EXHIBIT 99.1
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AGREEMENT AND PLAN OF MERGER
by and between
KIMCO REALTY CORPORATION,
SI 1339, INC.
and
ATLANTIC REALTY TRUST
dated as of
December 1, 2005
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TABLE OF CONTENTS
PAGE
ARTICLE 1 The Merger........................................................1
Section 1.1 The Merger........................................................1
Section 1.2 Closing...........................................................2
Section 1.3 Effective Time of the Merger......................................2
Section 1.4 Effect of the Merger..............................................2
ARTICLE 2 The Surviving Corporation and Conversion of Shares................2
Section 2.1 Charter...........................................................2
Section 2.2 By-laws...........................................................3
Section 2.3 Board of Directors; Officers......................................3
Section 2.4 Merger Consideration..............................................3
Section 2.5 Company Special Dividend..........................................4
Section 2.6 Payment...........................................................4
Section 2.7 Withholding Rights................................................6
Section 2.8 No Further Rights.................................................6
Section 2.9 Closing of the Company's Transfer Books...........................6
Section 2.10 Dissenting Shares.................................................6
ARTICLE 3 Representations and Warranties of the Company.....................6
Section 3.1 Organization......................................................6
Section 3.2 Capitalization....................................................7
Section 3.3 Authority.........................................................7
Section 3.4 No Violations; Consents and Approvals.............................7
Section 3.5 SEC Documents; Financial Statements...............................8
Section 3.6 Absence of Certain Changes; No Undisclosed Liabilities............9
Section 3.7 Litigation........................................................9
Section 3.8 Compliance with Applicable Law...................................10
Section 3.9 Taxes............................................................10
Section 3.10 Certain Employee Plans...........................................13
Section 3.11 Properties.......................................................15
Section 3.12 Environmental Matters............................................17
Section 3.13 Information......................................................18
Section 3.14 Maryland Takeover Law............................................18
Section 3.15 Broker's Fees....................................................19
Section 3.16 Contracts........................................................19
Section 3.17 Insurance........................................................20
Section 3.18 Opinion of Financial Advisor.....................................20
Section 3.19 Board Recommendation.............................................20
ARTICLE 4 Representations and Warranties of Parent and Merger Sub..........20
Section 4.1 Organization.....................................................20
Section 4.2 Capitalization...................................................21
Section 4.3 Authority........................................................22
Section 4.4 No Violations; Consents and Approvals............................22
Section 4.5 SEC Documents; Financial Statements..............................23
Section 4.6 Litigation.......................................................23
Section 4.7 Taxes............................................................24
Section 4.8 Proxy Statement; Form S-4 Registration Statement;
Other Information................................................24
Section 4.9 Broker's Fees....................................................24
Section 4.10 Authorization for Parent Common Stock............................24
ARTICLE 5 Covenants of the Parties.........................................25
Section 5.1 Taking of Necessary Action.......................................25
Section 5.2 Public Announcements; Confidentiality............................27
Section 5.3 Conduct of the Business of the Company...........................28
Section 5.4 No Solicitation of Transactions..................................30
Section 5.5 Information and Access...........................................32
Section 5.6 Employee and Other Arrangements..................................33
Section 5.7 Indemnification..................................................33
Section 5.8 Reorganization...................................................34
Section 5.9 Listing Application..............................................34
Section 5.10 Transfer Taxes...................................................34
Section 5.11 Tax Returns......................................................35
Section 5.12 Guaranty.........................................................35
Section 5.13 Affiliates.......................................................35
Section 5.14 Estoppels........................................................35
Section 5.15 Casualty; Condemnation...........................................36
Section 5.16 Title Insurance Policy...........................................36
ARTICLE 6 Conditions to Closings...........................................37
Section 6.1 Conditions to Each Party's Obligation to Effect the Merger.......37
Section 6.2 Conditions to Obligation of the Company to Effect the Merger.....38
Section 6.3 Conditions to Obligations of the Acquiring Entities to Effect
the Merger.......................................................38
ARTICLE 7 Termination, Amendment and Waiver................................39
Section 7.1 Termination......................................................39
Section 7.2 Procedure and Effect of Termination..............................41
Section 7.3 Expenses.........................................................42
ARTICLE 8 Miscellaneous....................................................42
Section 8.1 Counterparts.....................................................42
Section 8.2 Governing Law....................................................43
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Section 8.3 Entire Agreement.................................................43
Section 8.4 Notices..........................................................43
Section 8.5 Successors and Assigns...........................................44
Section 8.6 Headings.........................................................44
Section 8.7 Amendments and Waivers...........................................44
Section 8.8 Certain Definitions; Interpretation; Absence of Presumption......44
Section 8.9 Severability.....................................................46
Section 8.10 Indemnification Agreement........................................46
Section 8.11 Further Assurances...............................................46
Section 8.12 Specific Performance.............................................47
Section 8.13 Third Party Beneficiaries........................................47
Section 8.14 Survival of Representations and Warranties.......................47
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INDEX OF DEFINED TERMS
DEFINED TERM SECTION
-------------- --------
Acquiring Entities........................................Section 5.1(b)
Action....................................................Section 3.7
Affiliate Agreement.......................................Section 5.12
Agreement.................................................Introduction Paragraph
Business Day..............................................Section 8.8(ii)
Cash Payments.............................................Section 2.6(b)
Certificates..............................................Section 2.6(b)
Change in the Company Board Recommendation................Section 5.1(c)
Class A Excess Preferred Stock............................Section 4.2
Class A Preferred Stock...................................Section 4.2
Class B Excess Preferred Stock............................Section 4.2
Class B Preferred Stock...................................Section 4.2
Class C Excess Preferred Stock............................Section 4.2
Class C Preferred Stock...................................Section 4.2
Class D Excess Preferred Stock............................Section 4.2
Class D Preferred Stock...................................Section 4.2
Class E Excess Preferred Stock............................Section 4.2
Class E Preferred Stock...................................Section 4.2
Class F Excess Preferred Stock............................Section 4.2
Class F Preferred Stock...................................Section 4.2
Closing Date..............................................Section 1.2
COBRA.....................................................Section 5.6
Code......................................................Preamble
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DEFINED TERM SECTION
-------------- --------
Company...................................................Introduction Paragraph
Company Board Recommendation..............................Section 3.19
Company Common Stock......................................Section 2.4
Company Material Adverse Effect...........................Section 8.8(iii)
Company Merger Expenses...................................Section 2.4(c)
Company Permits...........................................Section 3.8
Company Permitted Encumbrances............................Section 3.11(a)
Company Plans.............................................Section 3.10(a)
Company SEC Documents.....................................Section 3.5
Company Stockholder Meeting...............................Section 5.1(c)
Competing Transaction.....................................Section 5.4
Contract..................................................Section 3.16
Department................................................Section 1.3
Dissenting Shares.........................................Section 2.10
Effective Time............................................Section 1.3
Encumbrances..............................................Section 3.11(a)
Environmental Law.........................................Section 3.12
ERISA.....................................................Section 3.10(a)
ERISA Affiliate...........................................Section 3.10(a)
Exchange Act..............................................Section 3.4(b)
Exchange Agent............................................Section 2.6(a)
Fairness Opinion..........................................Preamble
Financial Advisor.........................................Preamble
Form S-4 Registration Statement...........................Section 5.1(e)
v
DEFINED TERM SECTION
-------------- --------
GAAP......................................................Section 3.5(c)
GAAP Liabilities..........................................Section 8.8(Iv)
Hazardous Materials.......................................Section 3.12
HSR Act...................................................Section 3.4(b)
Indemnification Agreement.................................Section 5.5
Indemnified Parties.......................................Section 5.7
Kimco Standstill Agreement................................Section 3.9(f)
Liabilities...............................................Section 8.8(v)
Lien......................................................Section 3.9(d)
Market Price..............................................Section 2.4(a)
Merger....................................................Preamble
Merger Consideration......................................Section 2.4
Merger Sub................................................Introduction Paragraph
MGCL......................................................Section 1.1
Non-Cure Notice...........................................Section 5.16(a)
Notice of Superior Proposal...............................Section 5.4(b)
NYSE......................................................Section 2.4(a)
Office Lease..............................................Section 3.11(a)
Parent....................................................Introduction Paragraph
Parent Common Stock.......................................Section 2.4
Parent Equity Participation Plan..........................Section 4.2
Parent Material Adverse Effect............................Section 8.8(vi)
Parent Option Plan........................................Section 4.2
Parent SEC Documents......................................Section 4.5
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DEFINED TERM SECTION
-------------- --------
Per Share Stock Consideration.............................Section 2.4(a)
Per Share REIT Dividend Amount............................Section 2.5
Person....................................................Section 8.8(vii)
Property..................................................Section 3.11(a)
Property Restrictions.....................................Section 3.11(a)
Proxy Statement...........................................Section 5.1(b)
Ramco.....................................................Section 6.3(f)
REIT......................................................Section 3.9(f)
REIT Dividend Amount......................................Section 2.5
Required Approvals........................................Section 5.1
Rockwood..................................................Section 3.15
SEC.......................................................Section 2.4(c)
Securities Act............................................Section 3.5
Service Contracts.........................................Section 3.11(d)
Space Leases..............................................Section 3.11(c)
Special Committee.........................................Recitals
Special Dividend..........................................Section 2.5
Subsidiaries..............................................Section 8.8(viii)
Superior Proposal.........................................Section 5.4(b)
Surviving Corporation.....................................Section 1.1
Takeover Statutes.........................................Section 3.14
Tax Returns...............................................Section 3.9(p)
Taxes.....................................................Section 3.9(p)
Telco Lease...............................................Section 8.8(ix)
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DEFINED TERM SECTION
-------------- --------
Tenant Estoppel...........................................Section 5.13
Title Commitment..........................................Section 5.16(a)
Title Insurer.............................................Section 5.16(a)
Total Company Shares......................................Section 2.4(a)
Total Stock Consideration.................................Section 2.4(a)
Transfer Taxes............................................Section 5.10
2005 Dividend.............................................Section 8.8(i)
Voting Agreement..........................................Preamble
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "AGREEMENT"), dated as of December
1, 2005, by and among KIMCO REALTY CORPORATION, a Maryland corporation
("PARENT"), SI 1339, Inc., a Maryland corporation ("MERGER SUB"), and ATLANTIC
REALTY TRUST, a Maryland real estate investment trust (the "COMPANY").
WHEREAS, the respective Board of Directors or Board of Trustees, as
applicable, of Parent, Merger Sub and the Company have approved the merger of
Company with and into Merger Sub (the "MERGER"), upon the terms and subject to
the conditions set forth herein;
WHEREAS, a Special Committee of the Board of Trustees (the "SPECIAL
COMMITTEE") and the Board of Trustees of the Company has received the written
opinion of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ & Co., Inc. the ("FINANCIAL ADVISOR") to the effect
that, based on, and subject to, the various assumptions and qualifications set
forth in such opinion, as of the date of such opinion, the Merger Consideration
to be received by the holders of the shares of Company Common Stock (other than
Parent, Merger Sub or any of their respective affiliates) pursuant to the Merger
is fair to such holders from a financial point of view (the "FAIRNESS OPINION");
WHEREAS, the Special Committee has determined that this Agreement,
the Merger and the other transactions contemplated hereby are fair to, advisable
and in the best interests of the Company and its stockholders, and has
unanimously voted to approve this Agreement, and recommend acceptance and
approval by the Board of Trustees of, this Agreement, the Merger, and the other
transactions contemplated hereby; and
WHEREAS, the Board of Trustees has determined that this Agreement,
the Merger and the other transactions contemplated hereby are fair to, advisable
and in the best interests of the Company and its stockholders, and has
unanimously voted to approve this Agreement, and recommend acceptance and
approval by the Company's stockholders of, this Agreement, the Merger, and the
other transactions contemplated hereby; and
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code"); and
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties and agreements contained herein the parties hereto
agree as follows:
ARTICLE 1
THE MERGER
SECTION 1.1 THE MERGER. Upon the terms and subject to the conditions
hereof, at the Effective Time (as defined in Section 1.3) and in accordance with
the provisions of the Maryland General Corporation Law (the "MGCL"), the Company
shall be merged with and into Merger Sub and the separate existence of the
Company shall thereupon cease, and Merger Sub shall continue as the surviving
corporation in the Merger (the "SURVIVING CORPORATION").
SECTION 1.2 CLOSING. Unless this Merger Agreement shall have been
terminated pursuant to Section 7.1, and subject to the satisfaction or waiver of
the conditions set forth in Article 6, the closing of the Merger will take place
as promptly as practicable (and in any event within three Business Days) after
satisfaction or waiver of the conditions set forth in Section 6.1, Section 6.2
and Section 6.3 (other than conditions that are to be satisfied on the Closing
Date, but subject to the fulfillment or waiver of such conditions), at the
offices of Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇, ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, unless another date or place is agreed to in writing by the parties
hereto (the "CLOSING DATE").
SECTION 1.3 EFFECTIVE TIME OF THE MERGER. The Merger shall become
effective upon the acceptance of the filing of the articles of merger with the
State Department of Assessments and Taxation of the State of Maryland (the
"DEPARTMENT") in accordance with the MGCL, and by making all other filings
required under the MGCL to be made prior to or concurrent with the effectiveness
of the Merger, which filings shall be made as soon as practicable on the Closing
Date. When used in this Merger Agreement, the term "EFFECTIVE TIME" shall mean
the time at which such articles are accepted for record by the Department.
SECTION 1.4 EFFECT OF THE MERGER. The Merger shall, from and after the
Effective Time, have all the effects provided by the MGCL. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all the
properties, rights, privileges, powers and franchises of the Company and Merger
Sub shall vest in the Surviving Corporation, and other than as provided herein,
all debts, liabilities and duties of the Company and Merger Sub shall become the
debts, liabilities and duties of the Surviving Corporation. If at any time after
the Effective Time the Surviving Corporation shall consider or be advised that
any further deeds, conveyances, assignments or assurances in law or any other
acts are necessary, desirable or proper to vest, perfect or confirm, of record
or otherwise, in the Surviving Corporation, the title to any property or rights
of the Company to be vested in the Surviving Corporation, by reason of, or as a
result of, the Merger, or otherwise to carry out the purposes of this Agreement,
the Company agrees that the Surviving Corporation and its proper officers and
directors may execute and deliver all such deeds, conveyances, assignments and
assurances in law and do all things necessary, desirable or proper to vest,
perfect or confirm title to such property or rights in the Surviving Corporation
and otherwise to carry out the purposes of this Agreement, and that the proper
officers and directors of the Surviving Corporation are fully authorized in the
name of the Company or otherwise to take any and all such action.
