary course of business and which are not material, individually or in the aggregateChateau Disclosure Letter;
(viii) except as set forth in Section 5.1(b)(viii) issue or sell any debt securities or warrants or other rights to acquire debt securities of the Cabot Disclosure Letter, (A) assume Chateau or guarantee the indebtedness of another Personany Chateau Subsidiary, enter into any "keep well" or other agreement to maintain any financial statement condition of another Person or enter into any arrangement having the economic effect of any of the foregoing;
(ix) except for matters disclosed in Section 3.1(b)(ix) of the Chateau Disclosure Letter, (B) prepay, refinance or amend any existing indebtedness, (C) Indebtedness or make any loans, advances, capital contributions or investments in any other Person or (D) pledge or otherwise encumber shares in excess of capital stock or securities $250,000 in Cabot or any Cabot Subsidiarythe aggregate;
(ix) (Ax) make or rescind any express or deemed material election relating to Taxes (unless Cabot Chateau reasonably determines, after prior consultation with CalWest, determines that such action is (i) required by Law; Law or (ii) necessary or appropriate to preserve CabotChateau's status as a REIT or the partnership status of Cabot LP Chateau OP or any other Cabot Chateau Subsidiary which files Tax Returns as a partnership for federal tax purposes (in which case, Cabot or Cabot LP, as the case may be, shall make such election in a timely mannerpurposes); provided, however, that nothing in this Agreement shall preclude Cabot Chateau from designating dividends paid by it as "capital gain dividends" within the meaning of Section 857 of the Code (with the prior written consent of CalWest, which will not be unreasonably withheld), or (B) elect to pay tax on any capital gain realized after January 1, 2001Code;
(xxi) (A) fail to maintain its books and records change in all any material respects in accordance with GAAP consistently applied, respect (Bexcept as may be required by Law) change any of its methods, principles or practices of accounting in effect other than as required by GAAP; provided, that with the consent of CalWest, which shall not be unreasonably withheld, Cabot may implement a change in method of accounting for federal income tax purposes with respect to classifying certain property as personal property rather than real property, or (CB) settle or compromise any claim, action, suit, litigation, proceeding, arbitration, investigation, audit or controversy relating to Taxes, except in the case of settlements or compromises relating to Taxes on real property or sales Taxes in an amount not to exceed, individually or in the aggregate, $250,000, or change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ended December 31, 20002001, or (D) revalue in any material respect any of its assets, including writing-off accounts receivable, except, in each of the foregoing cases, except as may be required by the SEC, changes in applicable Law or GAAP (in which case, Cabot shall promptly inform CalWest of such changes)GAAP;
(xi) other than as set forth in Section 6.6(d) and except as set forth in Section 5.1(b)(xi) of the Cabot Disclosure Letter, (Axii) adopt any new employee benefit plan, incentive plan, severance plan, bonus plan, compensation, special remuneration, retirement, health, life, disability, stock option or similar plan, grant new stock appreciation rights or amend any existing plan Chateau Employee Benefit Plan, or rights, (B) enter into or amend any employment agreement or similar agreement or arrangement or, except in the ordinary course consistent with past practice, or grant or become obligated to grant any increase in the compensation or benefits of officers or employees, (C) grant any severance or termination pay, or any increase thereof, to any trustee, officer or employee, except payments made pursuant to written agreements or plans outstanding on the date hereof, the material terms of which such changes as are disclosed in Section 5.1(b)(xi) of the Cabot Disclosure Letter and copies of which have been provided to CalWest, (D) increase the number of its full-time permanent employees by an amount inconsistent with past practice or (E) change any actuarial or other assumption used to calculate funding obligations with respect to any Cabot Pension Plan, or change the manner in which contributions to any Cabot Pension Plan are made or the basis on which such contributions are determined, except, in each of the foregoing cases, as may be required by Law (in which case, Cabot shall promptly inform CalWest of such action);
(xii) settle or compromise any material litigation, including any shareholder derivative or class action claims (without regard to materiality), arising out of or in connection with any of the transactions contemplated by this Agreement, or waive, release or assign any material rights or claimsLaw;
(xiii) enter into or amend or otherwise modify any material agreement or arrangement with Persons that are Affiliates or Associates of Cabot or any Cabot Subsidiary or, as of the date of this Agreement, are employees, officers or trustees employees or directors of Cabot Chateau or any Cabot Chateau Subsidiary without the prior written consent of CalWest notice to Purchaser and the approval of a majority of the "independent" members of the Cabot Board of TrusteesDirectors of Chateau;
(xiv) except as otherwise permitted or contemplated by this Agreement, authorize, recommend, propose or announce an intention to adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization liquidation or other reorganization dissolution of Cabot Chateau or any of the Cabot Chateau Subsidiaries;
(xv) fail to use its commercially reasonable best efforts to maintain with financially responsible insurance companies insurance, insurance coverage substantially similar to insurance coverage maintained by Cabot in such amounts and the Cabot Subsidiaries on the date hereofagainst such risks and losses as are a customary for companies engaged in their respective businesses;
(xvi) (A) amend or terminate, or waive compliance with the terms of or breaches under, any material term of any Material Contract or enter into a new contract, agreement or arrangement that, if entered into prior to the date of this Agreement, would have been required to be listed in Section 4.1(u)(i) of the Cabot Disclosure Letter or (B) other than in the ordinary course of business consistent with past practice, waive, release, grant or transfer any rights of material value;
(xvii) enter into any Tax Protection Agreement;
(xviii) fail to use its commercially reasonable best efforts to comply or remain in compliance with all material terms and provisions of any agreement relating to any outstanding indebtedness (as defined in Section 4.1(g)) Indebtedness of Cabot Chateau or any Cabot Chateau Subsidiary;
(xixxvii) take enter into any agreement that contains a change of control or similar provision that would be violated by the consummation of the transactions contemplated hereunder (and Chateau shall use its reasonable best efforts to bring about the deletion of any such provision, including any such provision in its existing loan commitments with Archon Financial); or
(xviii) take, permit or cause any action that would, or that would reasonably be expected to, result in (A) omission inconsistent with any of the representations and warranties foregoing.
(c) During the period from the date of Cabot set forth in this Agreement becoming untrue or incorrect or (B) any to the Effective Time, Chateau shall, and shall cause each of the Tender Offer Conditions or Section 7.1 not being satisfied;
(xx) fail to (A) duly and timely file all material reports, Tax Returns and other material documents required to be filed with all Governmental Entities and other authorities Chateau Subsidiaries (including the New York Stock Exchange)Chateau OP) to, subject consult and cooperate with Purchaser with respect to extensions permitted by Law, provided Cabot notifies CalWest all real estate tax reassessments and its counsel that it is availing itself of such extensions and provided such extensions do not adversely affect Cabot's status as a qualified REIT under the Code or (B) fail to cause all such reports and other documents to be complete and accurate in all material respects when filed;
(xxi) fail to pay any Taxes or other material debts when due;
(xxii) sell, securitize, tax certiorari matters.
Appears in 1 contract
Covenants Relating to Conduct of Business Pending the Merger. Section 5.1 3.1 Conduct of Business by Cabot Chateau and Cabot LPChateau OP and ROC.
(a) During the period from the date of this Agreement to the earlier of the termination of this Agreement or the Merger Effective Time, Cabot Chateau shall, and shall cause each of the Cabot Chateau Subsidiaries (including Cabot LPChateau OP) to (i) use all commercially reasonable efforts to, carry on its businesses in the usual, regular and ordinary course in substantially the same manner as heretofore conducted and consistent with past practice and in compliance in all material respects with applicable Law, in each case, with no less diligence and effort than would be applied in the absence of this Agreement and (ii) to the extent consistent with the foregoing clause (i), use its commercially reasonable efforts to preserve intact (i) its current business organization, goodwill, assets, ongoing businesses, Cabot's and (ii) Chateau’s status as a REIT within the meaning of the Code Code. During the period from the date of this Agreement to the Effective Time, Chateau shall, and shall cause each of the Chateau Subsidiaries (including Chateau OP) which has been classified for federal income tax purposes as a partnership to preserve its relationships with customersstatus as a partnership for federal income tax purposes and not enter into or amend a Limited Partner Tax Agreement. Chateau will promptly deliver to Purchaser true and correct copies of any report, suppliersstatement, distributors, lessors, creditors, employees, contractors and others having business dealings with it schedule or other document filed with the intention that its goodwill SEC by Chateau subsequent to the date of this Agreement; and ongoing businesses shall be unimpaired at the Merger Effective Time. On a regular and frequent basis, and from time to time Chateau will promptly upon CalWest's reasonable request, Cabot shall confer with CalWest and report on operational matters. Cabot shall promptly (but in any event within two (2) Business Days) advise CalWest orally and in writing notify Purchaser of any Cabot Material Adverse Effect litigation pending or threatened having, to the knowledge of Chateau, potential liability to Chateau or any matter which would constitute a Cabot Material Adverse Effect (including any litigation having potential Liability to Cabot or any Cabot Subsidiary (other than litigation arising out of or relating to personal injury claims that are covered by applicable insurance) the Chateau Subsidiaries in excess of $250,000 200,000 or any complaint, investigation or hearing hearing, of which Chateau has Knowledge, by any a Governmental Entity involving Cabot Chateau or any Cabot Subsidiary). Cabot shall promptly provide to CalWest (and its counsel) copies of all filings made by Cabot with any Governmental Entity in connection with this Agreement and the transactions contemplated hereby, including any Cabot SEC Document filed after the date of this AgreementChateau Subsidiaries.
(b) Without limiting the generality of the foregoing, during the period from the date of this Agreement to the earlier of the termination of this Agreement or the Merger Effective Time, except as set forth in Section 3.1(b) of the Chateau Disclosure Letter, as otherwise expressly provided contemplated by this Agreement or the Transaction Documents or to the extent consented to by CalWest in writing in advance by Purchaser, Chateau and in writing, Cabot Chateau OP and each other Chateau Subsidiary shall not and shall not engage in, authorize or commit or agree to, and shall cause to any of the Cabot Subsidiaries (including Cabot LP) not to (and not to authorize or commit or agree to):following:
(i) take any action that would prevent or delay the consummation of the transactions contemplated by this Agreement or the other Transaction Documents;
(ii) (A) declare, set aside or pay any dividends on, or make any other actual, constructive or deemed distributions (whether in cash, shares, property or otherwise) in respect of, any of Cabot's shares, Chateau’s capital stock or the partnership interests, shares, stock or other equity interests in any Cabot Subsidiary ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ that is not directly or indirectly wholly-wholly owned by CabotChateau, except for distributions (i1) on the Cabot Common Shares declared authorization and payment of quarterly dividends with respect to the quarter ended September 30Chateau Common Stock on any quarterly anniversaries of prior dividend record and payment dates in accordance with past practice, 2001 and at the same rate per share as the most recent quarterly dividend, (2) at the Closing, in an amount equal to (x) the fraction equal (A) the number of days following the most recent such dividend payment date up to but not including the Closing Date divided by (B) 91.25, multiplied by (y) the same quarterly dividend rate, provided that, with respect to clauses (1) and (ii2), Chateau shall notify Purchaser in writing of the proposed record date for any such distribution at least 10 days prior to such date, (3) a distribution per OP Unit in the same amount as a dividend per share of Chateau Common Stock permitted pursuant to clauses (1), and (2) above, with the same record and payment dates as such dividends on Chateau Common Stock, (4) quarterly distributions with respect to the Preferred Chateau Series A OP Units as which are required by their termsthe terms of the Chateau OP Agreement, and provided, (5) any distribution (or an increase in a distribution) by Chateau that Cabot may make dividend payments it is required to make by the Code in order minimum amount necessary for Chateau to maintain REIT status status, or avoid the incurrence of any Taxes under Section 857 of the Code, avoid the imposition of any excise Taxes under Section 4981 of the Code; provided, however, that any such distribution or increase referred to in this clause (5) shall reduce the Merger Consideration dollar for dollar, and those shall be determined by taking into account that are sufficient to eliminate any federal tax liabilitythe Common Stock Merger Consideration is a distribution qualifying for the dividends paid deduction under Sections 561 and 562 of the Code, (B) split, combine or reclassify any shares, capital stock, partnership interests or other equity interests or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of such shares, capital stock, partnership interests or other equity interests interests, or take any similar action described in Section 1.7(d) or Section 1.9(d) or (C) purchase, redeem (except for the redemption of LP OP Units for shares of Public Common Shares in accordance with their terms) or otherwise acquire any Cabot Common Shares, stock, other equity interests or securities shares of Cabot Chateau’s capital stock or the partnership interests, stock, stock or other equity interests or securities of in any Cabot Chateau Subsidiary or any options, warrants or rights to acquire, or security convertible into, Cabot Common Shares, stock, other equity interest or securities shares of Cabot Chateau’s capital stock or the partnership interests, stock or other equity interests in any Cabot Chateau Subsidiary, except to repurchase shares of Chateau Common Stock issued under any Chateau Option Plan or in connection with the use of Cabot Chateau Common Shares or LP Units Stock to pay the exercise price or Tax withholding obligation upon the exercise of a Cabot Chateau Option as presently permitted under any Cabot the Chateau Option PlanPlans;
(iiiii) (A) classify issue, deliver, sell or re-classify grant any unissued Cabot Common Shares, option or other material right in respect of any shares of capital stock, units, interests, any other voting or redeemable securities (including LP OP Units or other partnership interests) or stock based performance units of Cabot Chateau or any Cabot Subsidiary; (B) change the number of issued and outstanding Cabot Common Shares, shares of stock, units, interests, any other voting or redeemable securities (including LP Units or other partnership interests) or stock based performance units of Cabot or Cabot Subsidiaries, (C) authorize for issuance, issue, deliver, sell, or grant any option or other right in respect of, any Cabot Common Shares, shares of stock, units, interests, any other voting or redeemable securities (including LP Units or other partnership interests), or stock based performance units of Cabot or any Cabot Chateau Subsidiary or any securities convertible into, or any rights, warrants or options to acquire, any such shares, units, interests, voting securities or convertible or redeemable securities (exceptsecurities, with respect to the foregoing clause except (A)) to Chateau or a Chateau Subsidiary, (B) and (C), (1) as permitted or required under the Cabot LP Chateau OP Agreement as presently in effecteffect of the date hereof, (2C) in connection with the exercise of outstanding Cabot Chateau Stock Options under the Cabot Chateau Option Plan or the exchange of units OP Units for shares of Cabot LP for Cabot Chateau Common Shares or other units of partnership interest of Cabot LPStock, pursuant to the terms of such units, (3) the issuance of DEUs for the fiscal year ending on the earlier of (a) December 31, 2001 and (b) the Merger Effective Time as required by existing Cabot Options (including DEUs) and (4) as required under the Option Agreement) or (D) amend in connection with conversion of any of Chateau or waive any option to acquire Cabot Common SharesChateau OP convertible securities outstanding as of the date hereof;
(iiiiv) amend the Cabot Chateau Charter or the Cabot Chateau By-laws, the Cabot LP Chateau OP Agreement or any other comparable charter or organizational documents of any Cabot Subsidiary (including any joint venture agreement to which Cabot or any Cabot Subsidiary is a party)Chateau Subsidiary, except as otherwise contemplated by this Agreement;
(ivv) (Aexcept as set forth in Section 3.1(b)(v) of the Chateau Disclosure Letter, merge, consolidate or enter into any other business combination transaction with any Person, except as provided in Section 6.4, (B) acquire (by merger, consolidation or acquisition) any corporation, partnership or other entity or (C) purchase any equity interest in or all or substantially all of the assets of, any Person or any division or business thereof;
(vvi) (A) enter into any new commitments obligating Cabot or any Cabot Subsidiary to make capital expenditures in excess of $1,500,000 in the aggregate for each successive period of forty-five (45) days following the date hereof, not including tenant allowances under existing leases and the commitments except as set forth in Section 5.1(b)(v3.1(b)(vi) of the Cabot Chateau Disclosure Letter, provided Cabot shall be permitted to enter into a commitment to make repairs and/or prevent damage to any Cabot Properties as is necessary in the event of an emergency situation as long as Cabot provides CalWest with a copy of such commitment within two (2) Business Days after such commitment is entered into, (BA) acquire, enter into any option to acquire, or exercise an option or other right or election or enter into any other commitment or contractual obligation (each, a "“Commitment"”) for the acquisition of any real property or other transaction (other than (i) any Commitment referred to in Section 5.1(b)(v3.1(b)(vi) of the Cabot Chateau Disclosure Letter) involving nonrefundable deposits; (B) make any capital expenditures, (ii) any exchange of real property pursuant to Section 1031 of the Code referred to in Section 5.1(b)(v) of the Cabot Disclosure Letter or (iii) entering into leases for property of less than 100,000 square feet and incurring any reasonable and customary expenditures related thereto), (C) commence construction of, or enter into any Commitment to develop or construct, construct other real estate projects involving in excess of $250,000 (other than any Commitment referred to in or contemplated by Section 5.1(b)(v3.1(b)(vi) of the Cabot Chateau Disclosure Letter), or (DC) incur additional indebtedness (secured Indebtedness or unsecured) guarantee the Indebtedness of another Person, except for working capital under its revolving line(s) of credit and Commitments for indebtedness described Indebtedness incurred in accordance with Section 5.1(b)(v3.1(b)(vi) of the Cabot Chateau Disclosure Letter or (E) modify, amend, terminate or enter into any commitment to modify, amend or terminate any indebtedness in existence as of the date hereof;
(vi) sell, mortgage, subject to Lien (or, in the case of an involuntary Lien, failed to take action within thirty (30) days of the creation thereof to have such Lien removed) or otherwise dispose of any of the Cabot Properties, except those that are (A) permitted by Section 5.1(b)(v), or (B) made in the ordinary course of business and subject of a binding contract in existence on the date of this AgreementLetter;
(vii) sell, mortgage, lease, mortgage, subject to Lien or otherwise encumber or dispose of any of its personal the Chateau Properties, or intangible propertyother assets, or assign or encumber the right to receive income, dividends, distributions and the like or agree to do any of the foregoing, except as referred to in transactions made in or contemplated by Section 3.1(b)(vii) of the ordinary course of business and which are not material, individually or in the aggregateChateau Disclosure Letter;