ARTICLE 2
THE SURVIVING CORPORATION AND CONVERSION OF SHARES
SECTION 2.1 CHARTER. The charter of Merger Sub as in effect immediately
prior to the Effective Time shall be the Charter of the Surviving Corporation
after the Effective Time, except that the change of name described in the
articles of merger shall be effective as an amendment thereto, until thereafter
changed or amended as provided therein or by applicable law.
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SECTION 2.2 BY-LAWS. The by-laws of Merger Sub as in effect immediately
prior to the Effective Time shall be the bylaws of the Surviving Corporation,
until, subject to Section 5.7, thereafter changed or amended as provided therein
or by applicable law.
SECTION 2.3 BOARD OF DIRECTORS; OFFICERS. The directors of Merger Sub
immediately prior to the Effective Time shall be the directors of the Surviving
Corporation and the officers of Merger Sub immediately prior to the Effective
Time shall be the officers of the Surviving Corporation, in each case, until the
earlier of their respective resignations or the time that their respective
successors are duly elected or appointed and qualified.
SECTION 2.4 MERGER CONSIDERATION. As of the Effective Time, by virtue
of the Merger and without any action on the part of any shareholder of the
Company, each outstanding share of beneficial interest, par value $0.01 per
share, of the Company ("Company Common Stock") shall be converted into and
represent the right to receive a number of shares (subject to clause (b) below)
of common stock, par value $0.01 per share, of the Parent (the "PARENT COMMON
STOCK") equal to the Per Share Stock Consideration (as such term is defined in
clause (a) below) (the "MERGER CONSIDERATION"); provided, however, if between
the date hereof and the Effective Time the outstanding shares of Company Common
Stock shall have been changed into a different number of shares or a different
class, by reason of any stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares, the amounts of cash
per share and Parent Common Stock per share shall be correspondingly adjusted to
reflect such stock dividend, subdivision, reclassification, recapitalization,
split, combination or exchange of shares.
(a) The "PER SHARE STOCK CONSIDERATION" shall be a number of shares of
Parent Common Stock equal to the quotient obtained by dividing (I) Total Stock
Consideration by (II) Total Company Shares. "TOTAL STOCK CONSIDERATION" shall
equal the quotient obtained by dividing (i) the amount by which (x) the sum of
(A) Eighty Two Million Five Hundred Thousand Dollars ($82,500,000), (B) the
aggregate amount of the Company's and its Subsidiary's cash and cash equivalents
on hand or in bank accounts as of the close of business on the Business Day
immediately prior to the Closing Date (net of amounts of outstanding checks or
transfers) and (C) all Lease Expenses exceeds (y) the sum of (aa) the amount of
the Company Merger Expenses and (bb) the REIT Dividend Amount (to the extent not
previously paid to the Exchange Agent pursuant to Section 2.6) and (cc) the 2005
Dividend (to the extent not previously paid) by (ii) the Market Price. "TOTAL
COMPANY SHARES" means the number of outstanding shares of Company Common Stock
immediately prior to the Effective Time. The "MARKET PRICE" shall equal the
closing price on the New York Stock Exchange, Inc. (the "NYSE") (or, if not
listed on such date on the NYSE, such other exchange on which such shares are
then listed) of shares of Parent Common Stock on the final full trading day
immediately preceding the Closing Date. The term "Lease Expenses" means all
leasing commissions, tenant improvement costs, legal fees and related expenses
with respect to (i) the Telco Stores Lease and (ii) leases entered into
following the date hereof and in accordance with Section 5.3(vi).
(b) FRACTIONAL SHARES. Notwithstanding the provisions of clause (a) of
this Section 2.4, no fraction of a share of Parent Common Stock shall be issued
in the Merger. In lieu of any such fractional shares, each holder of Company
Common Stock receiving fractional shares of Parent Common Stock in the Merger,
upon surrender of a Certificate for exchange pursuant to
3
Section 2.6, shall be paid an amount in cash (without interest), rounded to the
nearest cent, determined by multiplying (x) the Market Price by (y) the
fractional interest in Parent Common Stock to which such holder would otherwise
be entitled (after taking into account all shares of Company Common Stock then
held of record by such holder). On the Business Day immediately preceding the
Closing Date, the chief financial officer of the Company shall deliver to the
Merger Sub a certificate, in form and substance reasonably satisfactory to the
Parent and signed on behalf of the Company setting forth in reasonable detail
(i) the nature and amount of each of the Company Merger Expenses (whether
previously paid or not), (ii) the REIT Dividend Amount, (iii) the 2005 Dividend,
if any, (iv) the aggregate amount of the Company's and its Subsidiary's cash and
cash equivalents on hand or in bank accounts as of the Business Day immediately
prior to the Closing Date (net of amounts of outstanding checks or transfers)
and (iv) the Lease Expenses.
(c) For purposes of this Agreement, "COMPANY MERGER EXPENSES" means all
(i) brokerage or similar fees, (ii) legal and accounting fees and disbursements,
(iii) advisory, consulting and severance fees and expenses, (iv) printing and
Securities and Exchange Commission ("SEC") filing fees and expenses, (v)
Transfer Taxes (as such term is defined in Section 5.10) regardless of whether
such Transfer Taxes are the obligation of the Company and its Subsidiary or the
obligation of Parent and its Subsidiaries but excluding any such Transfer Taxes
that are the obligation of any shareholder (other than the Parent and its
affiliates) solely in their capacity as a shareholder, (vi) all GAAP Liabilities
(including all accounts payable and accrued expenses, and any roll-back property
taxes actually assessed and, to the extent applicable, excluding the 2005
Dividend and the Special Dividend), and (vii) other unpaid fees and expenses
incurred or accrued by the Company and its Subsidiary, which in each case have
not been paid on or prior to the Business Day immediately prior to the Closing
Date.
SECTION 2.5 COMPANY SPECIAL DIVIDEND. The Company shall declare and
pay, in accordance with Section 2.6, a dividend (the "SPECIAL DIVIDEND") to its
shareholders, the record date for which shall be the close of business on the
last Business Day prior to the Closing Date. The Special Dividend shall be in an
amount equal to the dividend the Company, in consultation with Parent,
reasonably determines is necessary for the Company to declare and pay in order
to qualify as a REIT (as such term is defined in Section 3.9) for its taxable
year commencing on January 1, 2006 and ended on the Closing Date (the "REIT
DIVIDEND AMOUNT") and the per share amount of the REIT Dividend Amount shall be
an amount equal to the REIT Dividend Amount divided by the number of shares of
Company Common Stock outstanding as of the last Business Day prior to the
Closing Date (the "PER SHARE REIT DIVIDEND AMOUNT").
SECTION 2.6 PAYMENT.
(a) Prior to the Effective Time, Parent shall appoint a commercial bank
or trust company to act as an exchange agent hereunder for purposes of
exchanging shares of Company Common Stock for the Merger Consideration (the
"EXCHANGE AGENT"). At or prior to the Effective Time, Parent shall deposit with
the Exchange Agent, in trust for the benefit of holders of shares of Company
Common Stock, certificates representing the Parent Common Stock issuable
pursuant to Section 2.4. Parent and Merger Sub agree to make available directly
or indirectly to the Exchange Agent, from time to time as needed, cash
sufficient to pay cash in lieu of any fractional shares pursuant to Section
2.4(b). Prior to the Effective Time, the Company
4
will deposit with the Exchange Agent cash sufficient to pay any dividends and
other distributions, if any, including the REIT Dividend Amount and, to the
extent not previously paid, the 2005 Dividend.
(b) Promptly after the Effective Time, the Exchange Agent shall pay the
Per Share REIT Dividend Amount and to the extent not previously paid, the 2005
Dividend Amount to holders of record on the last Business Day prior to the
Closing Date, in accordance with customary procedures for the payment of
dividends, and to mail to each record holder of shares of Company Common Stock
as of the Closing Date (i) a letter of transmittal, including if applicable a
form of election, which shall specify that delivery shall be effected, and risk
of loss and title to the Company Common Stock shall pass, only upon proper
delivery of certificates which immediately prior to the Effective Time
represented the Company Common Stock held by such shareholder ("CERTIFICATES")
to the Exchange Agent, and which letter shall be in customary form and have such
other provisions as Parent or Merger Sub may reasonably specify (such letter to
be reasonably acceptable to the Company prior to the Effective Time) and (ii)
instructions for effecting the surrender of such Certificates in exchange for
Merger Consideration. Upon surrender of the Certificates to the Exchange Agent
together with such letter of transmittal, duly executed and completed in
accordance with the instructions thereto, and such other documents as may
reasonably be required by the Exchange Agent, the holder of such Certificates
shall be entitled to receive in exchange therefor (A) one or more shares of
Parent Common Stock (which shall be in uncertificated book-entry form unless a
physical certificate is requested by such holder) representing, in the
aggregate, the whole number of shares of Per Share Stock Consideration that such
shareholder has the right to receive pursuant to Section 2.4 (after taking into
account all shares of Company Common Stock then held by such shareholder) and
(B) a check in the amount equal to the cash that such shareholder has the right
to receive pursuant to the provisions of Section 2.4(a) and Section 2.5, cash in
lieu of any fractional shares of Parent Common Stock pursuant to Section 2.4(b)
and any unpaid dividends and other distributions, if any, ("CASH PAYMENTS"). No
interest will be paid or will accrue on any Cash Payments. In the event of a
transfer of ownership of Company Common Stock which is not registered in the
transfer records of the Company, the Merger Consideration and any Cash Payments
to which such holder is entitled, may be issued with respect to the Company
Common Stock to such transferee if such shareholder's Company Common Stock are
presented to the Exchange Agent accompanied by all documents required to
evidence and effect such transfer and to evidence that any applicable stock
transfer taxes have been paid.
(c) Unless otherwise required by applicable law, any portion of the
aggregate Merger Consideration which remains undistributed to holders of shares
of Company Common Stock one year after the Effective Time shall be delivered to
the Parent and any holders of shares of Company Common Stock who have not
theretofore complied with the provisions of this ARTICLE 2 shall thereafter look
only to Surviving Corporation for payment of any Merger Consideration to which
they are entitled pursuant to this ARTICLE 2. None of Parent, Surviving
Corporation or the Exchange Agent shall be liable to any holder of shares of
Company Common Stock for any cash and securities held by Parent, Surviving
Corporation or the Exchange Agent for payment pursuant to this ARTICLE 2
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.
5
SECTION 2.7 WITHHOLDING RIGHTS. Each of the Surviving Corporation and
Parent shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of Company Common Stock such
amounts as it determines is required to deduct and withhold with respect to the
making of such payment under the Code, or any provision of state, local or
foreign tax law. To the extent that amounts are so withheld by the Surviving
Corporation or Parent, as the case may be, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to holders of
Company Common Stock in respect of which such deduction and withholding was made
by the Surviving Corporation or Parent, as the case may be.
SECTION 2.8 NO FURTHER RIGHTS. From and after the Effective Time,
holders of Certificates shall cease to have any rights as shareholders of the
Company, except as provided herein (including the right to receive (i) the
Merger Consideration, (ii) the Per Share REIT Dividend Amount, (iii) any unpaid
2005 Dividend amount and (iv) any cash to be paid in lieu of fractional shares
of the Parent Common Stock as set forth in Section 2.4 (b)) or by law.
SECTION 2.9 CLOSING OF THE COMPANY'S TRANSFER BOOKS. At the Effective
Time, the stock transfer books of the Company shall be closed and no transfer of
shares of Company Common Stock shall be made thereafter. In the event that,
after the Effective Time, Certificates are presented to Merger Sub or the
Surviving Corporation, they shall be cancelled and exchanged for Merger
Consideration for each share of Company Common Stock represented as provided in
Section 2.4.
SECTION 2.10 DISSENTING SHARES. Notwithstanding Section 2.8 hereof,
shares of Company Common Stock issued and outstanding immediately prior to the
Effective Time and held by a holder who has properly exercised and perfected
appraisal rights under Title 3. Subtitle 2. of the MGCL (the "DISSENTING
SHARES") shall not be converted into the right to receive the Merger
Consideration, but the holders of Dissenting Shares shall be entitled to receive
such consideration as shall be determined pursuant to Title 3. Subtitle 2. of
the MGCL and pursuant to the Maryland Business Combination Act; PROVIDED,
HOWEVER, that if any such holder shall have failed to perfect or shall
effectively withdraw or lose his or her right to appraisal and payment under the
MGCL, such holder's shares of Company Common Stock shall thereupon be deemed to
have been converted as of the Effective Time into the right to receive Merger
Consideration as set forth in Section 2.4 hereof, and such shares of Company
Common Stock shall no longer be Dissenting Shares.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Merger Sub
as follows:
SECTION 3.1 ORGANIZATION. The Company is a real estate investment trust
and its Subsidiary is a corporation, each duly organized, validly existing and
in good standing under the laws of their respective jurisdictions of
incorporation or organization, as applicable, and each of the Company and its
Subsidiary has all requisite real estate investment trust or corporate power
6
and authority to own, lease and operate their respective properties and to carry
on their respective businesses as now being conducted. Each of the Company and
its Subsidiary is duly qualified or licensed and in good standing to do business
in each jurisdiction in which the property owned, leased or operated by it or
the nature of the business conducted by it makes such qualification necessary,
except in such jurisdictions where the failure to be so duly qualified or
licensed and in good standing would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect. The Company
owns directly all of the outstanding capital stock or other equity interests of
its Subsidiary free and clear of any liens and encumbrances. The Company does
not directly or indirectly own any capital stock or other proprietary interest
in any person other than its Subsidiary.
SECTION 3.2 CAPITALIZATION. The authorized capital stock of the Company
consists of 10,000,000 shares of Company Common Stock and 10,000,000 shares of
excess common stock, par value $0.01. As of August 31, 2005, there were
3,561,553 shares of Company Common Stock and no shares of excess common stock
issued and outstanding. The Company's Subsidiary does not own any shares of
Company Common Stock. There are no outstanding options to purchase shares of
Company Common Stock. There were not as of the date hereof, and at all times
thereafter through the Effective Time there will not be, any existing options,
warrants, calls, subscriptions, or other rights or other agreements or
commitments obligating the Company or its Subsidiary to issue, transfer or sell
any shares of capital stock or other equity interests of the Company or its
Subsidiary or any other securities convertible into or evidencing the right to
subscribe for any such shares or other equity interests. All issued and
outstanding shares of Company Common Stock are duly authorized and
validly issued, fully paid, non-assessable and have not been issued in violation
of any preemptive rights with respect thereto. There are no outstanding
obligations of the Company or its Subsidiary to repurchase, redeem, or otherwise
acquire any shares of Company Common Stock or to grant preemptive or
anti-dilutive rights with respect to any Company Common Stock.
SECTION 3.3 AUTHORITY. The Company has full real estate investment
trust power and authority to execute and deliver this Agreement and, subject to
the approval of its shareholders, to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized and
approved by the Board of Trustees of the Company, and other than the approval by
its shareholders, no other real estate investment trust proceedings are
necessary to authorize this Agreement or the consummation of the transactions
contemplated hereby. The Board of Trustees of the Company has directed that this
Agreement be submitted to the stockholders of the Company for their approval.
This Agreement has been duly and validly executed and delivered by the Company
and, assuming this Agreement constitutes a legal, valid and binding agreement of
Parent and Merger Sub, it constitutes a legal, valid and binding agreement of
the Company, enforceable against it in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights or general principles of equity.
SECTION 3.4 NO VIOLATIONS; CONSENTS AND APPROVALS. (a) None of the
execution and delivery of this Agreement, the consummation of the transactions
contemplated hereby or compliance by the Company with any of the provisions
hereof will (i) conflict with or violate any provision of its declaration of
trust or bylaws, (ii) conflict with, result in a violation or
7
breach of, or constitute (with or without due notice or lapse of time or both) a
default, or give rise to any right of modification, termination, cancellation or
acceleration, or result in the loss of any benefit to which the Company or its
Subsidiary is entitled or any increase in any of the Company's or its
Subsidiary's payment or performance obligations under any of the terms,
conditions or provisions of the Office Lease, any Contract, Space Lease,
easement, arrangement, understanding, order, arbitration award, license,
franchise, permit judgment, decree, note, bond, mortgage, indenture or other
instrument to which the Company or its Subsidiary is a party, or by which the
Company or its Subsidiary or any of their respective properties is bound or
result in the creation or imposition of any Lien on assets of the Company or its
Subsidiary, or (iii) violate any statute, rule, regulation, order or decree of
any public body or authority by which the Company or its Subsidiary or any of
their respective properties is bound, excluding from the foregoing clauses (ii)
or (iii) violations, breaches, defaults or rights which, either individually or
in the aggregate, would not reasonably be expected to have a Company Material
Adverse Effect or for which the Company has received or, prior to the Closing
Date, shall have received effective consents or waivers.
(b) No filing or registration with, notification to, or authorization,
consent or approval of, any governmental entity is required in connection with
the execution and delivery of this Agreement by the Company, or the consummation
by the Company of the transactions contemplated hereby, except (i) expiration of
the waiting period under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended (the "HSR ACT"), if a filing under the HSR Act is required,
(ii) in connection, or in compliance, with the provisions of the Securities
Exchange Act of 1934, as amended and the rules promulgated thereunder (the
"EXCHANGE ACT"), (iii) the filing of articles of merger with the Department,
(iv) such filings and consents as may be required under any environmental law
pertaining to any notification, disclosure or required approval triggered by the
Merger or the transactions contemplated hereby, (v) filing with, and approval of
NASDAQ and the SEC with respect to the Merger and the delisting and
deregistration of the shares of Company Common Stock, (vi) such consents,
approvals, orders, authorizations, notifications, registrations, declarations
and filings as may be required under the corporation, takeover or blue sky laws
of various states and (vii) such other consents, approvals, orders,
authorizations, notifications, registrations, declarations and filings the
failure of which to be obtained or made would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect.
SECTION 3.5 SEC DOCUMENTS; FINANCIAL STATEMENTS. (a) The Company has
timely filed with the SEC and has made available to Merger Sub copies of each
registration statement, form, statement, report, proxy statement, information
statement, schedule or other document required to be filed with the SEC by the
Company or its Subsidiary since December 31, 1999 under the Securities Act or
the Exchange Act (such documents, as supplemented and amended since the time of
filing, the "COMPANY SEC DOCUMENTS"). As of the dates filed (and, in the case of
registration statements and proxy statements, on the dates of effectiveness and
the dates of mailing, respectively, and in the case of any Company SEC Document
amended or superseded by a filing prior to the date of this Agreement, then on
the date of such amending or superseding filing), the Company SEC Documents,
including any financial statements or schedules included therein, complied in
all material respects with the applicable requirements of the Securities Act of
1933, as amended and the rules promulgated thereunder (collectively, the
"SECURITIES ACT"), and the Exchange Act, as the case may be, and
8
none of such Company SEC Documents contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(b) None of the Company, its Subsidiary, or any of their respective
assets, businesses, or operations, is as of the date of this Agreement a party
to, or is bound or affected by, or receives benefits under any Contract or
agreement or amendment thereto, that in each case would be required to be filed
as an exhibit to a Form 10-K as of the date of this Agreement that has not been
filed as an exhibit to a Company SEC Document filed prior to the date of this
Agreement.
(c) As of the dates filed (and, in the case of registration statements
and proxy statements, on the dates of effectiveness and the dates of mailing,
respectively, and, in the case of any Company SEC Document amended or superseded
by a filing prior to the date of this Agreement, then on the date of such
amending or superseding filing), the consolidated financial statements included
in the Company SEC Documents complied as to form in all material respects with
then applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto, were prepared in accordance with United States
generally accepted accounting principles ("GAAP") applied on a consistent basis
during the periods involved (except as may be indicated therein or in the notes
thereto or, in the case of unaudited statements, as permitted by Form 10-Q of
the Commission) and fairly presented the Company's consolidated financial
position of the Company and its Subsidiary for the periods then ended.
SECTION 3.6 ABSENCE OF CERTAIN CHANGES; NO UNDISCLOSED LIABILITIES.
(a) Except as set forth on Schedule 3.6, since December 31, 2004
through the date of this agreement, the Company has not (i) incurred any
Liability or suffered any event or occurrence which, individually or in the
aggregate, would reasonably be expected to have a Company Material Adverse
Effect, (ii) made any changes in accounting methods, principles or practices
(iii) declared, set aside or paid any dividend or other distribution with
respect to its capital stock, or (iv) taken any action that if, taken after the
execution of this Agreement, would violate Section 5.3. Since December 31, 2004
to the date of this Agreement, each of the Company and its Subsidiary has
conducted its operations according to its ordinary course of business consistent
with past practice.
(b) Except (i) to the extent disclosed or reserved against on the
balance sheet of the Company dated as of December 31, 2004 included in the
Company SEC Documents, (ii) as incurred after the date thereof in the ordinary
course of business consistent with past practice and, if incurred after the date
of this Agreement, not prohibited by this Agreement, (iii) for Company Merger
Expenses, or (iv) as set forth on SCHEDULE 3.6(B), neither the Company nor its
Subsidiary has any Liabilities.
SECTION 3.7 LITIGATION. Except as set forth on SCHEDULE 3.7, there is
no suit, claim, action, proceeding, hearing, notice of violation, demand letter
or investigation (each an "ACTION") pending or, to the knowledge of the Company,
threatened against the Company or its Subsidiary or any of their respective
properties or assets, officers or directors, before any governmental entity
which, individually or in the aggregate, would reasonably be expected to
9
have a Company Material Adverse Effect. Except as set forth on SCHEDULE 3.7,
neither the Company nor its Subsidiary is, nor since December 31, 1999 has been,
subject to any outstanding order, writ, injunction or decree which, individually
or in the aggregate, would reasonably be expected to have a Company Material
Adverse Effect.
SECTION 3.8 COMPLIANCE WITH APPLICABLE LAW. Except as set forth in
SCHEDULE 3.8, the Company and its Subsidiary hold, and since December 31, 1999
have held, all permits, licenses, variances, exemptions, orders and approvals of
all governmental entities necessary for the lawful ownership and operation of
the Property (as defined in Section 3.11) or the lawful conduct of their
respective businesses (the "Company Permits"), except for failures to hold such
permits, licenses, variances, exemptions, orders and approvals which would not,
individually or in the aggregate, reasonably be expected to have, individually
or in the aggregate, a Company Material Adverse Effect. Except as set forth in
SCHEDULE 3.8, the Company and its Subsidiaries and the Property (as hereinafter
defined) are in compliance with the terms of the Company Permits, except where
the failure so to comply would not, individually or in the aggregate, reasonably
be expected to have a Company Material Adverse Effect. Except as set forth in
SCHEDULE 3.8, the businesses of the Company and its Subsidiaries and the
operation of the Company Properties are not being conducted in violation of any
law, ordinance or regulation of any governmental entity except for violations or
possible violations which, individually or in the aggregate, would not
reasonably be expected to have a Company Material Adverse Effect. Except as set
forth in SCHEDULE 3.8, no investigation or review by any governmental entity
with respect to the Company or its Subsidiary or any Property is pending or, to
the knowledge of the Company, threatened nor, to the knowledge of the Company,
has any governmental entity indicated an intention to conduct the same, other
than, in each case, those which would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect.
SECTION 3.9 TAXES.
(a) Except as set forth on SCHEDULE 3.9(A), each of the Company and its
Subsidiary has duly and timely filed, or caused to be filed, all federal, state,
local and foreign income and other material Tax Returns (as defined in Section
3.9(p) of this Agreement) required to be filed by it. Each such Tax Return is
accurate and complete in all material respects. Except as may be required
pursuant to Section 5.11, there are no outstanding requests for any extension of
time within which to file any Tax Return or within which to pay any Taxes (as
defined in Section 3.9(p) of this Agreement) shown to be due on any Tax Return.
(b) Except as set forth on Schedule 3.9(b) each of the Company and its
Subsidiary has duly and timely paid or caused to be duly and timely paid, all
Taxes that are shown on all Tax Returns required to be filed by it as due and
payable, and has paid, or caused to be paid, all Taxes otherwise required to be
paid, other than such Taxes as are being contested in good faith and for which
adequate reserves have been established and other than where the failure to so
file, pay or withhold would not reasonably be expected to have, individually or
in the aggregate, a Company Material Adverse Effect. Each of Company and its
Subsidiary has withheld proper and accurate amounts from their employees,
customers, depositors, stockholders, and others from whom they are or were
required to withhold taxes in compliance with all applicable federal, state,
local, provincial and foreign laws and have timely paid all such withheld
amounts to the
10
appropriate taxing authorities. There are no waivers or extensions of any
applicable statute of limitations to assess any Taxes.
(c) Except as set forth on SCHEDULE 3.9(C), the Company has incurred no
liability for any material Taxes under Sections 857(b), 860(c), or 4981 of the
Code, IRS Notice 88-19, Treasury Regulation Section 1.337(d)-5, or Treasury
Regulation Section 1.337(d)-6 including any material Tax arising from a
prohibited transaction described in Section 857(b)(6) of the Code, and neither
the Company nor its Subsidiary has incurred any material liability for Taxes
other than in the ordinary course of business other than transfer or similar
Taxes arising in connection with the sales of property. No event has occurred,
and no condition or circumstance exists, which presents a risk that any material
Tax described in the preceding sentence will be imposed on the Company or its
Subsidiary.
(d) Except as set forth on SCHEDULE 3.9(D), there are no material
claims or assessments pending against the Company or its Subsidiary for any
alleged deficiency in any Tax, and neither the Company nor its Subsidiary knows
of any threatened Tax claims or assessments against the Company or its
Subsidiary which if upheld would reasonably be expected to result, individually
or in the aggregate, in a material cost or liability for the Company or its
Subsidiary. There are no pledges, claims, liens, charges, encumbrances or
security interests of any kind or nature whatsoever (the foregoing, and
mortgages, deeds of trust, options, covenants, conditions, restrictions,
easements and rights of first refusal or first offer, each a "LIEN") for any
Taxes upon the assets of the Company or its Subsidiary except for statutory
Liens for Taxes not yet due.
(e) There is no material deferred inter-company gain within the meaning
of the Treasury Regulations promulgated under Section 1502 of the Code.
(f) Except as set forth on SCHEDULE 3.9(F), assuming the accuracy of
the representations and warranties made by Parent and its affiliates in the
Third Amended and Restated Standstill Agreement dated as of August 3, 2004 (the
"KIMCO STANDSTILL AGREEMENT") by and among the Company on the one hand and
Parent, Kimco Realty Services, Inc. and ▇▇▇▇▇▇ ▇▇▇▇▇▇ on the other hand, and the
accuracy of the representations and warranties made by the parties (other than
the Company) to the Standstill Agreement, dated as of January 27, 2004, by and
among the Company, on the one hand, and High Rise Capital Management, L.P., High
Rise Capital Advisors, L.L.C., Bridge Realty Advisors, L.L.C., Zankel Management
GP, L.L.C., Cedar Bridge Realty Fund, L.P., Cedar Bridge Institutional Fund,
L.P., a Delaware limited partnership ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇'▇▇▇▇▇▇ on the
other hand, which representations the Company has no reason to believe are not
true and accurate, (i) the Company was eligible to and did validly elect to be
taxed as a real estate investment trust (a "REIT") within the meaning of the
Code for calendar year 1996 and all subsequent taxable periods, (ii) the Company
has qualified as REIT, and complied with all applicable laws, rules and
regulations, including the Code, relating to REITs, for each taxable year
commencing with its taxable year ending December 31, 1996, (ii) has operated,
and intends to continue to operate, in such a manner as to qualify as a REIT
through the Effective Time, and (iii) the Company has not taken or omitted to
take any action which could result in a challenge to its status as a REIT.
11
(g) No challenge to the Company's status as a REIT is pending, or to
the Company's knowledge, is or has been threatened. Neither the Company nor its
Subsidiary holds any asset the disposition of which would be subject to rules
similar to Section 1374 of the Code as announced in IRS Notice 88-19 or Treasury
Regulation Section 1.337(d)-5 or Treasury Regulation Section 1.337(d)-6. The
Subsidiary, since its acquisition by the Company, has been and continues to be
classified for Federal income tax purposes as a "qualified REIT subsidiary"
within the meaning of Section 856(i)(2) of the Code and, other than the
Subsidiary, the Company does not own (directly or indirectly) any other equity
interest in an entity (including a corporation, partnership or limited liability
company).
(h) The Company does not have any earnings and profits attributable to
the Company or any other corporation in any non-REIT year within the meaning of
Section 857 of the Code. Neither the Company nor its Subsidiary has made any
election, and is not required, to treat any of its assets as owned by another
person for tax purposes (other than by reason of a Subsidiary being a "qualified
REIT subsidiary").
(i) Neither the Company nor its Subsidiary has made any payments, is
obligated to make any payments, or is a party to an agreement that could
obligate it to make any payments that will not be deductible under Section 280G
of the Code. The Company and its Subsidiary have disclosed to the IRS all
positions taken on their federal income Tax Returns which could give rise to a
substantial understatement of Tax under Section 6662 of the Code. The
disallowance of a deduction under Section 162(m) of the Code for employee
remuneration will not apply to any amount paid or payable by the Company or the
Subsidiaries under any plan or other agreement, program, arrangement or
understanding currently in effect.