(viii) except as set forth in Section 5.1(b)(viii) issue or sell any debt securities or warrants or other rights to acquire debt securities of the Cabot Disclosure Letter, (A) assume Chateau or guarantee the indebtedness of another Personany Chateau Subsidiary, enter into any "“keep well" ” or other agreement to maintain any financial statement condition of another Person or enter into any arrangement having the economic effect of any of the foregoing;
(ix) except for matters disclosed in Section 3.1(b)(ix) of the Chateau Disclosure Letter, (B) prepay, refinance or amend any existing indebtedness, (C) Indebtedness or make any loans, advances, capital contributions or investments in any other Person or (D) pledge or otherwise encumber shares in excess of capital stock or securities $250,000 in Cabot or any Cabot Subsidiarythe aggregate;
(ix) (Ax) make or rescind any express or deemed material election relating to Taxes (unless Cabot Chateau reasonably determines, after prior consultation with CalWest, determines that such action is (i) required by Law; Law or (ii) necessary or appropriate to preserve Cabot's Chateau’s status as a REIT or the partnership status of Cabot LP Chateau OP or any other Cabot Chateau Subsidiary which files Tax Returns as a partnership for federal tax purposes (in which case, Cabot or Cabot LP, as the case may be, shall make such election in a timely mannerpurposes); provided, however, that nothing in this Agreement shall preclude Cabot Chateau from designating dividends paid by it as "“capital gain dividends" ” within the meaning of Section 857 of the Code (with the prior written consent of CalWest, which will not be unreasonably withheld), or (B) elect to pay tax on any capital gain realized after January 1, 2001Code;
(xxi) (A) fail to maintain its books and records change in all any material respects in accordance with GAAP consistently applied, respect (Bexcept as may be required by Law) change any of its methods, principles or practices of accounting in effect other than as required by GAAP; provided, that with the consent of CalWest, which shall not be unreasonably withheld, Cabot may implement a change in method of accounting for federal income tax purposes with respect to classifying certain property as personal property rather than real property, or (CB) settle or compromise any claim, action, suit, litigation, proceeding, arbitration, investigation, audit or controversy relating to Taxes, except in the case of settlements or compromises relating to Taxes on real property or sales Taxes in an amount not to exceed, individually or in the aggregate, $250,000, or change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ended December 31, 20002001, or (D) revalue in any material respect any of its assets, including writing-off accounts receivable, except, in each of the foregoing cases, except as may be required by the SEC, changes in applicable Law or GAAP (in which case, Cabot shall promptly inform CalWest of such changes)GAAP;
(xi) other than as set forth in Section 6.6(d) and except as set forth in Section 5.1(b)(xi) of the Cabot Disclosure Letter, (Axii) adopt any new employee benefit plan, incentive plan, severance plan, bonus plan, compensation, special remuneration, retirement, health, life, disability, stock option or similar plan, grant new stock appreciation rights or amend any existing plan Chateau Employee Benefit Plan, or rights, (B) enter into or amend any employment agreement or similar agreement or arrangement or, except in the ordinary course consistent with past practice, or grant or become obligated to grant any increase in the compensation or benefits of officers or employees, (C) grant any severance or termination pay, or any increase thereof, to any trustee, officer or employee, except payments made pursuant to written agreements or plans outstanding on the date hereof, the material terms of which such changes as are disclosed in Section 5.1(b)(xi) of the Cabot Disclosure Letter and copies of which have been provided to CalWest, (D) increase the number of its full-time permanent employees by an amount inconsistent with past practice or (E) change any actuarial or other assumption used to calculate funding obligations with respect to any Cabot Pension Plan, or change the manner in which contributions to any Cabot Pension Plan are made or the basis on which such contributions are determined, except, in each of the foregoing cases, as may be required by Law (in which case, Cabot shall promptly inform CalWest of such action);
(xii) settle or compromise any material litigation, including any shareholder derivative or class action claims (without regard to materiality), arising out of or in connection with any of the transactions contemplated by this Agreement, or waive, release or assign any material rights or claimsLaw;
(xiii) enter into or amend or otherwise modify any material agreement or arrangement with Persons that are Affiliates or Associates of Cabot or any Cabot Subsidiary or, as of the date of this Agreement, are employees, officers or trustees employees or directors of Cabot Chateau or any Cabot Chateau Subsidiary without the prior written consent of CalWest notice to Purchaser and the approval of a majority of the "“independent" ” members of the Cabot Board of TrusteesDirectors of Chateau;
(xiv) except as otherwise permitted or contemplated by this Agreement, authorize, recommend, propose or announce an intention to adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization liquidation or other reorganization dissolution of Cabot Chateau or any of the Cabot Chateau Subsidiaries;
(xv) fail to use its commercially reasonable best efforts to maintain with financially responsible insurance companies insurance, insurance coverage substantially similar to insurance coverage maintained by Cabot in such amounts and the Cabot Subsidiaries on the date hereofagainst such risks and losses as are a customary for companies engaged in their respective businesses;
(xvi) (A) amend or terminate, or waive compliance with the terms of or breaches under, any material term of any Material Contract or enter into a new contract, agreement or arrangement that, if entered into prior to the date of this Agreement, would have been required to be listed in Section 4.1(u)(i) of the Cabot Disclosure Letter or (B) other than in the ordinary course of business consistent with past practice, waive, release, grant or transfer any rights of material value;
(xvii) enter into any Tax Protection Agreement;
(xviii) fail to use its commercially reasonable best efforts to comply or remain in compliance with all material terms and provisions of any agreement relating to any outstanding indebtedness (as defined in Section 4.1(g)) Indebtedness of Cabot Chateau or any Cabot Chateau Subsidiary;
(xixxvii) take enter into any agreement that contains a change of control or similar provision that would be violated by the consummation of the transactions contemplated hereunder (and Chateau shall use its reasonable best efforts to bring about the deletion of any such provision, including any such provision in its existing loan commitments with Archon Financial); or
(xviii) take, permit or cause any action that would, or that would reasonably be expected to, result in (A) omission inconsistent with any of the representations and warranties foregoing.
(c) During the period from the date of Cabot set forth in this Agreement becoming untrue or incorrect or (B) any to the Effective Time, Chateau shall, and shall cause each of the Tender Offer Conditions or Section 7.1 not being satisfied;
(xx) fail to (A) duly and timely file all material reports, Tax Returns and other material documents required to be filed with all Governmental Entities and other authorities Chateau Subsidiaries (including the New York Stock Exchange)Chateau OP) to, subject consult and cooperate with Purchaser with respect to extensions permitted by Law, provided Cabot notifies CalWest all real estate tax reassessments and its counsel that it is availing itself of such extensions and provided such extensions do not adversely affect Cabot's status as a qualified REIT under the Code or (B) fail to cause all such reports and other documents to be complete and accurate in all material respects when filed;
(xxi) fail to pay any Taxes or other material debts when due;
(xxii) sell, securitize, tax certiorari matters.
Appears in 1 contract
Covenants Relating to Conduct of Business Pending the Merger. Section 5.1 3.1. Conduct of Business by Cabot and Cabot LPCPA:12.
(a) During the period from the date of this Agreement to the earlier of the termination of this Agreement or the Merger Effective Time, Cabot shall, and CPA:12 shall cause each of the Cabot Subsidiaries (including Cabot LP) use all commercially reasonable efforts to (i) carry on its businesses in the usual, regular and ordinary course consistent with past practice in substantially the same manner as heretofore conducted and in compliance in all material respects with applicable LawLaw and, in each case, with no less diligence and effort than would be applied in the absence of this Agreement and (ii) to the extent consistent with the foregoing clause (i)herewith, use its commercially reasonable efforts to preserve intact in all material respects its current business organization, goodwill, ongoing businesses, Cabot's status businesses and CPA:12’s qualification as a REIT within the meaning of the Code and its relationships with customers, suppliers, distributors, lessors, creditors, employees, contractors and others having business dealings with it with the intention that its goodwill and ongoing businesses shall be unimpaired at the Merger Effective TimeCode. On a regular and frequent basis, and from time to time CPA:12 will promptly upon CalWest's reasonable request, Cabot shall confer with CalWest and report on operational matters. Cabot shall promptly (but in any event within two (2) Business Days) advise CalWest orally and in writing notify CPA:14 of any Cabot Material Adverse Effect litigation involving CPA:12 having, to the Knowledge of CPA:12, potential liability to CPA:12 or any matter which would constitute a Cabot Material Adverse Effect (including any litigation having potential Liability to Cabot or any Cabot Subsidiary (other than litigation arising out of or relating to personal injury claims that are covered by applicable insurance) the CPA:12 Subsidiaries in excess of $250,000 50,000 or any complaint, investigation or hearing hearing, of which CPA:12 has Knowledge, by any a Governmental Entity involving Cabot CPA:12 or any Cabot Subsidiary). Cabot shall promptly provide to CalWest (and its counsel) copies of all filings made by Cabot with any Governmental Entity in connection with this Agreement and the transactions contemplated hereby, including any Cabot SEC Document filed after the date of this AgreementCPA:12 Subsidiaries.