(j) Except as set forth in SCHEDULE 3.9(J), and except as set forth in
the following sentence, neither the Company nor its Subsidiary has received or
is subject to any written ruling of a taxing authority related to Taxes or has
entered into any written and legally binding agreement with a taxing authority
relating to Taxes. The Company has entered into a written closing agreement with
the Internal Revenue Service with respect to all claims raised by the Internal
Revenue Service with respect to the Company's taxable years 1996 and 1997. No
issues have been raised in any examination by any taxing authority with respect
to the Company or the Subsidiary which, by application of similar principles,
reasonably could be expected to result in a proposed deficiency or increase in
Tax for any other period not so examined.
(k) Other than the Tax Agreement between the Company and RPS Realty
Trust dated May 10, 1996 and listed on SCHEDULE 3.9(K), neither the Company nor
its Subsidiary (a) is a party to or is otherwise subject to any Tax allocation
or sharing agreement, or (b) has any liability for Taxes of another person under
law, by contract or otherwise except for withholding Taxes incurred in the
ordinary course of business that have been properly withheld but are not yet
required to be deposited with a Tax authority. Except as set forth on SCHEDULE
3.9(K), the Company has no liability (contingent or otherwise) or unsatisfied
obligation to RPS Realty Trust under or arising out of the Tax Agreement between
the Company and RPS Realty Trust dated May 10, 1996.
(l) Neither the Company nor its Subsidiary has distributed stock of
another person, or has had its stock distributed by another person, in a
transaction that occurred on or
12
after January 1, 2000 that was purported or intended to be governed in whole or
in part by Code Section 355.
(m) Neither the Company nor its Subsidiary has taken any action or
knows of any fact, agreement, plan or other circumstance that is reasonably
likely to prevent the Merger from qualifying as a "reorganization" within the
meaning of Section 368(a) of the Code.
(n) To the knowledge of the Company as of the Closing Date, neither the
Company nor its Subsidiary is or has been a party to any "reportable
transaction" within the meaning of Treasury Regulations Section 1.6011-4(b).
(o) Except for the Special Dividend, and the 2005 Dividend, if any, it
is not necessary for the Company to declare and pay a dividend in order to
maintain its qualification as a REIT.
(p) For purposes of this Agreement, "TAXES" means all taxes (whether
United States federal, state or local or foreign) of any kind whatsoever,
including income, alternative or add-on minimum, estimated, gross receipts,
profits, sales, use, occupation, value added, ad valorem, transfer, franchise,
withholding, payroll, employment, unemployment, net worth, social security,
worker's compensation, excise, or property taxes, together with any interest,
penalties, additions to tax and additional amounts imposed with respect thereto
whether disputed or not, and shall include any amounts payable pursuant to any
tax sharing agreement or with respect to which any relevant entity is liable as
a successor, pursuant to contract or otherwise. For purposes of this Agreement,
"TAX RETURNS" means returns, reports, forms or other documentation (including
any additional or supporting material and any amendments or supplements)
required to be filed with any taxing authority of the United States or any other
relevant jurisdiction responsible for the imposition or collection of Taxes,
including any information returns, claims for refunds, amended returns, or
declarations of estimated Taxes.
SECTION 3.10 CERTAIN EMPLOYEE PLANS.
(a) The Company and its Subsidiary have complied, and are now in
compliance, in all material respects with all provisions of ERISA, the Code and
all laws and regulations applicable to each "employee benefit plans," as defined
in Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and each other employee benefit plan, program, policy,
practice or other arrangement providing benefits to any current or former
employee, officer or director of the Company or its Subsidiary or any
beneficiary or dependent thereof that is sponsored or maintained by the Company
or its Subsidiary or to which the Company or its Subsidiary is obligated to
contribute, including without limitation any bonus, incentive, deferred
compensation, vacation, stock purchase, stock option, severance, employment,
change of control or fringe benefit plan, program or policy (the "COMPANY
PLANS"). SCHEDULE 3.10(A) sets forth a complete and accurate list of all Company
Plans. No Company Plan is intended to be a "qualified plan" within the meaning
of Section 401(a) of the Code, nor is any Company Plan subject to Title IV or
Section 302 of ERISA or Section 412 or 4971 of the Code. None of the Company,
its Subsidiary and their respective "ERISA Affiliates" (as defined in the next
sentence) contributes to or is obligated to contribute to, or has, at any time
within the last six years, contributed to or been obligated to contribute to,
any "multiemployer plan" within
13
the meaning of Section 4001(a)(3) of ERISA or any plan with two or more
contributing sponsors at least two of whom are not under common control, within
the meaning of Section 4063 of ERISA. The term "ERISA AFFILIATE" means, with
respect to any entity, trade or business, any other entity, trade or business
that is a member of a group described in Section 414(b) or (c), (m) or (o) of
the Code or Section 4001(b)(1) of ERISA that includes the first entity, trade or
business, or that is a member of the same "controlled group" as the first
entity, trade or business pursuant to Section 4001(a)(14) of ERISA. There does
not now exist, nor do any circumstances exist that could result in, any
Liability on the part of the Company or its Subsidiary under (i) Title IV of
ERISA, (ii) section 302 of ERISA, or (iii) sections 412 and 4971 of the Code.
There does not now exist, nor do any circumstances exist that could result in,
any Liability on the part of the Company its Subsidiary under the continuation
coverage requirements of section 601 et seq. of ERISA and section 4980B of the
Code, other than such Liabilities that arise solely out of, or relate solely to,
the Company Plans. Neither the Company, its Subsidiary, nor any of their
respective directors, officers, employees or agents has, with respect to any
Company Plan, engaged in any "prohibited transaction" (as such term is defined
in Section 4975 of the Code or Section 406 of ERISA)) nor has any Company Plan
engaged in any such prohibited transaction which could result in any taxes or
penalties or prohibited transactions under Section 4975 of the Code or under
Section 502(i) of ERISA, which, in the aggregate, would reasonably be expected
to result in material Liability on the part of the Company or its Subsidiary.
Copies of all of the Company Plans and any related trusts and summary plan
descriptions have been made available to Merger Sub.
(b) The Company and its Subsidiary are each in material compliance with
all applicable federal, state and local laws respecting employment, employment
practices, terms and conditions of employment and wages and hours of employment.
Without limiting the foregoing, each individual who renders services to the
Company or its Subsidiary who is classified as having the status of an
independent contractor or other non-employee status for any purpose is properly
so characterized. Neither the Company nor its Subsidiary is a party to or
subject to any labor union or collective bargaining agreement with respect to
any of its employees. No labor organization or group of employees of the Company
or its Subsidiary has made a pending demand for recognition or certification,
and there are no representation or certification proceedings or petitions
seeking a representation proceeding presently pending or threatened to be
brought or filed, with the National Labor Relations Board or any other labor
relations tribunal or authority.
(c) Except as set forth on SCHEDULE 3.10(C), none of the execution and
delivery of this Agreement, receipt of the Company Stockholder Approval and the
consummation of the transactions contemplated hereby will result in, cause the
accelerated vesting or delivery of, or require, any payment or benefit to any
employee or former employee of the Company, or its Subsidiary, either alone or
in conjunction with any other event (including, without limitation, termination
of employment). SCHEDULE 3.10(C) lists the maximum amount of the "excess
parachute payments" within the meaning of Section 280G of the Code that could
become payable by the Company and its Subsidiary and ERISA Affiliates in
connection with the execution and delivery of this Agreement, receipt of the
Company Stockholder Approval or the consummation of the transactions
contemplated hereby.
14
SECTION 3.11 PROPERTIES.
(a) The Company's Subsidiary owns marketable fee simple title to the
real property, whose legal description is listed on SCHEDULE 3.11 attached
hereto (the "PROPERTY"). The Property is not subject to any rights of way,
written agreements, laws, ordinances and regulations affecting building use or
occupancy, or reservations of an interest in title (collectively, "Property
Restrictions") or Liens (including Liens for Taxes), mortgages or deeds of
trust, claims against title, charges which are Liens, security interests or
other encumbrances on title (the "Encumbrances"), except for (i) Property
Restrictions and Encumbrances set forth in SCHEDULE 3.11(A), (ii) Property
Restrictions imposed or promulgated by law or any governmental body or authority
with respect to real property, including zoning regulations, which, individually
or in the aggregate, would not have a Company Material Adverse Effect, (iii)
Property Restrictions and Encumbrances disclosed on existing title reports or
existing surveys provided to Parent or Parent's representatives prior to the
date hereof, and (iv) mechanics', carriers', workmen's, repairmen's Liens and
other Encumbrances and Property Restrictions, if any, which, individually or in
the aggregate, would not (x) materially and adversely affect the value of the
Property or (y) materially and adversely impair the use and operations of the
Property (the Property Restrictions and Encumbrances set forth in clauses (i)
through (iv) above, in each case subject to expansion as set forth in Section
5.16, being hereinafter referred to collectively as the "COMPANY PERMITTED
ENCUMBRANCES"). Valid policies of title insurance have been issued insuring the
Company's or its Subsidiary' title to the Property in amounts at least equal to
the purchase price thereof, subject only to the Company Permitted Encumbrances
and such policies are, at the date hereof, in full force and effect and no claim
has been made against any such policy. The Company's lease for its headquarters
at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "OFFICE LEASE") is valid,
binding and in full force and effect and is not subject to any pledge, lien,
mortgage, sublease, assignment, license or other agreement granting to any third
party any interest in such Lease or any right to the use or occupancy the
property leased thereunder. A true and complete copy of the Lease has previously
been delivered to Parent, including without limitation all amendments or
modifications thereof and all side letters or other instruments affecting the
obligations of any party thereunder. The Company is now in possession of the
property leased thereunder. There are no outstanding defaults or circumstances
which, upon the giving of notice or passage of time or both, would constitute a
default or breach by either party under the Lease and the consummation of the
transactions contemplated hereby does not require the consent of the lessor
under the Lease and will not constitute a breach or default under the Lease. The
Company and its Subsidiary have no interests in any real property other than the
Property and the Lease.
(b) Neither the Company nor its Subsidiary has received any notice from
any governmental authority, mortgagee, tenant, insurer or other party (i) that
any portion of the Property or the use or operation of any portion of the
Property is currently in violation of any zoning, environmental or other land
use regulations, and to the Company and its Subsidiary's knowledge no such
notice has been issued; (ii) that the Company or its Subsidiary is currently in
violation or with the passage of time will be in violation of the requirements
of any ordinance, law or regulation or order of any government or any agency,
body or subdivision thereof (including, without limitation, the local building
department) or the recommendations of any insurance carrier or Board of Fire
Underwriters affecting the Property, or that any investigation has been
commenced, or is contemplated, regarding any such possible violation; or (iii)
asserting
15
that the Company or its Subsidiary is required to perform work at the Property
and to the Company's knowledge no such notice has been issued.
(c) Each lease by the Company or its Subsidiary of a portion of the
Property to third parties (the "SPACE LEASES") is described (including the name
of the tenant, the number of square feet demised, the base monthly rent, and the
scheduled expiration date) on SCHEDULE 3.11(C). Each Space Lease is validly
existing, in full force and effect and enforceable against the other parties
thereto; no Space Lease has been modified or supplemented except (if at all) as
set forth on SCHEDULE 3.11(C); no rent has been paid more than one month in
advance by any tenant, and no tenant is entitled to any "free rent" period,
defense, credit, allowance or offset against rental; the information set forth
in SCHEDULE 3.11(C) is true, correct and complete. To the Company's knowledge,
there is no default of either landlord or tenant under any of the Space Leases,
and no state of facts which with notice and/or the passage of time would ripen
into a default, except as set forth on SCHEDULE 3.11(C). There are no persons or
entities entitled to possession of the Property other than those listed on
SCHEDULE 3.11(C). No work or installations are required of the Company or its
Subsidiary except as specified (if at all) in the Space Leases, and in any case
the Company or its Subsidiary has fully completed all tenant improvements
specified in any Space Lease to be the responsibility of the landlord and has
paid all tenant construction allowances. There are no leasing commissions due
nor will any become due in connection with any Space Lease or the renewal
thereof, and no understanding or agreement exists in regard to payment of any
leasing commissions or fees for future Space Leases. The Company and its
Subsidiary has no obligations with respect to contributing for or paying dues or
charges to any merchant's association or marketing fund.
(d) SCHEDULE 3.11(D) contains a complete list and description of each
service contract in respect of the Property (the "SERVICE CONTRACTS"). To the
Company's knowledge, there is no material default, or event that with notice or
lapse of time or both would constitute a material default, by any party to any
Service Contract. The Company and its Subsidiary has received no notice that any
party to any Service Contract intends to cancel or terminate such agreement.
(e) There are no agreements or understandings relating to the Property,
except for the Company Permitted Encumbrances, Space Leases and Service
Contracts;
(f) True and complete copies of the most recent real property tax
▇▇▇▇(s) for the Property (which include ▇▇▇▇[s] for all real estate taxes from
all municipal authorities assessing same) are annexed as SCHEDULE 3.11(F). No
tax reduction proceedings are pending or outstanding. The foregoing are all the
taxes on the Property or the income therefrom other than federal and state
income taxes on net taxable income. There are no special assessments or
betterment assessments (whether payable in installments or otherwise) applicable
to the Property and no tenant is entitled to any refund of any tax or other
payment by reason of tax reduction proceedings affecting current or prior years.
(g) No property other than the Property is included in the tax
assessment of the Property, and there are no unpaid assessments for utility
installations.
16
(h) The zoning classification of the Property is not violated by the
use(s) and/or improvements at the Property on the date hereof. SCHEDULE 3.11(H)
constitutes a list of all of the permits and authorizations in the Company and
or its Subsidiary's possession or control in effect as of this date with respect
to the Property (including but not limited to certificates of occupancy).
(i) The Company has no knowledge of any threatened or pending
condemnation or eminent domain proceeding or other constraint on present or
future use, operation or development of the Property.
(j) Attached as SCHEDULE 3.11(J) is a list of all on-site employees or
hired persons in connection with the management, operation or maintenance of the
Property.
(k) The Company has no knowledge of any structural defects or deferred
maintenance in the improvements situated upon the Property. The heating,
ventilating and air conditioning, plumbing, electrical and drainage systems at
or serving the Property and all facilities and equipment relating thereto are in
good condition and working order, and roofs are free of leaks.
(l) Neither the execution and delivery of this Agreement nor the
consummation of the transactions herein contemplated will conflict with, result
in a breach of or constitute (with or without the giving of notice or the
passing of time, or both) a default under, or otherwise adversely affect any
Space Lease, or any other Contract, instrument, license or undertaking to which
the Company or its Subsidiary is a party or by which any of them or any of their
respective properties or assets is or may be bound or that relates to the
Property in any respect.
(m) No tenant under a Space Lease or other person has any option, right
of first refusal or other right to purchase the Property or any part thereof or
interest therein.
(n) All construction and/or maintenance work required by the terms of
any Space Lease or other Company Permitted Encumbrances, or by any building,
zoning or other law, ordinance or regulation affecting the Property, including
without limitation any roadway and utility line construction on the Property
and/or adjacent property has been satisfactorily completed and there are and
will be at Closing no charges, Liens or assessments against the Property for any
of same.
SECTION 3.12 ENVIRONMENTAL MATTERS. None of the Company, its Subsidiary
or, to the knowledge of the Company, any other person has caused or permitted
(a) the unlawful presence of any hazardous substances, hazardous materials,
toxic substances or any other materials that are regulated by or form the basis
of liability under any Environmental Law materials (collectively, "HAZARDOUS
MATERIALS") on any of the Property, or (b) any unlawful spills, releases,
discharges or disposal, dumping or storage of Hazardous Materials to have
occurred or be presently occurring on or from the Property as a result of any
construction on or operation and use of such properties, which presence or
occurrence would reasonably be expected to, individually or in the aggregate,
have a Company Material Adverse Effect; and in connection with the construction
on or operation and use of the Property, the Company and its Subsidiary have not
failed to comply, in any material respect, with all Environmental Laws. The
Company
17
has delivered to Merger Sub true, correct and complete copies of all reports
identified on SCHEDULE 3.12 attached hereto.
For purposes of this Agreement, the term "ENVIRONMENTAL LAW" shall
mean the Federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980 (as the same may be amended from time to time) and any
other law, ordinance or regulation and administrative and judicial orders of any
governmental entity, including requirements under permits, licenses, consents
and approvals, relating to pollution or protection of human health or safety or
the environment, including those that relate to emissions, discharges, releases
or threatened releases, or the generation, recycling, manufacturing, processing,
distribution, use, reuse, treatment, storage, disposal, transport, or handling,
of Hazardous Materials.
SECTION 3.13 INFORMATION. None of the Proxy Statement (as defined in
Section 5.1(b)) or any other document filed or to be filed by or on behalf of
the Company with the SEC or any other governmental entity in connection with the
transactions contemplated hereby contained when filed or will, at the respective
times filed with the SEC or other governmental entity and, in addition, in the
case of the Proxy Statement, if any, at the date it or any amendment or
supplement thereto is mailed to shareholders and at the time of the meeting of
shareholders of the Company to vote on the Merger, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements made therein, in light of
the circumstances under which they were made, not misleading; provided that the
foregoing shall not apply to information supplied in writing by Merger Sub or
Parent specifically for inclusion or incorporation by reference in any such
document. The Proxy Statement will comply as to form in all material respects
with the provisions of the Exchange Act and the rules and regulations
thereunder. None of the information supplied by the Company specifically for
inclusion or incorporation by reference in any document filed or to be filed by
or on behalf of Merger Sub or Parent with the SEC or any other governmental
entity in connection with the transactions contemplated hereby contains any
untrue statement of a material fact or omits to state any material fact required
to be stated therein or necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading.
SECTION 3.14 MARYLAND TAKEOVER LAW. The Company has taken all action
required to be taken by it in order to exempt this Agreement and the Merger from
the requirements of any "moratorium," "control share," "fair price," or
"affiliate transaction," or other takeover laws and regulations of any State
(collectively, "TAKEOVER STATUTES") including the Maryland Control Share
Acquisition Act, and any takeover provision in any of the Company's governing
documents other than the Maryland Business Combination Act. The affirmative vote
of holders of at least: (i) eighty (80%) of the issued and outstanding shares of
the Company Common Stock and (ii) two-thirds of the issued and outstanding
shares of Company Common Stock not held by Parent or any affiliate or associate
of Parent (as such terms are defined in Section 602 of the Maryland Business
Combination Act of the MGCL) is the only vote of the Company's stockholders
required to approve this Agreement and the Merger (together, the "Company
Stockholder Vote"). The Company's Board of Trustees has taken all action
required to be taken by it in order to exempt Parent, Merger Sub and each of
their respective affiliates from the Aggregate Share Ownership Limit provisions
and transfer restrictions set forth in Article VII of the Company's Declaration
of Trust, as amended.
18
SECTION 3.15 BROKER'S FEES. No broker, investment banker, financial
advisor or other person, other than Rockwood Realty Associates ("ROCKWOOD") (the
fees and expenses of which are described in the engagement letter dated April 1,
2004, between Rockwood and the Company as last amended by that certain extension
letter dated as of July 25, 2005 between Rockwood and the Company, a true and
correct copy of which has been provided to the Parent and such agreement has not
been further amended) and the Financial Advisor (the fees and expenses of which
are described in the engagement letter dated September 29, 2005, between the
Financial Advisor and the Company, a true and correct copy of which has been
provided to the Parent and such agreement has not been amended), is entitled to
any broker's, financial advisor's or similar fees or commissions in connection
with the transactions contemplated hereby based on agreements, arrangements or
understandings made by or on behalf of the Company, its Subsidiary, or their
respective officers, directors, representative or employees.
SECTION 3.16 CONTRACTS. Schedule 3.16 lists, as of the date of this
Agreement, all written or oral contracts, agreements, guarantees, leases and
executory commitments (other than Company Plans, the Office Lease or Space
Leases) (each, a "CONTRACT") to which the Company or its Subsidiary is a party
and that fall within any of the following categories: (a) Contracts not entered
into in the ordinary course of the Company's and its Subsidiary's business
consistent with past practice, (b) joint venture, partnership and similar
agreements, (c) Contracts that are Service Contracts or equipment leases
involving payments by the Company or its subsidiaries of more than $50,000 per
year, (d) Contracts containing covenants purporting by their express terms to
limit the freedom of the Company or its Subsidiary to compete in any line of
business in any geographic area or to hire any individual or group of
individuals, (e) Contracts that, after the Effective Time, would have the effect
of limiting the freedom of Parent or its Subsidiaries (other than the Company
and its Subsidiary) to compete in any line of business in any geographic area or
to hire any individual or group of individuals, (f) Contracts relating to any
outstanding commitment for capital expenditures, (g) Contracts with any with any
present or former stockholder, director, officer, employee, partner or
consultant of the Company or its Subsidiary, (h) indentures, mortgages,
promissory notes, loan agreements, guarantees of borrowed money or providing for
the creation of any charge, security interest, encumbrance or lien upon any of
the assets of the Company or its Subsidiary, (i) Contracts with or for the
benefit of any of the Company's affiliates or immediate family member thereof
(other than the Company's Subsidiary) and (n) Contracts involving payments by
the Company or its Subsidiary of more than $50,000 per year. All such Contracts
and all other Contracts that are material to the business or operations of the
Company or its Subsidiary are valid and binding obligations of the Company or
its Subsidiary, as the case may be, and, to the knowledge of the Company, the
valid and binding obligation of each other party thereto, except such Contracts
that, if not so valid and binding, would not, individually or in the aggregate,
have a Company Material Adverse Effect. Neither the Company or its Subsidiary,
nor, to the knowledge of the Company, any other party thereto, is in violation
of or in default in respect of, nor has there occurred an event or condition,
that with the passage of time or giving of notice (or both), would constitute a
default under or permit the termination of, any such Contract or of any other
Contract that is material to the business or operations of the Company or its
Subsidiary, except such violations or defaults under or terminations that,
individually or in the aggregate, would not have a Company Material Adverse
Effect.
19
SECTION 3.17 INSURANCE. SCHEDULE 3.17 lists all material insurance
policies and binders and programs of self-insurance owned, held or maintained by
the Company and its Subsidiary on the date this Agreement that afford or
afforded, as the case may be, coverage to the Company or its Subsidiary, or the
respective assets or businesses of the Company or its Subsidiary. The Company's
and its Subsidiary's insurance policies are in all material respects in full
force and effect in accordance with their terms, no notice of cancellation has
been received, and there is no existing default or event that, with the giving
of notice or lapse of time or both, would constitute a default thereunder. All
premiums under the Company's and its Subsidiary's insurance policies have been
paid in full to date. The Company and its Subsidiary have not been refused any
insurance, nor has the coverage of the Company or any of its Subsidiary been
limited, by any insurance carrier to which it has applied for insurance or with
which it has carried insurance during the past three years. The Company or its
Subsidiary is a "named insured" or an "insured" under such insurance policies.
Set forth on SCHEDULE 3.17 is the amount of the annual premium currently paid by
the Company for its directors' and officers' liability insurance.
SECTION 3.18 OPINION OF FINANCIAL ADVISOR. The Board of Trustees of the
Company has received, and provided to the Parent, the Fairness Opinion, and such
opinion has not been withdrawn or revoked or otherwise modified in any material
respect.
SECTION 3.19 BOARD RECOMMENDATION. (a) The Board of Trustees of the
Company, at a meeting duly called and held, has, by unanimous vote of those
trustees present (who constituted 100% of the trustees then in office), (i)
determined, that this Agreement and the transactions contemplated by this
Agreement, including the Merger, are advisable and fair to and in the best
interests of the Company Stockholders, (ii) directed that the transaction be
submitted to the Company Stockholders for consideration and (iii) resolved, as
of the date of this Agreement, to recommend that the Company Stockholders
approve this Agreement and the Merger (the "COMPANY BOARD RECOMMENDATION").
(b) The Special Committee, at a meeting duly called and held, has, by
unanimous vote of all of the members of the Special Committee (i) determined,
that this Agreement and the transactions contemplated by this Agreement,
including the Merger, are advisable and fair to and in the best interests of the
Company Stockholders, (ii) directed that the transaction be submitted to the
Company Stockholders for consideration and (iii) resolved, as of the date of
this Agreement, to recommend that the Board of Trustees approve this Agreement
and the Merger.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Each of Parent and Merger Sub hereby represents and warrants to the
Company as follows:
SECTION 4.1 ORGANIZATION. Each of Parent and Merger Sub is a
corporation duly organized, validly existing and in good standing under the laws
of their respective jurisdictions of incorporation or organization, as
applicable, and each of Parent and Merger Sub has all requisite corporate power
and authority to own, lease and operate their respective properties and
20
to carry on their respective businesses as now being conducted. Each of Parent
and Merger Sub is duly qualified or licensed and in good standing to do business
in each jurisdiction in which the property owned, leased or operated by it or
the nature of the business conducted by it makes such qualification necessary,
except in such jurisdictions where the failure to be so duly qualified or
licensed and in good standing would not, individually or in the aggregate,
reasonably be expected to have a Parent Material Adverse Effect. Parent owns all
of the outstanding capital stock or other equity interests of Merger Sub.
SECTION 4.2 CAPITALIZATION. As of the date hereof, the authorized
capital stock of the Parent was an aggregate of 461,600,000 shares, consisting
of 300,000,000 shares of Parent Common Stock; 153,000,000 shares of Excess Stock
of the Parent, par value $0.01 per share; 3,600,000 shares of Preferred Stock;
345,000 shares of 7 3/4% Class A Cumulative Redeemable Preferred Stock, $1.00
par value per share ("CLASS A PREFERRED STOCK"); 230,000 shares of 8 1/2% Class
B Cumulative Redeemable Preferred Stock, $1.00 par value per share ("CLASS B
PREFERRED STOCK"); 460,000 shares of 8 3/8% Class C Cumulative Redeemable
Preferred Stock, $1.00 par value per share ("CLASS C PREFERRED STOCK"); 700,000
shares of 7 1/2% Class D Cumulative Convertible Preferred Stock, $1.00 par value
per share ("CLASS D PREFERRED STOCK"); 65,000 shares of Floating-Rate Class E
Cumulative Redeemable Preferred Stock; $1.00 par value per share ("CLASS E
PREFERRED STOCK"); 700,000 shares of 6.65% Class F Cumulative Redeemable
Preferred Stock, $1.00 par value per share ("CLASS F PREFERRED STOCK"); 345,000
shares of Class A Excess Preferred Stock, $1.00 par value per share ("CLASS A
EXCESS PREFERRED STOCK"); 230,000 shares of Class B Excess Preferred Stock,
$1.00 par value per share ("CLASS B EXCESS PREFERRED STOCK"); 460,000 shares of
Class C Excess Preferred Stock, $1.00 par value per share ("CLASS C EXCESS
PREFERRED STOCK"); 700,000 shares of Class D Excess Preferred Stock, $1.00 par
value per share ("CLASS D EXCESS PREFERRED STOCK"); 65,000 shares of Class E
Excess Preferred Stock, $1.00 par value per share ("CLASS E EXCESS PREFERRED
STOCK"); and 700,000 shares of Class F Excess Preferred Stock, $1.00 par value
per share ("CLASS F EXCESS PREFERRED STOCK"). As of September 30, 2005, the
outstanding shares of stock of the Parent were as follows: 227,252,825 shares of
Common Stock; no shares of Excess Stock; no shares of Preferred Stock; no shares
of Class A Preferred Stock; no shares of Class A Excess Preferred Stock; no
shares of Class B Preferred Stock; no shares of Class B Excess Preferred Stock;
no shares of Class C Preferred Stock; no shares of Class C Excess Preferred
Stock; no shares of Class D Preferred Stock; no shares of Class D Excess
Preferred Stock; no shares of Class E Preferred Stock; no shares of Class E
Excess Preferred Stock; 700,000 shares of Class F Preferred Stock and no shares
of Class F Excess Preferred Stock. In addition, as of the same date,
approximately 20,944,231 shares of Common Stock have been reserved for issuance
under the Parent's 1998 Equity Participation Plan (the "PARENT EQUITY
PARTICIPATION PLAN") and the Parent's Stock Option Plan (the "PARENT OPTION
PLAN"). Except for the options to purchase shares of Parent Common Stock under
the Parent Equity Participation Plan and Parent Option Plan, which may be
redeemed for shares of Parent Common Stock, and 4,766,160 shares issuable upon
conversion of certain convertible units, there were not as of the date hereof,
any existing options, warrants, calls, subscriptions, or other rights or other
agreements or commitments obligating Parent, Merger Sub or any of their
respective Subsidiaries to issue, transfer or sell any shares of capital stock
or other equity interests of Parent, Merger Sub or any of their respective
Subsidiaries or any other securities convertible into or evidencing the right to
subscribe for any such shares or other equity interests. All issued and
outstanding shares of Parent Common Stock are duly authorized and
21
validly issued, fully paid, non-assessable (other than general partnership
interests in Subsidiaries that are partnerships) and free of preemptive rights
with respect thereto.