(b) Without limiting the generality of the foregoing, during the period from the date of this Agreement to the earlier of the termination of this Agreement or the Merger Effective TimeTime of the Merger, except as otherwise expressly provided contemplated by this Agreement or the Transaction Documents or to the extent consented to by CalWest in advance and in writingCPA:14, Cabot which consent shall not and be unreasonably withheld, conditioned or delayed, CPA:12 shall not engage in, authorize or commit or agree to, and shall cause to any of the Cabot Subsidiaries (including Cabot LP) not to (and not to authorize or commit or agree to):following:
(i) (A) declare, set aside or pay any dividends on, or make any other actual, constructive or deemed distributions (whether in cash, shares, property or otherwise) in respect of, any of Cabot's shares, stock CPA:12 Common Stock or the partnership interests, shares, stock or other equity interests in any Cabot CPA:12 Subsidiary that is not directly or indirectly wholly-owned by CabotCPA:12, except for distributions (i1) on the Cabot Common Shares declared authorization and payment of regular quarterly dividends with respect to the quarter ended September 30CPA:12 Common Stock (not to exceed $.2087 per share per quarter), 2001 and provided that CPA:12 shall notify CPA:14 of the proposed record date for any such distribution prior to such date, (ii2) on the Preferred Units as required payment of the Special Distribution or (3) following the CPA:12 Stockholder Meeting, any distribution (or an increase in a distribution) by their termsCPA:12 that is necessary for CPA:12 to maintain its REIT qualification, and providedavoid the incurrence of any Taxes under Section 857 of the Code, avoid the imposition of any excise Taxes under Section 4981 of the Code, or avoid the need to make one or more extraordinary or disproportionately larger distributions to meet any of the objectives in this clause (3), provided that CPA:12 shall provide CPA:14 with evidence, reasonably satisfactory to CPA:14, that Cabot may make dividend payments it such distribution is required necessary and CPA:12 shall not be permitted to make by pay any such distribution in the Code in order event the Alternate Merger is to maintain REIT status and those that are sufficient to eliminate any federal tax liabilitybe effected, (B) split, combine or reclassify any shares, stock, partnership interests or other equity interests CPA:12 Common Stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of such shares, stock, partnership interests or other equity interests CPA:12 Common Stock or (C) purchase, redeem (except for the redemption of LP Units for shares of Public Common Shares in accordance with their terms) or otherwise acquire any Cabot CPA:12 Common Shares, stock, other equity interests or securities of Cabot or the partnership interests, stock, other equity interests or securities of any Cabot Subsidiary Stock or any options, warrants or rights to acquire, or security convertible into, Cabot shares of CPA:12 Common Shares, stock, other equity interest or securities of Cabot or the partnership interests, stock or other equity interests in any Cabot Subsidiary, except in connection with the use of Cabot Common Shares or LP Units to pay the exercise price or Tax withholding obligation upon the exercise of a Cabot Option as presently permitted under any Cabot Option PlanStock;
(ii) (A) classify issue, deliver, sell or re-classify grant any unissued Cabot option or other material right in respect of, any CPA:12 Common SharesStock, shares of capital stock, units, interests, any other voting or redeemable securities (including LP Units or other partnership interests) or stock based performance units of Cabot or any Cabot Subsidiary; (B) change the number of issued and outstanding Cabot Common Shares, shares of stock, units, interests, any other voting or redeemable securities (including LP Units or other partnership interests) or stock based performance units of Cabot or Cabot Subsidiaries, (C) authorize for issuance, issue, deliver, sell, or grant any option or other right in respect of, any Cabot Common Shares, shares of stock, units, interests, any other voting or redeemable securities (including LP Units or other partnership interests), or stock based performance units of Cabot or any Cabot Subsidiary CPA:12 or any securities convertible into, or any rights, warrants or options to acquire, any such shares, units, interests, voting securities or convertible or redeemable securities securities, except (except, with respect i) to the foregoing clause (A)CPA:12 or a wholly-owned CPA:12 Subsidiary, (Bii) pursuant to CPA:12’s distribution reinvestment and share purchase plan or (C), (1iii) as required under the Cabot LP Agreement as presently in effect, (2) in connection with the exercise of outstanding Cabot Options under the Cabot Option Plan or the exchange of units of Cabot LP for Cabot Common Shares or other units of partnership interest of Cabot LP, pursuant to the terms of such units, (3) advisory agreement between CPA:12 and W. P. C▇▇▇▇ & Co. LLC and the issuance of DEUs for the fiscal year ending on the earlier of (a) December 31, 2001 acquisition services agreement between CPA:12 and (b) the Merger Effective Time as required by existing Cabot Options (including DEUs) and (4) as required under the Option Agreement) or (D) amend or waive any option to acquire Cabot Common SharesC▇▇▇▇ Asset Management Corp.;
(iii) amend the Cabot CPA:12 Charter or the Cabot By-laws, the Cabot LP Agreement or any other comparable charter or organizational documents of any Cabot Subsidiary (including any joint venture agreement to which Cabot or any Cabot Subsidiary is a party)CPA:12 Bylaws, except as otherwise contemplated required by this AgreementAgreement or in connection with the Sale of Assets, Special Distribution or the Alternate Merger;
(iv) (A) merge, consolidate or enter into any other business combination similar extraordinary corporate transaction with any Person, except as provided in Section 6.4, (B) acquire (by merger, consolidation or acquisition) any corporation, partnership or other entity or (C) purchase any equity interest in or all or substantially all of the assets of, any Person or any division or business thereof;
(v) except for transactions in the ordinary course of business consistent with past practice, (A) enter into make any new commitments obligating Cabot or any Cabot Subsidiary to make capital expenditures in excess of $1,500,000 in the aggregate for each successive period of forty-five (45) days following the date hereof, not including tenant allowances under existing leases and the commitments set forth in Section 5.1(b)(v) of the Cabot Disclosure Letter, provided Cabot shall be permitted to enter into a commitment to make repairs and/or prevent damage to any Cabot Properties as is necessary in the event of an emergency situation as long as Cabot provides CalWest with a copy of such commitment within two (2) Business Days after such commitment is entered intoexpenditures, (B) acquire, enter into any option to acquire, or exercise an option or other right or election or enter into any other commitment or contractual obligation (each, a "“Commitment"”) for the acquisition of any real property or other transaction (other than (i) any Commitment referred to in Section 5.1(b)(v) of the Cabot Disclosure Letter, (ii) any exchange of real property pursuant to Section 1031 of the Code referred to in Section 5.1(b)(v) of the Cabot Disclosure Letter or (iii) entering into leases for property of less than 100,000 square feet and incurring any reasonable and customary expenditures related thereto), involving nonrefundable deposits; (C) commence construction of, or enter into any Commitment to develop or construct, other real estate projects involving in excess of $250,000 (other than any Commitment referred to in Section 5.1(b)(v) of the Cabot Disclosure Letter), projects; (D) incur additional indebtedness (secured or unsecured) except for working capital under its revolving line(s) of credit and Commitments for indebtedness described in Section 5.1(b)(v) of the Cabot Disclosure Letter ); or (E) modifymake any loans, amendadvances, terminate capital contributions or enter into investments in any commitment to modify, amend or terminate any indebtedness in existence as of the date hereofother Person;
(vi) except for transactions in the ordinary course of business consistent with past practice, the Sale of Assets, the Special Distribution and as set forth on Schedule 2.1(p)(iv) of the CPA:12 Disclosure Letter, (A) sell, mortgage, lease, subject to Lien (or, in the case of an involuntary Lien, failed to take action within thirty (30) days of the creation thereof to have such Lien removed) or otherwise dispose of any of the Cabot CPA:12 Properties, except those that are (A) permitted by Section 5.1(b)(v), or ; (B) made in the ordinary course of business and subject of a binding contract in existence on the date of this Agreement;
pledge or otherwise encumber CPA:12 Common Stock; or (viiC) sell, lease, mortgage, subject to Lien or otherwise dispose of any of its personal or intangible property, except in transactions made in the ordinary course of business and which are not material, individually or in the aggregate;
(viiivii) except as set forth in Section 5.1(b)(viii) of the Cabot Disclosure Letter, (A) assume or guarantee the indebtedness of another Person, enter into any "“keep well" ” or other agreement to maintain any financial statement condition of another Person or enter into any arrangement having the economic effect of any of the foregoing, foregoing other than in the ordinary course of business consistent with past practice;
(Bviii) (A) prepay, refinance or amend any existing indebtednessindebtedness other than, (C) make any loansin the case of refinancings and amendments, advances, capital contributions or investments on terms more favorable than the terms of the existing indebtedness other than in any other Person the ordinary course of business consistent with past practice or (DB) pledge pay, discharge or otherwise encumber shares satisfy any claims, Liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise) other than the payment, discharge or satisfaction, in the ordinary course of capital stock business consistent with past practice or securities in Cabot accordance with their terms, of Liabilities reflected or any Cabot Subsidiaryreserved against in the balance sheet of CPA:12 dated as of December 31, 2005;