SECTION 4.3 AUTHORITY. (a) Merger Sub has full corporate power and
authority to execute and deliver this Agreement and, subject to the approval of
its shareholders, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized and
approved by the Board of Directors of Merger Sub and no other corporate
proceedings are necessary to authorize this Agreement or the consummation of the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Merger Sub and, assuming this Agreement constitutes a
legal, valid and binding agreement of the Company, it constitutes a legal, valid
and binding agreement of Merger Sub, enforceable against it in accordance with
its terms, subject to applicable bankruptcy, in-solvency, moratorium or other
similar laws relating to creditors' rights or general principles of equity.
(b) Parent has full corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized and
approved by the Board of Directors of Parent no other corporate proceedings are
necessary to authorize this Agreement or the consummation of the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Parent and, assuming this Agreement constitutes a legal, valid and
binding agreement of the Company, it constitutes a legal, valid and binding
agreement of Parent, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, in-solvency, moratorium or other similar laws
relating to creditors' rights or general principles of equity.
SECTION 4.4 NO VIOLATIONS; CONSENTS AND APPROVALS. (a) None of the
execution and delivery of this Agreement, the consummation of the transactions
contemplated hereby or compliance by Parent or Merger Sub with any of the
provisions hereof will (i) conflict with or violate any provision of such
party's charter or by-laws, (ii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default, or
give rise to any right of modification, termination, cancellation or
acceleration, or result in the loss of any benefit to which Parent or Merger Sub
is entitled or any increase in any of Parent's or Merger Sub's payment or
performance obligations, any of the terms, conditions or provisions of any
Contract, arrangement, understanding, order, arbitration award, license,
franchise, permit judgment, decree, note, bond, mortgage, indenture or other
instrument which Parent or Merger Sub is a party, or by which Parent or Merger
Sub or any of their respective properties is bound or result in the creation or
imposition of any Lien on asset of the Company or its Subsidiary, or (iii)
violate any statute, rule, regulation, order or decree of any public body or
authority by which Parent or Merger Sub or any of their respective properties is
bound, excluding from the foregoing clauses (ii) or (iii) violations, breaches,
defaults or rights which, either individually or in the aggregate, would not
reasonably be expected to have a Parent Material Adverse Effect or for which
Parent or Merger Sub has received or, prior to the Closing Date, shall have
received appropriate consents or waivers.
(b) No filing or registration with, notification to, or authorization,
consent or approval of, any governmental entity is required in connection with
the execution and delivery of
22
this Agreement by Parent or Merger Sub, or the consummation by Parent or Merger
Sub of the transactions contemplated hereby, except (i) expiration of the
waiting period under the HSR Act, if a filing under the HSR Act is required,
(ii) in connection, or in compliance, with the provisions of the Exchange Act,
(iii) the filing of articles of merger with the Department, (iv) such filings
and consents as may be required under any environmental law pertaining to any
notification, disclosure or required approval triggered by the Merger or the
transactions contemplated hereby, (v) filings with, and approval of, the NYSE
with respect to the listing of the Parent Common Stock to be issued in
connection with the Merger, (vi) such consents, approvals, orders,
authorizations, notifications, registrations, declarations and filings as may be
required under the corporation, takeover or blue sky laws of various states and
(vii) such other consents, approvals, orders, authorizations, notifications,
registrations, declarations and filings the failure of which to be obtained or
made would not, individually or in the aggregate, reasonably be expected to have
a Parent Material Adverse Effect.
SECTION 4.5 SEC DOCUMENTS; FINANCIAL STATEMENTS. (a) Parent has timely
filed with the SEC and has made available to the Company copies of each form,
statement, registration statement, report, proxy statement, information
statement, schedule or other document filed with the SEC by Parent since its
December 31, 1999 under the Securities Act or the Exchange Act (such documents,
as supplemented and amended since the time of filing, the "PARENT SEC
DOCUMENTS"). As of their date filed (and, in the case of registration statements
and proxy statements, on the dates of effectiveness and the dates of mailing,
respectively, and in the case of any Company SEC Document amended or superseded
by a filing prior to the date of this Agreement, then on the date of such
amending or superseding filing), the Parent SEC Documents, including any
financial statements or schedules included therein, complied in all material
respects with the applicable requirements of the Securities Act and the Exchange
Act, as the case may be, and none of such SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(b) As of the dates filed (and, in the case of registration statements
and proxy statements, on the dates of effectiveness and the dates of mailing,
respectively, and, in the case of any Company SEC Document amended or superseded
by a filing prior to the date of this Agreement, then on the date of such
amending or superseding filing), the consolidated financial statements included
in the Parent SEC Documents complied as to form in all material respects with
then applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto, were prepared in accordance with GAAP applied
on a consistent basis during the periods involved (except as may be indicated
therein or in the notes thereto or, in the case of unaudited statements, as
permitted by Form 10-Q of the Commission) and fairly presented Parent's
consolidated financial position and that of its consolidated Subsidiaries as at
the dates thereof and the consolidated results of their operations and
statements of cash flows for the periods then ended.
SECTION 4.6 LITIGATION. Except as disclosed in the Parent SEC
Documents, there is no Action pending or, to the knowledge of Parent or Merger
Sub, threatened against Parent, any of its Subsidiaries or any of their
respective properties or assets before any governmental entity which,
individually or in the aggregate, would reasonably be expected to have a Parent
Material Adverse Effect. Except as disclosed in the Parent SEC Documents, none
of the Parent
23
or any of its Subsidiaries is subject to any outstanding order, writ, injunction
or decree which, would, individually or in the aggregate, reasonably be expected
to have a Parent Material Adverse Effect.
SECTION 4.7 TAXES. Parent (i) has elected to be taxed as a REIT within
the meaning of the Code and has qualified as, and complied with all applicable
laws, rules and regulations, including the Code, relating to, a REIT, for all
taxable years commencing with its taxable year ending December 31, 1992, (ii)
has operated, and intends to continue to operate, in such a manner as to qualify
as a REIT for each taxable year ending after the Closing Date, and (iii) has not
taken or omitted to take any action which would reasonably be expected to result
in, and Parent has no actual knowledge of, a revocation of its status as a REIT.
Parent represents that each of its Subsidiaries of which all the outstanding
capital stock is owned solely by Parent is a Qualified REIT Subsidiary as
defined in Section 856(i) of the Code or a taxable REIT subsidiary as defined in
Section 856(l)(1) of the Code.
SECTION 4.8 PROXY STATEMENT; FORM S-4 REGISTRATION STATEMENT; OTHER
INFORMATION. None of the information with respect to Parent or its Subsidiaries
supplied by Parent or Merger Sub in writing specifically for inclusion in the
Proxy Statement or any amendments thereof or supplements thereto and at the time
of the meeting of the shareholders of the Company to vote on the Merger or in
the Form S-4 Registration Statement (as defined in Section 5.1 hereof) will, in
the case of the Proxy Statement or any amendments thereof or supplements
thereto, at the time of the mailing of the Proxy Statement or any amendments or
supplements thereto, or, in the case of the Form S-4 Registration Statement, at
the time it becomes effective, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading, except that no representation is made by Parent
with respect to information related to the Company or any affiliate of the
Company included in the Proxy Statement or the Form S-4 Registration Statement,
as the case may be. The Proxy Statement and the Form S-4 Registration Statement
will each comply as to form in all material respects with the provisions of the
Exchange Act and the Securities Act, respectively, and the rules and regulations
promulgated under each such statute.
SECTION 4.9 BROKER'S FEES. None of Parent, any of its Subsidiaries or
any of their respective directors or officers has incurred any liability for any
broker's fees, commissions, or financial advisory or finder's fees in connection
with any of the transactions contemplated hereby, and none of Parent, any of its
Subsidiaries or any of its directors or officers has employed any broker, finder
or financial advisor in connection with any of the transactions contemplated
hereby.
SECTION 4.10 AUTHORIZATION FOR PARENT COMMON STOCK. Parent has taken
all necessary action to permit it to issue the number of shares of Parent Common
Stock required to be issued by it pursuant to this Agreement. Shares of Parent
Common Stock issued pursuant to this Agreement will, when issued, be validly
issued, fully paid and nonassessable and no Person will have any preemptive
right of subscription or purchase in respect thereof. Shares of Parent Common
Stock will, when issued, be registered under the Securities Act and the Exchange
Act and registered or exempt from registration under any applicable state
securities laws and will, when issued, be listed on the NYSE, subject to
official notice of issuance.
24
ARTICLE 5
COVENANTS OF THE PARTIES
SECTION 5.1 TAKING OF NECESSARY ACTION. (a) Each party hereto agrees to
use its reasonable best efforts promptly to take or cause to be taken all action
and promptly to do or cause to be done all things necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated hereby, subject to the terms and conditions hereof,
including (i) all actions and things necessary to cause all conditions precedent
to its obligations set forth in ARTICLE 6 to be satisfied, (ii) preparing and
filing as promptly as practicable all documentation to effect all necessary
applications, notices, petitions, filings, and other documents and to obtain as
promptly as practicable all consents, waivers, licenses, orders, registrations,
approvals, permits, rulings, authorizations and clearances necessary or
advisable to be obtained from any third party and/or any governmental entity in
order to consummate the Merger or any of the other transactions contemplated by
this Agreement (collectively, the "REQUIRED APPROVALS") and (iii) taking all
reasonable steps as may be necessary to obtain all such Required Approvals. In
furtherance and not in limitation of the foregoing, each of the Company, Parent
and Merger Sub agrees that if required they shall to the extent necessary (i)
make, as promptly as practicable, (A) if required, an appropriate filing of a
Notification and Report Form pursuant to the HSR Act with respect to the
transactions contemplated hereby and (B) all other necessary filings with other
governmental entities relating to the Merger and the other transactions
contemplated by this Agreement, and, to supply as promptly as practicable any
additional information or documentation that may be requested pursuant to such
laws or by such governmental entities or third parties and to use reasonable
best efforts to cause the expiration or termination of the applicable waiting
periods under the HSR Act and the receipt of Required Approvals under such other
laws or from such governmental entities as soon as practicable and (ii) not to
extend any waiting period under the HSR Act into any agreement with the FTC or
the DOJ not to consummate the transactions contemplated by this Agreement,
except with the prior written consent of the other parties hereto (which consent
shall not be unreasonably withheld or delayed). Each of the Company, Parent and
Merger Sub shall, in connection with the efforts referenced in this Section 5.1
to obtain all Required Approvals, use its reasonable commercial efforts to (i)
cooperate in all respects with each other in connection with any filing or
submission and in connection with any investigation or other inquiry, including
any proceeding initiated by a private party, (ii) subject to applicable law,
permit the other party to review in advance any proposed written communication
between it and any governmental entity or any third party with respect to
obtaining the Required Approvals, (iii) promptly inform each other of (and, at
the other party's reasonable request, supply to such other party) any
communication (or other correspondence or memoranda) received by such party
from, or given by such party to, the DOJ, the FTC or any other governmental
entity and of any material communication received or given in connection with
any proceeding by a private party, in each case regarding any of the
transactions contemplated hereby, and (iv) consult with each other in advance to
the extent practicable of any meeting or conference with the DOJ, the FTC or any
other governmental entity or, in connection with any proceeding by a private
party, with any other person, and to the extent permitted by the DOJ, the FTC or
such other applicable governmental entity or other person, give the other party
the opportunity to attend and participate in such meetings and conferences.
25
(b) As promptly as practicable after the date hereof, the Company shall
prepare and file with the SEC a preliminary proxy statement by which the
shareholders of the Company will be asked to approve the Merger (together with
all amendments and supplements thereto, the "PROXY STATEMENT"). The Company
shall use its reasonable best efforts to respond to any comments or other
communication of the SEC, and to cause the Proxy Statement to be mailed to the
shareholders of the Company at the earliest practicable time. The Company will
notify the Merger Sub and Parent (together, the " ACQUIRING ENTITIES") promptly
of the receipt of any comments or other communication from the SEC or its staff
and of any request by the SEC or its staff or any other government officials for
amendments or supplements to the Proxy Statement or for additional information
and will supply the Acquiring Entities with copies of all written correspondence
and advise the Acquiring Entities of all oral communication between it or any of
its representatives, on the one hand, and the SEC, or its staff or any other
government officials, on the other hand, with respect to the Proxy Statement, in
the case of correspondence to or communications with the SEC, sufficiently in
advance of such correspondence or communication to provide the Acquiring
Entities with the reasonable opportunity to review and comment on such
correspondence and communication. The Proxy Statement shall comply in all
material respects with all applicable requirements of law. Whenever any event
occurs which is required to be set forth in an amendment or supplement to the
Proxy Statement, the Company or Acquiring Entities, as the case may be, shall
promptly inform the other party of such occurrence and cooperate in filing with
the SEC or its staff or any other government officials, and/or mailing to
shareholders of the Company such amendment or supplement in each case as
reasonably in advance of such filing to provide the Acquiring Entities with the
reasonable opportunity to review and comment on such filing. Subject to the
provisions of clause (c) below and Section 5.4 hereof, the Proxy Statement shall
include the Company Board Recommendation.
(c) The Company shall duly take all lawful action to call, give notice
of, convene and hold a meeting of its shareholders (the "COMPANY STOCKHOLDER
MEETING") to be held as promptly as practicable for the purpose of obtaining the
Company Stockholder Approval and, subject to Section 5.4, shall take all lawful
action to solicit the Company Stockholder Approval. The Board of Trustees of the
Company shall not (i) withdraw, modify or qualify (or propose to withdraw,
modify or qualify) in any manner adverse to the Parent or Merger Sub the Company
Board Recommendation or (ii) take any action or make any statement in connection
with the Company Stockholders Meeting inconsistent with such recommendation
(each of (i) and (ii) collectively, a "CHANGE IN THE COMPANY BOARD
RECOMMENDATION"); PROVIDED, HOWEVER, that the Board of Trustees of the Company
may make a Change in the Company Board Recommendation pursuant to Section 5.4
hereof. Notwithstanding any Change in the Company Board Recommendation, this
Agreement shall be submitted to the stockholders of the Company at the Company
Stockholder Meeting for the purpose of considering this Agreement and the Merger
and, prior to the termination of this Agreement in accordance with Section 7.1,
nothing contained herein shall be deemed to relieve the Company of such
obligation.
(d) Parent shall vote, or cause to be voted, all of the Shares then
owned by it, Merger Sub or any of its other Subsidiaries in favor of the
approval and adoption of the Merger and this Agreement at the Company
Stockholder Meeting.
(e) The Acquiring Entities shall, as promptly as practicable following
the date of this Agreement, prepare and file with SEC a registration statement
on Form S-4 (the "FORM S-4
26
REGISTRATION STATEMENT"), containing the Proxy Statement and prospectus, in
connection with the registration under the Securities Act of Parent Common Stock
issuable upon conversion of the Company Common Stock pursuant to the Merger. The
Acquiring Entities shall, and shall cause their accountants and attorneys to,
use their reasonable best efforts to have or cause the Form S-4 Registration
Statement declared effective as promptly as practicable, including, causing
their accountants to deliver necessary or required instruments such as opinions
and certificates, and will take any other action reasonably required or
necessary to be taken under federal or state securities laws or otherwise in
connection with the registration process. The Company shall promptly furnish the
Acquiring Entities with all information concerning it as may be required for
inclusion in the Form S-4 Registration Statement. The Company shall cooperate
with the Acquiring Entities in the preparation of the Registration Statement in
a timely fashion and shall use reasonable best efforts to assist the Acquiring
Entities in having the Registration Statement declared effective by the SEC as
promptly as practicable. If, at any time prior to the Effective Time, the
Company shall obtain knowledge of any information pertaining to the Company that
would require any amendment or supplement to the Form S-4 Registration
Statement, the Company shall so advise the Acquiring Entities and shall promptly
furnish the Acquiring Entities with all information as shall be required for
such amendment or supplement, and shall promptly amend or supplement the Form
S-4 Registration Statement.
(f) The Acquiring Entities shall use their reasonable best efforts to
obtain, prior to the effective date of the Form S-4 Registration Statement, all
necessary state securities laws or "blue sky" permits and approvals required to
carry out the transactions contemplated by this Agreement and the Merger, and
will pay all expenses incident thereto.
(g) In furtherance and not in limitation of the foregoing, the
Acquiring Entities shall use their reasonable best efforts to resolve such
objections, if any, as may be asserted with respect to the transactions
contemplated by this Agreement under any anti-trust, competition or trade
regulatory laws, rules or regulations of any governmental entity; provided,
however, that nothing contained herein shall require the Acquiring Entities to
sell, hold separate or otherwise dispose of or agree to conduct their business
in a specified manner or agree to permit the sale, holding separate or other
disposition of, any assets of the Acquiring Entities, the Company or their
respective Subsidiaries.
SECTION 5.2 PUBLIC ANNOUNCEMENTS; CONFIDENTIALITY.
(a) The Company and the Acquiring Entities will cooperate with each
other before making any public statements or issuing any press releases with
respect to this Agreement and any of the transactions contemplated hereby and
shall not make any such public statements or issue any such press releases prior
to such consultation, subject to each party's disclosure obligations imposed by
law and any stock exchange or similar rules.
(b) Each of the Company and the Acquiring Entities agrees that all
information provided to it or any of its representatives pursuant to this
Agreement shall be kept confidential, and each of the Company and the Acquiring
Entities shall not (x) disclose such information to any persons other than the
directors, officers, employees, financial advisors, legal advisors, accountants,
consultants and affiliates of the Company or the Acquiring Entities, as
applicable, who reasonably need to have access to the confidential information
and who are advised of the
27
confidential nature of such information or (y) use such information in a manner
which would be detrimental to the Company; PROVIDED, HOWEVER, the foregoing
obligation of each of the Company and the Acquiring Entities shall not (i)
relate to any information that (1) is or becomes generally available other than
as a result of unauthorized disclosure by the Company or the Acquiring Entities,
as applicable, or by persons to whom the Company or the Acquiring Entities, as
applicable, has made such information available, (2) is or becomes available to
the Company or the Acquiring Entities, as applicable, on a non-confidential
basis from a third party that is not, to the knowledge of the Company or the
Acquiring Entities, as applicable, bound by any other confidentiality agreement
with the other party hereto, or (ii) prohibit disclosure of any information if
required by law, rule, regulation, court order or other legal or governmental
process.
SECTION 5.3 CONDUCT OF THE BUSINESS OF THE COMPANY. Prior to the
Effective Time, except as contemplated by this Agreement and except for the
matters set forth in SCHEDULE 5.3 or unless Merger Sub shall otherwise have
previously agreed in writing, the Company shall, and shall cause its Subsidiary
to, cause the Property to be operated and maintained in a professional manner
and to carry on their respective businesses in the usual, regular and ordinary
course in accordance in all material respects with past practice and in
accordance with all applicable laws, and shall, and shall cause its Subsidiary
to, use reasonable best efforts to preserve intact the Company's status as a
REIT within the meaning of the Code, to preserve intact their present business
organizations and properties, and keep available the services of their employees
and preserve their relationships with customers, suppliers, tenants and others
having business dealings with them. Without limiting the generality of the
foregoing, and except as contemplated by this Agreement, including Section 2.5,
and except for the matters set forth in SCHEDULE 5.3, prior to the Effective
Time unless Parent shall otherwise have previously agreed in writing, the
Company shall not and shall not permit its Subsidiary to:
(i) (w) declare, set aside, or pay any dividends on, or make any
other distributions in respect of, any of its capital stock, other than
(1) dividends and distributions by the Company's Subsidiary to the
Company, (2) the Special Dividend and (3) if the Closing occurs after
December 23, 2005, the 2005 Dividend, (x) split, combine or reclassify any
of its capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock, (y) purchase, redeem or otherwise acquire, any shares of
capital stock of the Company or its Subsidiary or any other equity
securities thereof or any rights, warrants, or options to acquire any such
shares or other securities or (z) create any subsidiaries;
(ii) issue, deliver, sell, pledge or otherwise encumber any
shares of its capital stock, any other voting securities of the Company
or any securities convertible into, or any rights, warrants or options to
acquire, any such shares or voting securities;
(iii) amend its declaration of trust, by-laws or other comparable
organizational documents;
(iv) acquire or agree to acquire (x) by merging or consolidating
with, or by purchasing a substantial portion of the assets of, or by any
other manner, any business or any corporation, partnership, joint venture,
association or other business organization
28
or division thereof, or (y) any assets other than in the ordinary course
of business, consistent with pastpractice and in accordance with the
budget provided to Parent;
(v) (i) sell, contribute, assign or create any right, title or
interest whatsoever in or to the Property, (ii) cause any Lien,
assessment, obligation, interest, encroachment or liability whatsoever
(other than the Company Permitted Encumbrances) to be placed or remain of
record against the Property, and (iii) knowingly impair or modify in any
material respect the status of title to (or the legal description of) the
Property;
(vi) except for the Telco Stores Lease, (1) enter into any new
(or extend, renew or replace any existing) lease, agreement, service
contract, employment contract, permit or obligation affecting the
Property, (2) change, alter, file for, pursue, accept or obtain any
zoning, land use permit or other development approval or entitlement, (3)
consent to the inclusion of any portion of the Property into any special
district or (4) terminate any Space Lease or Service Contract (other than
upon expiration of such Tenant Lease or Service Contract pursuant to its
terms); PROVIDED, HOWEVER, that the Company may enter into any service or
similar contract without Merger Sub's approval if such contract is entered
into in the ordinary course of the Company business and is terminable
without penalty or premium on not more than 30 days' notice from the owner
of the Property and is disclosed promptly in writing to Merger Sub;
PROVIDED, FURTHER, that with the prior consent of the Parent, the Company
may enter into new leases;
(vii) make or rescind any material election relating to Taxes
(unless the Company reasonably determines that such action is required by
law or necessary to preserve the Company's status as a REIT);
(viii) (A) change in any material respect (except as may be
required by law) any of its methods, principles, or practices of
accounting in effect or (B) settle or compromise any Action, audit or
controversy relating to Taxes, 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
ending December 31, 2002, except as may be required by the SEC, changes in
applicable law or GAAP;
(ix) (x) incur any indebtedness for borrowed money or guarantee
any such indebtedness of another person, issue or sell any debt securities
of the Company or any of its subsidiaries, guarantee any debt securities
of another person (other than indebtedness to, guarantees of, or
issuances or sales to the Company or a wholly-owned Subsidiary of the
Company), or enter into any "keep well" or other agreement to maintain any
financial condition of another person, or (y) make any loans, advances or
capital contributions to, or investments in, any other person, other than
to the Company or any direct or indirect subsidiary of the Company;
(x) enter into or modify in any material respect any employment,
severance, termination or similar agreements or arrangements with, or
grant any bonuses, salary increases, severance or termination pay to, any
officer, director, consultant or
29
employee or otherwise increase the compensation or benefits provided to
any officer, director, consultant or employee;
(xi) accelerate the vesting or payment of the compensation payable
or the benefits provided or to become payable or provided to any of its,
or any of its subsidiaries', current or former directors, officers,
employees or consultants, or otherwise pay any amounts not due such
individual under an existing Company Benefit Plan;
(xii) enter into, adopt or amend in any material respect any
employee benefit plans, programs and other arrangements providing benefits
to any employee or former employee or to any beneficiary or dependent
thereof, and whether covering one individual or more than one individual,
except as shall be required by Applicable Laws;
(xiii) settle any Actions, whether now pending or made or brought
after the date of this Agreement;
(xiv) modify, amend or terminate, or waive, release or assign any
material rights or claims with respect to, any Contract, Service Contract
or Space Lease;
(xv) make any payments in respect of policies of directors' and
officers' liability insurance (premiums or otherwise) other than premiums
paid in respect of its current policies or a renewal thereof to the extent
set forth in SCHEDULE 5.7(B);
(xvi) take any action to exempt or make not subject to any
Takeover Statutes;
(xvii)on the Closing Date, make any payment, issue any checks, or
initiate any transfers;
(xviii) accelerate the receipt of amounts due with respect to
trade accounts receivable or any other accounts receivable, or lengthen
the period for payment of accounts payable;
(xix) take any action that could likely result in a violation or
breach of any agreement, covenant, representation or warranty contained
in this Agreement;
(xx) allow any pending applications for approval or permit in
connection with the Property to be withdrawn or permitted to lapse without
Merger Sub's consent, (and the Company shall promptly notify Merger Sub
of all pending applications); or
(xxi) authorize any of, or commit or agree to take any of, the
foregoing actions.
SECTION 5.4 NO SOLICITATION OF TRANSACTIONS.
(a) Unless and until this Agreement is terminated in accordance with
its terms, neither the Company nor its Subsidiary shall, directly or indirectly,
through any officer, trustee
30
director, agent or otherwise, nor will it authorize or permit any investment
banker, financial advisor, attorney, accountant or other representative acting
on its behalf to (A) initiate, solicit or encourage (including by way of
furnishing non-public information or assistance), or take any other action to
facilitate, any inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, (i) any acquisition in any manner, directly
or indirectly (including through any option, right to acquire or other
beneficial ownership), of 10% or more of any class of equity securities of the
Company, or assets representing a material portion of the assets of the Company
or the Property, other than by Parent or its Subsidiaries, (ii) any merger,
consolidation, sale of assets, share exchange, recapitalization, other business
combination, liquidation, or other action out of the ordinary course of business
of the Company, other than with the Parent or its Subsidiaries, (iii) any public
announcement of a proposal, plan or intention to do any of the foregoing or any
agreement to engage in any of the foregoing (any of the foregoing, a "COMPETING
PROPOSAL"), (iv) the withdrawal by the Company's Board of Trustees of its
Company Board Recommendation or (B) enter into, participate or maintain or
continue discussions or negotiate with any person or entity in furtherance of
such inquiries or to obtain a Competing Transaction, or (C) agree to or endorse
any Competing Transaction; PROVIDED, THAT, prior to the date of the Company
Stockholders Meeting, the Company's Board of Trustees or the Special Committee
(and the officers, trustees, agents, and financial advisors of the Company
acting at the direction of the Company's Board of Trustees or the Special
Committee) may furnish information to, or enter into discussions or negotiations
with, any person that previously has made an unsolicited bona fide written
Competing Proposal if, and only to the extent that (I) the Company's Board of
Trustees, after consultation with and having considered the advise of
independent outside legal counsel, determines in good faith, that (i) such
Competing Proposal would, if consummated, constitute a Superior Proposal (as
hereinafter defined), and (ii) the failure to engage in such negotiations or
discussions or provide such information would constitute a breach of the duties
of the Board of Trustees of the Company under the Company's declaration of trust
or applicable law, (II) prior to taking such action, the Company (i) provides
reasonable notice to Parent (but in any event no later than 48 hours prior to
taking such action) to the effect that it is taking such action and (ii)
receives from such person an executed confidentiality agreement in reasonably
customary form, and (III) the Company notifies the Acquiring Entities as
promptly as practicable of all of the relevant details relating to all inquiries
and proposals which the Company or its Subsidiary or any such officer, director,
employee, investment banker, financial advisor, attorney, accountant or other
representative may receive relating to any of such matters, and, if such inquiry
or proposal is in writing, the Company shall deliver to the Acquiring Entities a
copy of such inquiry or proposal. In furtherance of and not in limitation of the
preceding, the Company shall provide the Parent with a copy of any Competing
Proposal or amendments or supplements thereto, and promptly inform Parent of the
status of any discussions or negotiations with such a third party, and any
material changes to the terms and conditions of such Competing Proposal, and
shall promptly give Parent a copy of any information delivered to such person
that has not previously been reviewed by Parent. Immediately after the execution
and delivery of this Agreement, the Company will, and will cause its
subsidiaries and affiliates, and their respective officers, directors,
employees, investment bankers, attorneys, accountants and other agents to, cease
and terminate any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any possible Competing Proposal.
Nothing contained in this Section shall prohibit the Company's
31
Board of Trustees from complying with Rule 14e-2 promulgated under the Exchange
Act with regard to a tender or exchange offer.