(ix) (A) make or rescind any express or deemed material election relating to Taxes (unless Cabot CPA:12 reasonably determines, determines after prior consultation with CalWest, CPA:14 that such action is (i) required by Law; Law or (ii) necessary or appropriate to preserve Cabot's status CPA:12’s qualification as a REIT or the partnership status of Cabot LP or any other Cabot CPA:12 Subsidiary which files Tax Returns as a partnership for federal tax purposes (Federal Tax purposes, in which case, Cabot or Cabot LP, as the case may be, event CPA:12 shall make such election in a timely manner); provided, provided that nothing in this Agreement shall preclude Cabot CPA:12 from designating dividends paid by it as "“capital gain dividends" ” within the meaning of Section 857 of the Code (Code, with the prior written consent of CalWestCPA:14, which will not be unreasonably withheld), or (B) elect to pay tax on any capital gain realized after January 1, 2001;
(x) (A) fail change in any material respect that is adverse to maintain its books and records in all material respects in accordance with GAAP consistently applied, (B) change CPA:12 any of its methods, principles or practices of accounting in effect other than as required by GAAP; provided, that with the consent of CalWest, which shall not be unreasonably withheld, Cabot may implement a change in (including any method of accounting for federal income tax purposes with respect to classifying certain property as personal property rather than real property, Tax purposes) in effect or (CB) settle or compromise any claim, action, suit, litigation, proceeding, arbitration, investigation, audit or controversy relating to Taxes, except in the case of settlements or compromises relating to Taxes on real property or sales Taxes in an amount not to exceed, individually or in the aggregate, $250,000100,000, or change any of its methods of reporting income or deductions for federal Federal income tax Tax purposes from those employed in the preparation of its federal Federal income Tax Return for the taxable year ended December 31, 20002004, or except as to clauses (DA) revalue in any material respect any of its assets, including writing-off accounts receivable, except, in each of the foregoing cases, and (B) as may be required by the SEC, applicable Law or GAAP (in which case, Cabot shall promptly inform CalWest of such changes)GAAP;
(xi) other than as set forth in Section 6.6(d) and except as set forth in Section 5.1(b)(xi) of the Cabot Disclosure Letter, (A) adopt any new employee benefit plan, incentive plan, severance plan, bonus plan, compensationchange in control, special remunerationretention, retirement, health, life, disability, stock compensation or special remuneration plan, share option or similar plan, program, policy or arrangement, grant new stock share options, shares of restricted shares, share appreciation rights or amend any existing plan other equity-based awards, or rights, (B) enter into or amend any employment agreement, severance, change in control, termination agreement, retention agreement or any similar agreement or arrangement or, except in the ordinary course consistent with past practice, grant or become obligated to grant any increase in the compensation or benefits of officers or employees, (C) grant any severance or termination pay, or any increase thereof, to any trustee, officer or employee, except payments made pursuant to written agreements or plans outstanding on the date hereof, the material terms of which are disclosed in Section 5.1(b)(xi) of the Cabot Disclosure Letter and copies of which have been provided to CalWest, (D) increase the number of its full-time permanent employees by an amount inconsistent with past practice or (E) change any actuarial or other assumption used to calculate funding obligations with respect to any Cabot Pension Plan, or change the manner in which contributions to any Cabot Pension Plan are made or the basis on which such contributions are determined, except, in each of the foregoing cases, as may be required by Law (in which case, Cabot shall promptly inform CalWest of such action)arrangement;
(xii) settle or compromise any material litigation, including any shareholder derivative or class action claims (without regard to materiality), arising out of or in connection with any of the transactions except as contemplated by this Agreement, or waivethe Special Dividend and the Sale of Assets, release or assign any material rights or claims;
(xiii) enter into or amend or otherwise modify any material agreement or arrangement with Persons persons that are Affiliates or Associates of Cabot or any Cabot Subsidiary or, as of the date of this Agreement, are employees, officers or trustees or directors of Cabot CPA:12 or any Cabot Subsidiary without the prior written consent of CalWest and the approval of a majority of the "independent" members of the Cabot Board of TrusteesCPA:12 Subsidiary;
(xivxiii) except as required by this Agreement and as contemplated by the Sale of Assets and Special Distribution, authorize, recommend, propose or announce an intention to adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization liquidation or other reorganization dissolution of Cabot or any of the Cabot SubsidiariesCPA:12;
(xvxiv) fail to use its commercially reasonable efforts to maintain with financially responsible insurance companies insuranceexcept as otherwise permitted under this Agreement, insurance coverage substantially similar to insurance coverage maintained by Cabot and the Cabot Subsidiaries on the date hereof;
(xvi) (A) amend or terminate, or waive compliance with the terms of of, or breaches under, any material term of any CPA:12 Material Contract or enter into a new contract, agreement or arrangement that, if entered into prior to the date of this Agreement, would have been required to be have been listed in Section 4.1(u)(iSchedule 2.1(v)(i) of the Cabot CPA:12 Disclosure Letter or (B) other than in which after giving effect to the ordinary course of business consistent with past practice, waive, release, grant or transfer any rights of Merger would have a material valueadverse effect on CPA:14 and the CPA:14 Subsidiaries taken as a whole;
(xviixv) enter into into, assume or acquire any asset subject to any Tax Protection Agreement;
(xviii) fail to use its commercially reasonable efforts to comply or remain in compliance with all material terms and provisions of any agreement relating to any outstanding indebtedness (as defined in Section 4.1(g)) of Cabot or any Cabot Subsidiary;
(xixxvi) take any action that would, or that would could reasonably be expected to, result to prevent or impede the Merger from qualifying as a reorganization under Section 368(a) of the Code (other than allowing CPA:12 stockholders to elect the consideration to be received in the Merger) pursuant to this Agreement and the Joint Proxy Statement/Prospectus (Aas defined below); or
(xvii) take any action inconsistent with any of the representations and warranties of Cabot set forth in this Agreement becoming untrue or incorrect or (B) any of the Tender Offer Conditions or Section 7.1 not being satisfied;
(xx) fail to (A) duly and timely file all material reports, Tax Returns and other material documents required to be filed with all Governmental Entities and other authorities (including the New York Stock Exchange), subject to extensions permitted by Law, provided Cabot notifies CalWest and its counsel that it is availing itself of such extensions and provided such extensions do not adversely affect Cabot's status as a qualified REIT under the Code or (B) fail to cause all such reports and other documents to be complete and accurate in all material respects when filed;
(xxi) fail to pay any Taxes or other material debts when due;
(xxii) sell, securitize, foregoing.
Appears in 1 contract
Sources: Merger Agreement (Corporate Property Associates 12 Inc)
Covenants Relating to Conduct of Business Pending the Merger. Section 5.1 Conduct of Business by Cabot and Cabot LP.. -----------------------------------------
(a) During the period from the date of this Agreement to the earlier of the termination of this Agreement or the Merger Effective Time, Cabot shall, and shall cause each of the Cabot Subsidiaries (including Cabot LP) to (i) carry on its businesses in the usual, regular and ordinary course consistent with past practice and in compliance in all material respects with applicable Law, in each case, with no less diligence and effort than would be applied in the absence of this Agreement and (ii) to the extent consistent with the foregoing clause (i), use its commercially reasonable efforts to preserve intact its current business organization, goodwill, ongoing businesses, Cabot's status as a REIT within the meaning of the Code and its relationships with customers, suppliers, distributors, lessors, creditors, employees, contractors and others having business dealings with it with the intention that its goodwill and ongoing businesses shall be unimpaired at the Merger Effective Time. On a regular and frequent basis, and from time to time promptly upon CalWest's reasonable request, Cabot shall confer with CalWest and report on operational matters. Cabot shall promptly (but in any event within two (2) Business Days) advise CalWest orally and in writing of any Cabot Material Adverse Effect or any matter which would constitute a Cabot Material Adverse Effect (including any litigation having potential Liability to Cabot or any Cabot Subsidiary (other than litigation arising out of or relating to personal injury claims that are covered by applicable insurance) in excess of $250,000 or any complaint, investigation or hearing by any Governmental Entity involving Cabot or any Cabot Subsidiary). Cabot shall promptly provide to CalWest (and its counsel) copies of all filings made by Cabot with any Governmental Entity in connection with this Agreement and the transactions contemplated hereby, including any Cabot SEC Document filed after the date of this Agreement.
(b) Without limiting the generality of the foregoing, during the period from the date of this Agreement to the earlier of the termination of this Agreement or the Merger Effective Time, except as otherwise expressly provided by this Agreement or the Transaction Documents or to the extent consented to by CalWest in advance and in writing, Cabot shall not and shall not authorize or commit or agree to, and shall cause the Cabot Subsidiaries (including Cabot LP) not to (and not to authorize or commit or agree to):
(i) (A) declare, set aside or pay any dividends on, or make any other actual, constructive or deemed distributions (whether in cash, shares, property or otherwise) in respect of, any of Cabot's shares, stock or the partnership interests, shares, stock or other equity interests in any Cabot Subsidiary that is not directly or indirectly wholly-owned by Cabot, except for distributions (i) on the Cabot Common Shares declared with respect to the quarter ended September 30, 2001 and (ii) on the Preferred Units as required by their terms, and provided, that Cabot may make dividend payments it is -------- required to make by the Code in order to maintain REIT status and those that are sufficient to eliminate any federal tax liability, (B) split, combine or reclassify any shares, stock, partnership interests or other equity interests or issue or authorize the issuance of any securities in respect of, in lieu of or in substitution for shares of such shares, stock, partnership interests or other equity interests or (C) purchase, redeem (except for the redemption of LP Units for shares of Public Common Shares in accordance with their terms) or otherwise acquire any Cabot Common Shares, stock, other equity interests or securities of Cabot or the partnership interests, stock, other equity interests or securities of any Cabot Subsidiary or any options, warrants or rights to acquire, or security convertible into, Cabot Common Shares, stock, other equity interest or securities of Cabot or the partnership interests, stock or other equity interests in any Cabot Subsidiary, except in connection with the use of Cabot Common Shares or LP Units to pay the exercise price or Tax withholding obligation upon the exercise of a Cabot Option as presently permitted under any Cabot Option Plan;
(ii) (A) classify or re-classify any unissued Cabot Common Shares, shares of stock, units, interests, any other voting or redeemable securities (including LP Units or other partnership interests) or stock based performance units of Cabot or any Cabot Subsidiary; (B) change the number of issued and outstanding Cabot Common Shares, shares of stock, units, interests, any other voting or redeemable securities (including LP Units or other partnership interests) or stock based performance units of Cabot or Cabot Subsidiaries, (C) authorize for issuance, issue, deliver, sell, or grant any option or other right in respect of, any Cabot Common Shares, shares of stock, units, interests, any other voting or redeemable securities (including LP Units or other partnership interests), or stock based performance units of Cabot or any Cabot Subsidiary or any securities convertible into, or any rights, warrants or options to acquire, any such shares, units, interests, voting securities or convertible or redeemable securities (except, with respect to the foregoing clause (A), (B) and (C), (1) as required under the Cabot LP Agreement as presently in effect, (2) in connection with the exercise of outstanding Cabot Options under the Cabot Option Plan or the exchange of units of Cabot LP for Cabot Common Shares or other units of partnership interest of Cabot LP, pursuant to the terms of such units, (3) the issuance of DEUs for the fiscal year ending on the earlier of (a) December 31, 2001 and (b) the Merger Effective Time as required by existing Cabot Options (including DEUs) and (4) as required under the Option Agreement) or (D) amend or waive any option to acquire Cabot Common Shares;
(iii) amend the Cabot Charter or the Cabot By-laws, the Cabot LP Agreement or any other comparable charter or organizational documents of any Cabot Subsidiary (including any joint venture agreement to which Cabot or any Cabot Subsidiary is a party), except as otherwise contemplated by this Agreement;
(iv) (A) merge, consolidate or enter into any other business combination transaction with any Person, except as provided in Section 6.4, (B) acquire (by merger, consolidation ----------- or acquisition) any corporation, partnership or other entity or (C) purchase any equity interest in or all or substantially all of the assets of, any Person or any division or business thereof;
(v) (A) enter into any new commitments obligating Cabot or any Cabot Subsidiary to make capital expenditures in excess of $1,500,000 in the aggregate for each successive period of forty-five (45) days following the date hereof, not including tenant allowances under existing leases and the commitments set forth in Section 5.1(b)(v) of the Cabot Disclosure Letter, provided Cabot shall be permitted to enter into a commitment to make repairs and/or prevent damage to any Cabot Properties as is necessary in the event of an emergency situation as long as Cabot provides CalWest with a copy of such commitment within two (2) Business Days after such commitment is entered into, (B) acquire, enter into any option to acquire, or exercise an option or other right or election or enter into any other commitment or contractual obligation (each, a "Commitment") for the acquisition of any real property or other transaction (other than (i) any Commitment referred to in Section 5.1(b)(v) of the Cabot Disclosure Letter, (ii) any exchange of real property pursuant to Section 1031 of the Code referred to in Section 5.1(b)(v) of the Cabot Disclosure Letter or (iii) entering into leases for property of less than 100,000 square feet and incurring any reasonable and customary expenditures related thereto), (C) commence construction of, or enter into any Commitment to develop or construct, other real estate projects involving in excess of $250,000 (other than any Commitment referred to in Section 5.1(b)(v) of the Cabot Disclosure Letter), (D) incur additional indebtedness (secured or unsecured) except for working capital under its revolving line(s) of credit and Commitments for indebtedness described in Section 5.1(b)(v) of the Cabot Disclosure Letter or (E) modify, amend, terminate or enter into any commitment to modify, amend or terminate any indebtedness in existence as of the date hereof;
(vi) sell, mortgage, subject to Lien (or, in the case of an involuntary Lien, failed to take action within thirty (30) days of the creation thereof to have such Lien removed) or otherwise dispose of any of the Cabot Properties, except those that are (A) permitted by Section 5.1(b)(v), or (B) made in the ordinary course of business and subject of a binding contract in existence on the date of this Agreement;
(vii) sell, lease, mortgage, subject to Lien or otherwise dispose of any of its personal or intangible property, except in transactions made in the ordinary course of business and which are not material, individually or in the aggregate;
(viii) except as set forth in Section 5.1(b)(viii) of the Cabot Disclosure Letter, (A) assume or guarantee the indebtedness of another Person, enter into any "keep well" or other agreement to maintain any financial statement condition of another Person or enter into any arrangement having the economic effect of any of the foregoing, (B) prepay, refinance or amend any existing indebtedness, (C) make any loans, advances, capital contributions or investments in any other Person or (D) pledge or otherwise encumber shares of capital stock or securities in Cabot or any Cabot Subsidiary;
(ix) (A) make or rescind any express or deemed material election relating to Taxes (unless Cabot reasonably determines, after prior consultation with CalWest, that such action is (i) required by Law; or (ii) necessary or appropriate to preserve Cabot's status as a REIT or the partnership status of Cabot LP or any other Cabot Subsidiary which files Tax Returns as a partnership for federal tax purposes (in which case, Cabot or Cabot LP, as the case may be, shall make such election in a timely manner); provided, -------- that nothing in this Agreement shall preclude Cabot from designating dividends paid by it as "capital gain dividends" within the meaning of Section 857 of the Code (with the prior written consent of CalWest, which will not be unreasonably withheld), or (B) elect to pay tax on any capital gain realized after January 1, 2001;
(x) (A) fail to maintain its books and records in all material respects in accordance with GAAP consistently applied, (B) change any of its methods, principles or practices of accounting in effect other than as required by GAAP; provided, that with the consent of CalWest, which shall -------- not be unreasonably withheld, Cabot may implement a change in method of accounting for federal income tax purposes with respect to classifying certain property as personal property rather than real property, (C) settle or compromise any claim, action, suit, litigation, proceeding, arbitration, investigation, audit or controversy relating to Taxes, except in the case of settlements or compromises relating to Taxes on real property or sales Taxes in an amount not to exceed, individually or in the aggregate, $250,000, or change any of its methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its federal income Tax Return for the taxable year ended December 31, 2000, or (D) revalue in any material respect any of its assets, including writing-off accounts receivable, except, in each of the foregoing cases, as may be required by the SEC, applicable Law or GAAP (in which case, Cabot shall promptly inform CalWest of such changes);
(xi) other than as set forth in Section 6.6(d) and -------------- except as set forth in Section 5.1(b)(xi) of the Cabot Disclosure Letter, (A) adopt any new employee benefit plan, incentive plan, severance plan, bonus plan, compensation, special remuneration, retirement, health, life, disability, stock option or similar plan, grant new stock appreciation rights or amend any existing plan or rights, (B) enter into or amend any employment agreement or similar agreement or arrangement or, except in the ordinary course consistent with past practice, grant or become obligated to grant any increase in the compensation or benefits of officers or employees, (C) grant any severance or termination pay, or any increase thereof, to any trustee, officer or employee, except payments made pursuant to written agreements or plans outstanding on the date hereof, the material terms of which are disclosed in Section 5.1(b)(xi) of the Cabot Disclosure Letter and copies of which have been provided to CalWest, (D) increase the number of its full-time permanent employees by an amount inconsistent with past practice or (E) change any actuarial or other assumption used to calculate funding obligations with respect to any Cabot Pension Plan, or change the manner in which contributions to any Cabot Pension Plan are made or the basis on which such contributions are determined, except, in each of the foregoing cases, as may be required by Law (in which case, Cabot shall promptly inform CalWest of such action);
(xii) settle or compromise any material litigation, including any shareholder derivative or class action claims (without regard to materiality), arising out of or in connection with any of the transactions contemplated by this Agreement, or waive, release or assign any material rights or claims;
(xiii) enter into or amend or otherwise modify any agreement or arrangement with Persons that are Affiliates or Associates of Cabot or any Cabot Subsidiary or, as of the date of this Agreement, are employees, officers or trustees or directors of Cabot or any Cabot Subsidiary without the prior written consent of CalWest and the approval of a majority of the "independent" members of the Cabot Board of Trustees;
(xiv) authorize, recommend, propose or announce an intention to adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of Cabot or any of the Cabot Subsidiaries;
(xv) fail to use its commercially reasonable efforts to maintain with financially responsible insurance companies insurance, insurance coverage substantially similar to insurance coverage maintained by Cabot and the Cabot Subsidiaries on the date hereof;
(xvi) (A) amend or terminate, or waive compliance with the terms of or breaches under, any material term of any Material Contract or enter into a new contract, agreement or arrangement that, if entered into prior to the date of this Agreement, would have been required to be listed in Section 4.1(u)(i) of the Cabot Disclosure Letter or (B) other than in the ordinary course of business consistent with past practice, waive, release, grant or transfer any rights of material value;
(xvii) enter into any Tax Protection Agreement;
(xviii) fail to use its commercially reasonable efforts to comply or remain in compliance with all material terms and provisions of any agreement relating to any outstanding indebtedness (as defined in Section 4.1(g)) of Cabot or any Cabot Subsidiary;
(xix) take any action that would, or that would reasonably be expected to, result in (A) any of the representations and warranties of Cabot set forth in this Agreement becoming untrue or incorrect or (B) any of the Tender Offer Conditions or Section 7.1 not being satisfied;
(xx) fail to (A) duly and timely file all material reports, Tax Returns and other material documents required to be filed with all Governmental Entities and other authorities (including the New York Stock Exchange), subject to extensions permitted by Law, provided Cabot notifies CalWest and its counsel that it is availing itself of such extensions and provided such extensions do not adversely affect Cabot's status as a qualified REIT under the Code or (B) fail to cause all such reports and other documents to be complete and accurate in all material respects when filed;
(xxi) fail to pay any Taxes or other material debts when due;
(xxii) sell, securitize, fi
Appears in 1 contract
Covenants Relating to Conduct of Business Pending the Merger. Section 5.1 SECTION 5.01. Conduct of the Business by Cabot and Cabot LPPending the Merger.
(a) During the period from the date of this Agreement to and continuing until the earlier of the termination of this Agreement or the Merger Effective Time, Cabot shallLegacy agrees as to itself and the Legacy Subsidiaries, that Legacy shall not, and shall cause each the Legacy Subsidiaries not to, engage in any business whatsoever other than in connection with the consummation of the Cabot Subsidiaries (including Cabot LP) to (i) carry on its businesses in the usualtransactions contemplated by this Agreement, regular and ordinary course consistent with past practice and in compliance in all material respects with applicable Law, in each case, with no less diligence and effort than would be applied in the absence of this Agreement and (ii) to the extent consistent with the foregoing clause (i), shall use its commercially reasonable efforts to preserve intact its current business organizationand assets, goodwillmaintain its assets in good operating condition and repair (ordinary wear and tear excepted), ongoing businessesretain the services of its officers, Cabot's status as a REIT within the meaning of the Code employees and its relationships with customers, suppliers, distributors, lessors, creditors, employees, independent contractors and others having business dealings use reasonable commercial efforts to keep in full force and effect liability insurance and bonds comparable in amount and scope of coverage to that currently maintained with it with the intention that respect to its goodwill and ongoing businesses shall be unimpaired at the Merger Effective Time. On a regular and frequent basisbusiness, and from time to time promptly upon CalWest's reasonable requestunless, Cabot shall confer with CalWest and report on operational matters. Cabot shall promptly (but in any event within two (2) Business Days) advise CalWest orally and case, WPC consents otherwise in writing of any Cabot Material Adverse Effect or any matter which would constitute a Cabot Material Adverse Effect (including any litigation having potential Liability to Cabot or any Cabot Subsidiary (other than litigation arising out of or relating to personal injury claims that are covered by applicable insurance) in excess of $250,000 or any complaint, investigation or hearing by any Governmental Entity involving Cabot or any Cabot Subsidiary). Cabot shall promptly provide to CalWest (and its counsel) copies of all filings made by Cabot with any Governmental Entity in connection with this Agreement and the transactions contemplated hereby, including any Cabot SEC Document filed after the date of this Agreementwriting.
(b) Without limiting the generality of the foregoing, during During the period from the date of this Agreement to and continuing until the earlier Effective Time, WPC agrees that, other than in connection with the consummation of the termination transactions contemplated hereby, it shall carry on its business only in the ordinary course of business consistent with past practice, use commercially reasonable efforts to preserve intact its business and assets and use reasonable commercial efforts to keep in full force and effect liability insurance and bonds comparable in amount and scope of coverage to that currently maintained with respect to its business, unless, in any case, Legacy consents otherwise in writing; provided that WPC may take any and all of the actions listed in Schedule 5.01(b) of the WPC Disclosure Schedules at any time prior to or after the date of this Agreement or without the Merger consent of Legacy.
(c) During the period from the date of this Agreement and continuing until the Effective Time, each of WPC and Legacy agrees as to itself and, with respect to Legacy, the Legacy Subsidiaries, respectively, that except as otherwise expressly provided contemplated or permitted by this Agreement Agreement, as disclosed in Section 5.01(c) of the WPC Disclosure Schedule or the Transaction Documents Legacy Disclosure Schedule, as applicable, or to the extent consented to by CalWest in advance and that the other party shall otherwise consent in writing, Cabot shall not and shall not authorize or commit or agree to, and shall cause the Cabot Subsidiaries (including Cabot LP) not to (and not to authorize or commit or agree to)::
(i) (A) declare, set aside It shall not amend or pay any dividends on, propose to amend its certificate of incorporation or make any other actual, constructive by-laws or deemed distributions (whether equivalent organizational documents except as contemplated in cash, shares, property or otherwise) in respect of, any of Cabot's shares, stock or the partnership interests, shares, stock or other equity interests in any Cabot Subsidiary that is not directly or indirectly wholly-owned by Cabot, except for distributions (i) on the Cabot Common Shares declared with respect to the quarter ended September 30, 2001 and (ii) on the Preferred Units as required by their terms, and provided, that Cabot may make dividend payments it is required to make by the Code in order to maintain REIT status and those that are sufficient to eliminate any federal tax liability, (B) split, combine or reclassify any shares, stock, partnership interests or other equity interests or issue or authorize the issuance of any securities in respect of, in lieu of or in substitution for shares of such shares, stock, partnership interests or other equity interests or (C) purchase, redeem (except for the redemption of LP Units for shares of Public Common Shares in accordance with their terms) or otherwise acquire any Cabot Common Shares, stock, other equity interests or securities of Cabot or the partnership interests, stock, other equity interests or securities of any Cabot Subsidiary or any options, warrants or rights to acquire, or security convertible into, Cabot Common Shares, stock, other equity interest or securities of Cabot or the partnership interests, stock or other equity interests in any Cabot Subsidiary, except in connection with the use of Cabot Common Shares or LP Units to pay the exercise price or Tax withholding obligation upon the exercise of a Cabot Option as presently permitted under any Cabot Option Plan;this Agreement.
(ii) (A) classify or re-classify any unissued Cabot Common SharesIt shall not, shares nor in the case of stock, units, interests, any other voting or redeemable securities (including LP Units or other partnership interests) or stock based performance units of Cabot or any Cabot Subsidiary; (B) change Legacy shall it permit the number of issued and outstanding Cabot Common Shares, shares of stock, units, interests, any other voting or redeemable securities (including LP Units or other partnership interests) or stock based performance units of Cabot or Cabot Subsidiaries, (C) authorize for issuanceLegacy Subsidiaries to, issue, deliver, sell, redeem, acquire, authorize or grant any option propose to issue, deliver, sell, redeem, acquire or other right in respect ofauthorize, any Cabot Common Shares, shares of stock, units, interests, its capital stock of any other voting or redeemable securities (including LP Units or other partnership interests), or stock based performance units of Cabot or any Cabot Subsidiary class or any securities convertible into, or any rights, warrants or options to acquire, any such shares, units, interests, voting shares or convertible securities or other ownership interest, provided that: (1) Legacy shall be permitted to issue the shares of Legacy Common Stock to be issued to WPC Stockholders hereunder, and (2) each party shall be permitted to issue shares of its common stock pursuant to the exercise of stock options, warrants and other convertible securities outstanding as of the date hereof and listed on the WPC Disclosure Schedule or redeemable securities the Legacy Disclosure Schedule, as the case may be.
(exceptiii) It shall not, nor in the case of Legacy shall it permit any of the Legacy Subsidiaries to, nor shall it propose to: (a) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to the foregoing clause (A), (B) and (C), (1) as required under the Cabot LP Agreement as presently in effect, (2) in connection with the exercise any of outstanding Cabot Options under the Cabot Option Plan its capital stock or the exchange of units of Cabot LP for Cabot Common Shares or other units of partnership interest of Cabot LP, pursuant to the terms of such units, (3) the issuance of DEUs for the fiscal year ending on the earlier of (a) December 31, 2001 and (b) except with respect to the Merger Effective Time as required by existing Cabot Options (including DEUs) and (4) as required under the Option Agreement) Reverse Stock Split, reclassify, combine, split, subdivide or (D) amend redeem, purchase or waive otherwise acquire, directly or indirectly, any option to acquire Cabot Common Shares;
(iii) amend the Cabot Charter or the Cabot By-laws, the Cabot LP Agreement or any other comparable charter or organizational documents of any Cabot Subsidiary (including any joint venture agreement to which Cabot or any Cabot Subsidiary is a party), except as otherwise contemplated by this Agreement;its capital stock.
(iv) (A) merge, consolidate or enter into any other business combination transaction with any Person, except as provided in Section 6.4, (B) acquire (by merger, consolidation or acquisition) any corporation, partnership or other entity or (C) purchase any equity interest in or all or substantially all of the assets of, any Person or any division or business thereof;
(v) (A) enter into any new commitments obligating Cabot or any Cabot Subsidiary to make capital expenditures in excess of $1,500,000 in the aggregate for each successive period of forty-five (45) days following the date hereof, not including tenant allowances under existing leases and the commitments set forth in Section 5.1(b)(v) of the Cabot Disclosure Letter, provided Cabot shall be permitted to enter into a commitment to make repairs and/or prevent damage to any Cabot Properties as is necessary in the event of an emergency situation as long as Cabot provides CalWest with a copy of such commitment within two (2) Business Days after such commitment is entered into, (B) acquire, enter into any option to acquire, or exercise an option or other right or election or enter into any other commitment or contractual obligation (each, a "Commitment") for the acquisition of any real property or other transaction (other Other than (i) any Commitment referred to in Section 5.1(b)(v) of the Cabot Disclosure Letter, (ii) any exchange of real property pursuant to Section 1031 of the Code referred to in Section 5.1(b)(v) of the Cabot Disclosure Letter or (iii) entering into leases for property of less than 100,000 square feet and incurring any reasonable and customary expenditures related thereto), (C) commence construction of, or enter into any Commitment to develop or construct, other real estate projects involving in excess of $250,000 (other than any Commitment referred to in Section 5.1(b)(v) of the Cabot Disclosure Letter), (D) incur additional indebtedness (secured or unsecured) except for working capital under its revolving line(s) of credit and Commitments for indebtedness described in Section 5.1(b)(v) of the Cabot Disclosure Letter or (E) modify, amend, terminate or enter into any commitment to modify, amend or terminate any indebtedness in existence as of the date hereof;
(vi) sell, mortgage, subject to Lien (or, in the case of an involuntary Lien, failed to take action within thirty (30) days of the creation thereof to have such Lien removed) or otherwise dispose of any of the Cabot Properties, except those that are (A) permitted by Section 5.1(b)(v), or (B) made dispositions in the ordinary course of business and subject of consistent with past practice which would not cause a binding contract in existence on the date of this Agreement;
Legacy Material Adverse Effect or a WPC Material Adverse Effect (vii) sell, lease, mortgage, subject to Lien or otherwise dispose of any of its personal or intangible property, except in transactions made in the ordinary course of business and which are not material, individually or in the aggregate;
(viii) except as set forth in Section 5.1(b)(viii) of the Cabot Disclosure Letter, (A) assume or guarantee the indebtedness of another Person, enter into any "keep well" or other agreement to maintain any financial statement condition of another Person or enter into any arrangement having the economic effect of any of the foregoing, (B) prepay, refinance or amend any existing indebtedness, (C) make any loans, advances, capital contributions or investments in any other Person or (D) pledge or otherwise encumber shares of capital stock or securities in Cabot or any Cabot Subsidiary;
(ix) (A) make or rescind any express or deemed material election relating to Taxes (unless Cabot reasonably determines, after prior consultation with CalWest, that such action is (i) required by Law; or (ii) necessary or appropriate to preserve Cabot's status as a REIT or the partnership status of Cabot LP or any other Cabot Subsidiary which files Tax Returns as a partnership for federal tax purposes (in which case, Cabot or Cabot LP, as the case may be, shall make such election in a timely mannerapplicable); provided, that nothing in this Agreement shall preclude Cabot from designating dividends paid by it as "capital gain dividends" within the meaning of Section 857 of the Code (with the prior written consent of CalWest, which will not be unreasonably withheld), or (B) elect to pay tax on any capital gain realized after January 1, 2001;
(x) (A) fail to maintain its books and records in all material respects in accordance with GAAP consistently applied, (B) change any of its methods, principles or practices of accounting in effect other than as required by GAAP; provided, that with the consent of CalWest, which shall not be unreasonably withheld, Cabot may implement a change in method of accounting for federal income tax purposes with respect to classifying certain property as personal property rather than real property, (C) settle or compromise any claim, action, suit, litigation, proceeding, arbitration, investigation, audit or controversy relating to Taxes, except in the case of settlements or compromises relating to Taxes on real property or sales Taxes in an amount not to exceed, individually or in the aggregate, $250,000to it and its subsidiaries, or change taken as a whole, it shall not, nor shall it permit any of its methods subsidiaries to, sell, lease, encumber or otherwise dispose of, or agree to sell, lease (whether such lease is an operating or capital lease), encumber or otherwise dispose of reporting income or deductions for federal income tax purposes from those employed its assets.
(v) It shall promptly advise the other party hereto in writing of any change in the preparation condition (financial or otherwise), operations or properties, businesses or business prospects of its federal income Tax Return for the taxable year ended December 31, 2000, such party or (D) revalue in any material respect any of its assets, including writing-off accounts receivable, except, subsidiaries which would result in each of the foregoing casesa Legacy Material Adverse Effect or WPC Material Adverse Effect, as the case may be required by the SEC, applicable Law or GAAP (in which case, Cabot shall promptly inform CalWest of such changes);be.
(xivi) It shall not permit to occur any (a) change in accounting principles, methods or practices, investment practices, claims, payment and processing practices or policies regarding inter-company transactions, (b) incurrence of Indebtedness or any commitment to incur Indebtedness, any incurrence of a contingent liability, Contingent Obligation or other liability of any type, except for, with respect to WPC, other than as set forth in Section 6.6(d) and except as set forth in Section 5.1(b)(xi) obligations related to the acquisition of the Cabot Disclosure Letter, (A) adopt any new employee benefit plan, incentive plan, severance plan, bonus plan, compensation, special remuneration, retirement, health, life, disability, stock option or similar plan, grant new stock appreciation rights or amend any existing plan or rights, (B) enter into or amend any employment agreement or similar agreement or arrangement or, except Inventory in the ordinary course of business consistent with past practicepractices, grant (c) cancellation of any debt or become obligated to grant waiver or release of any increase contract, right or claim, except for cancellations, waivers and releases in the compensation or benefits ordinary course of officers or employeesbusiness consistent with its past practice which do not exceed $50,000 in the aggregate, (Cd) grant any severance amendment, termination or termination payrevocation of, or a failure to perform obligations or the occurrence of any increase thereof, to any trustee, officer or employee, except payments made pursuant to written agreements or plans outstanding on the date hereof, the material terms of which are disclosed in Section 5.1(b)(xi) of the Cabot Disclosure Letter and copies of which have been provided to CalWestdefault under, (Di) increase the number of its full-time permanent employees by an amount inconsistent with past practice any contract or agreement (Eincluding, without limitation, leases) change any actuarial or other assumption used to calculate funding obligations with respect to any Cabot Pension Plan, or change the manner in which contributions to any Cabot Pension Plan are made or the basis on which such contributions are determined, except, in each of the foregoing cases, as may be required by Law (in which case, Cabot shall promptly inform CalWest of such action);
(xii) settle or compromise any material litigation, including any shareholder derivative or class action claims (without regard to materiality), arising out of or in connection with any of the transactions contemplated by this Agreement, or waive, release or assign any material rights or claims;
(xiii) enter into or amend or otherwise modify any agreement or arrangement with Persons that are Affiliates or Associates of Cabot or any Cabot Subsidiary it is or, as of the date of this AgreementDecember 31, are employees2007, officers or trustees or directors of Cabot or any Cabot Subsidiary without the prior written consent of CalWest and the approval of was a majority of the "independent" members of the Cabot Board of Trustees;
(xiv) authorizeparty, recommend, propose or announce an intention to adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of Cabot or any of the Cabot Subsidiaries;
(xv) fail to use its commercially reasonable efforts to maintain with financially responsible insurance companies insurance, insurance coverage substantially similar to insurance coverage maintained by Cabot and the Cabot Subsidiaries on the date hereof;
(xvi) (A) amend or terminate, or waive compliance with the terms of or breaches under, any material term of any Material Contract or enter into a new contract, agreement or arrangement that, if entered into prior to the date of this Agreement, would have been required to be listed in Section 4.1(u)(i) of the Cabot Disclosure Letter or (B) other than in the ordinary course of business consistent with past practice, waiveor (ii) any License, release(e) execution of termination, grant severance or transfer similar agreements with any rights of material value;
its officers, directors, employees, agents or independent contractors or (xviif) enter entering into any Tax Protection Agreement;
(xviii) fail leases of real property or agreement to use its commercially reasonable efforts to comply or remain in compliance with all material terms and provisions of any agreement relating to any outstanding indebtedness (as defined in Section 4.1(g)) of Cabot or any Cabot Subsidiary;
(xix) take any action that would, or that would reasonably be expected to, result in (A) any of the representations and warranties of Cabot set forth in this Agreement becoming untrue or incorrect or (B) any of the Tender Offer Conditions or Section 7.1 not being satisfied;
(xx) fail to (A) duly and timely file all material reports, Tax Returns and other material documents required to be filed with all Governmental Entities and other authorities (including the New York Stock Exchange), subject to extensions permitted by Law, provided Cabot notifies CalWest and its counsel that it is availing itself of such extensions and provided such extensions do not adversely affect Cabot's status as a qualified REIT under the Code or (B) fail to cause all such reports and other documents to be complete and accurate in all material respects when filed;
(xxi) fail to pay any Taxes or other material debts when due;
(xxii) sell, securitize, acquire real property.
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