(b) Except as set forth in this Section 5.4(b), the Company Board of
Trustees will not approve or recommend or permit the Company to enter into any
agreement with respect to any Competing Proposal (other than a confidentiality
agreement as described in Section 5.4(a)) made by any person other than Parent
or Merger Sub or, except as set forth in this Section 5.4(b) or in Section
5.1(c), make a Change in the Company Board Recommendation. Notwithstanding the
foregoing and subject thereto, if the Company Board of Trustees, after having
considered the advice of independent outside legal counsel, determines in good
faith that failing to take such action would constitute a breach of the
obligations of the Company Board of Trustees under the Company's declaration of
trust or applicable law, the Company Board of Trustees may, prior to the date of
the Company Stockholders Meeting, approve or recommend a Competing Proposal (or
amendment or supplement thereto) or cause the Company to enter into an agreement
with respect thereto or make a Change in the Company Board Recommendation, but
in each case only if (i) the Company provides written notice to Parent (a
"NOTICE OF SUPERIOR PROPOSAL"), which notice must be received by Parent at least
five Business Days (exclusive of the day of receipt by Parent of the Notice of
Superior Proposal) prior to the time it intends to cause the Company to enter
into such an agreement, advising Parent in writing that the Company Board of
Trustees has received a Competing Proposal (or amendment or supplement thereto)
which it believes constitutes a Superior Proposal and which it intends to accept
and, with respect to which, enter into a definitive agreement, subject to the
provisions of this Section 5.4(b), providing a copy of any written offer or
proposal describing the Superior Proposal, specifying the material terms and
conditions of such Superior Proposal and identifying the person making such
Superior Proposal, (ii) as of the end of such five Business Day period
referenced above, Parent shall have failed to notify the Company in writing that
it has determined to revise the terms of the Merger to provide that the Merger
Consideration will be equal to or greater than the consideration to be paid to
the Company stockholders pursuant to the Superior Proposal, and (iii) the
Company terminates this Agreement in accordance with the requirements of Section
7.1(h) within 48 hours after the lapse of the five-day period referenced above
and immediately thereafter enters into an agreement with respect to such
Superior Proposal. For purposes of this Agreement, a "SUPERIOR PROPOSAL" means
any bona fide Competing Proposal not directly or indirectly initiated,
solicited, encouraged or facilitated by the Company after the date of this
Agreement in contravention of the provisions hereof which the Company Board of
Trustees or the Special Committee determines in good faith judgment (based on
the advice of the Financial Advisor or another investment banker of nationally
recognized reputation), taking into account all legal, financial, regulatory and
other aspects of the proposal, including the tax consequences of such Competing
Proposal to the Company and its shareholders, and the person making the
proposal, (i) would, if consummated, result in a transaction that is more
favorable to the Company's shareholders (in their capacity as shareholders),
from a financial point of view, than the Merger and (ii) is reasonably capable
of being completed; PROVIDED, HOWEVER, that for purposes of this definition, the
term Competing Proposal shall have the meaning assigned to such term in Section
5.4(a) except that the reference to 10 percent in the definition of "Competing
Proposal" shall be deemed to be a reference to 100 percent.
SECTION 5.5 INFORMATION AND ACCESS. Subject to and without limiting the
Indemnification Agreement, dated as of March 28, 2005 by and between the Company
and
32
Parent (as amended, the "INDEMNIFICATION AGREEMENT"), from the date hereof
until the Closing Date, (i) each party hereto and its respective Subsidiaries
shall afford to the other party and such other party's accountants, counsel and
other representatives full and reasonable access during normal business hours
(and at such other times as the parties may mutually agree) to its properties,
books, contracts, commitments, records and personnel and, during such period,
shall furnish promptly to such other party (1) a copy of each report, schedule
and other document filed or received by it pursuant to the requirements of
applicable laws, and (2) all other information concerning their businesses,
personnel and (with respect to the Company) the Property as such other party may
reasonably request. Such other party and its accountants, counsel and other
representatives shall, in the exercise of the rights described in this Section,
not unduly interfere with the operation of the businesses of the party providing
the access and information.
SECTION 5.6 EMPLOYEE AND OTHER ARRANGEMENTS. From and after the
Effective Time, Parent will cause the Surviving Corporation to honor, in
accordance with their terms, (i) all employment and consulting agreements and
other contracts to which the Company or its Subsidiary are parties set forth on
SCHEDULE 5.6 hereto and (ii) obligations to the Company's employees and former
employees under the continuation coverage requirements of Section 4980B of the
Code ("COBRA"); provided, however, nothing herein shall require the Acquiring
Entities to pay or reimburse the Company's employees or former employees for any
COBRA related costs they are responsible for paying under applicable law.
SECTION 5.7 INDEMNIFICATION. (a) Parent agrees that (i) all rights to
indemnification existing in favor of any trustee, officer, employee, or agent of
the Company and its Subsidiary (the "INDEMNIFIED PARTIES") as provided in their
respective declaration of trust, by-laws or comparable organizational documents
or in indemnification or reimbursement agreements with the Company or its
Subsidiary, or otherwise in effect as of the date hereof, in each case to the
extent provided to Parent prior to the date hereof, shall survive the Merger and
shall continue in full force and effect for a period of not less than six years
and ninety days from the Effective Time; provided that, in the event any claim
or claims are asserted or made within such six-year and ninety day period, all
rights to indemnification in respect of any such claim or claims shall continue
until final disposition of any and all such claims. Parent also agrees to, from
and after the Closing, indemnify all Indemnified Parties to the fullest extent
permitted by applicable law with respect to all acts and omissions arising out
of such individuals' services as officers, trustees, employees or agents of the
Company or its Subsidiary, or as trustees or fiduciaries of any plan for the
benefit of employees or trustees of, or otherwise on behalf of, the Company or
its Subsidiary, including the transactions contemplated by this Agreement;
PROVIDED, HOWEVER, that Parent shall not be liable for any settlement effected
without its written consent (which consent shall not be unreasonably withheld,
conditioned or delayed). Without limiting the generality of the foregoing, in
the event any such Indemnified Party is or becomes involved in any capacity in
any Action in connection with any matter, including the transactions
contemplated by this Agreement, Parent will pay as incurred such Indemnified
Party's reasonable legal fees and expenses (including the fees and expenses of
enforcing this indemnity) of counsel selected by the Indemnified Parties, which
counsel shall be reasonably satisfactory to Parent, promptly after statements
therefor are received and otherwise advance to such Indemnified Party upon
request reimbursement of documented expenses (including the cost of any
investigation and preparation) incurred in connection therewith, to the extent
not prohibited by the MGCL and upon receipt of any affirmation and undertaking
required by the MGCL;
33
PROVIDED, HOWEVER, that Parent shall not be liable for any settlement effected
without its written consent and the Indemnified Parties as a group may retain
only one law firm with respect to each related matter except to the extent there
is, in the opinion of counsel to an Indemnified Party, under applicable
standards of professional conduct, a conflict on any issue between positions of
any two or more Indemnified Parties.
(b) Notwithstanding anything to the contrary in Section 5.3, prior to
the Effective Time, the Company will purchase a "tail policy" providing coverage
substantially similar to the current policies of the directors' and officers'
liability insurance maintained by the Company for a six year period from and
after the Effective Time; provided, that the Company shall not pay more than
300% of the last annual premium paid by the Company prior to the date hereof for
such insurance policy and if the Surviving Corporation is unable to obtain the
insurance required by this Section 5.7, it shall obtain as much comparable
insurance as possible for a premium equal to such maximum amount; provided,
further, to the extent any premiums for such insurance policy have not been paid
prior to the last Business Day before the Closing Date such premiums shall be
considered Company Merger Expenses.
(c) Notwithstanding any other provisions hereof, the obligations of the
Company, the Surviving Corporation and Parent contained in this Section 5.7
shall be binding upon the successors and assigns of Parent and the Surviving
Corporation.
(d) The obligations of the Company, the Surviving Corporation and
Parent under this Section 5.7 shall not be terminated or modified in such a
manner as to adversely affect any Indemnified Party to whom this Section 5.7
applies without the consent of such affected Indemnified Party (it being
expressly agreed that the Indemnified Parties to whom this Section 5.7 applies
shall be third party beneficiaries of this Section 5.7).
SECTION 5.8 REORGANIZATION. From and after the date hereof and until
the Effective Time, none of the Company, Parent, Merger Sub or any of their
respective Subsidiaries or other Affiliates shall (i) knowingly take any action,
or knowingly fail to take any action, that would jeopardize qualification of the
Merger as a reorganization within the meaning of Section 368(a) of the Code; or
(ii) enter into any Contract, commitment or arrangement with respect to the
foregoing. Following the Effective Time, the Surviving Corporation shall use its
best efforts to conduct its business in a manner that would not jeopardize the
characterization of the Merger as a reorganization within the meaning of Section
368(a) of the Code.
SECTION 5.9 LISTING APPLICATION. Parent shall use its reasonable best
efforts to cause the shares of Parent Common Stock which are to be issued in the
Merger to be listed for trading on the NYSE, subject to official notice of
issuance prior to the Closing Date.
SECTION 5.10 TRANSFER TAXES. The Company and the Acquiring Entities
shall cooperate in the preparation, execution and filing of all returns,
questionnaires, applications or other documents regarding any real property
transfer, sales, use, transfer, value-added, stock transfer and stamp taxes, any
transfer, recording, registration and other fees and any similar taxes which
become payable in connection with the transactions contemplated by this
Agreement (together with any related interests, penalties or additions to tax,
"TRANSFER TAXES"). Other than to the extent included in Company Merger Expenses
and deducted from the Merger
34
Consideration, all obligations with respect to Transfer Taxes from and after the
Effective Time, shall be obligations of the Surviving Corporation or Parent as
the case may be, and shall not be deducted or withheld from any amounts payable
to the holders of Company Common Stock.
SECTION 5.11 TAX RETURNS. The Company shall timely prepare and file or
shall cause to be timely prepared and filed all Tax Returns of the Company and
the Subsidiary for any taxable period that ends on or before the Closing Date;
PROVIDED, HOWEVER, that the Company, prior to filing such Tax Returns, shall
provide Parent copies of such proposed Tax Returns at least 30 days prior to the
due date thereof (other than payroll tax returns, which shall be provided as
soon as possible after the filing thereof), such Tax Returns shall be prepared
consistently with this Agreement and past practice and, in the event that the
Parent reasonably objects to any item in such Tax Returns, the Company shall
make (or cause to be made) such revisions to such proposed tax returns as are
reasonably requested by the Parent. In the event that the Company and its
Subsidiary, on the one hand, and Parent, on the other hand, cannot reach an
agreement with respect to such Tax Return prior to the Closing Date and it is
possible to extend the time to file until a date after the Closing Date (taking
multiple extensions into account), the Company shall, and shall cause its
Subsidiary to, not file such Tax Return and instead request an extension of time
within which to file such Tax Return until after the Closing Date, in which
event Parent shall prepare and file, or cause to be prepared and filed, such Tax
Return after the Closing Date.
SECTION 5.12 GUARANTY. Parent hereby agrees to take all actions within
its power to cause Merger Sub to perform its obligations under this Agreement.
SECTION 5.13 AFFILIATES. Not less than 45 days prior to the date of the
Company Stockholder Meeting, the Company shall deliver to the Acquiring Entities
a list identifying all persons who are, at the time this Agreement is submitted
for approval to the shareholders of the Company, "affiliates" of the Company for
purposes of Rule 145 under the Securities Act and applicable SEC rules and
regulations, and such list shall be updated from time to time as may be
reasonably necessary to reflect changes from the date thereof. The Company shall
use reasonable best efforts to cause each Person identified on such list to
deliver to Parent not later than ten days prior to the Effective Time, a written
agreement substantially in the form attached as EXHIBIT A hereto (an "AFFILIATE
AGREEMENT").
SECTION 5.14 ESTOPPELS. On or before the 5th day prior to the Closing
Date, the Company shall deliver to Merger Sub copies of (a) an executed estoppel
certificate from each of the tenants listed on SCHEDULE 5.14 in substantially
the form attached hereto as EXHIBIT B, and (b) executed estoppel certificates
from tenants under other Space Leases (i.e., tenants other than those named in
SCHEDULE 5.14) and that, in the aggregate, lease at least 50% of the gross
leaseable area of the Property that is occupied by tenants other than those
named in SCHEDULE 5.14, each in the form attached hereto as EXHIBIT B (unless a
tenant's Space Lease requires a different form, in which case such form shall be
used for such Space Lease instead) (each, a "TENANT ESTOPPEL"). Each of the
Tenant Estoppels shall be dated effective as of no earlier than the 30th day
prior to the Closing Date. At the Closing, the Company shall deliver to Merger
Sub each executed original Tenant Estoppel.
35
SECTION 5.15 CASUALTY; CONDEMNATION.
(a) Prior to Closing, in the event of any damage to or destruction of
all or part of the Property (notice of which shall be given to Merger Sub by the
Company as soon as practicable following its occurrence), then the Company shall
promptly repair or replace such damage or destruction, except that if the cost
of such repair or replacement exceeds $1,000,000, or the damage would take more
than sixty (60) days to repair or rebuild, then in any such case Parent
shall have the right to terminate this Agreement by giving the Company written
notice of its intention to do so, such notice by Merger Sub to the Company to be
given not later than seven (7) days after Merger Sub shall have received the
notice from the Company of such aforesaid occurrence.
(b) In the event that any governmental authority having jurisdiction of
all or part of the Property notifies the Company or its Subsidiary before the
Closing that some alteration of or addition to the Property is required to be
made by law, rule or regulation (notice of which shall be given to Merger Sub by
the Company as soon as practicable after its receipt) or otherwise requires a
cure of a violation, then the Company shall promptly undertake such alteration
or addition or cure and shall accomplish the same before the date of Closing;
provided, however, that if the cost of such alteration or addition or cure shall
exceed $1,000,000, then in such event Parent shall have the right to terminate
this Agreement by written notice given to the Company within fifteen (15) days
after the Company has given Merger Sub the aforesaid notice.
(c) In the event that any condemnation or eminent domain proceedings
affecting the Property shall be threatened, contemplated, commenced or
consummated prior to the Closing (notice of which shall be given to Merger Sub
by the Company as soon as practicable after receipt by the Company or its
Subsidiary), Parent shall have the right to terminate this Agreement, by written
notice given to the Company within fifteen (15) days after the Company has given
Merger Sub the aforesaid notice.
SECTION 5.16 TITLE INSURANCE POLICY.
(a) Parent has obtained an Owners Title Insurance Commitment (the
"Title Commitment") with respect to the Property prior to the date of this
Agreement from First American Title Insurance Company of New York (the "Title
Insurer"), pursuant to which the Title Insurer has committed to insure
Subsidiary's fee simple title to the Property. Parent has previously delivered a
true and complete copy of the Title Commitment to the Company. The Parent hereby
acknowledges that the Title Commitment does not reveal any Encumbrances,
Property Restrictions or other defects of title that are not Company Permitted
Encumbrances. Parent shall notify the Company in writing of any Encumbrances,
Property Restrictions or other defects of title, which are not Company Permitted
Encumbrances, disclosed in any update or continuation of the Title Commitment
within ten Business Days of Parent's receipt thereof (and provide the Company
within such ten-Business Day period with true and complete copies of any such
Encumbrances, Property Restrictions or other defects of title). After receipt of
Parent's notice of title objections, the Company shall have the right,
exercisable by providing Parent notice within 10 Business Days of Company's
receipt of Parent's notice of title objections, to give notice to Parent of its
election not to cure same (or its inability to do so) (a "Non-Cure Notice") and
in the event that (a) a Non-Cure Notice is delivered, (b) the Company fails to
36
deliver a Non-Cure Notice within the applicable 10-Business Day period or (c)
within 45 Business Days of Parent's delivery of a notice of title objections the
Company has not removed or cured the noticed title objections, Parent shall have
the right, exercisable within 10 Business Day from such event, either (i) to
elect to accept the title to the Property subject to the title objections
specified by Parent (in which event such title objections shall be deemed for
all purposes herein, "Company Permitted Encumbrances") without any reduction or
abatement of the Merger Consideration or (ii) to elect to terminate this
Agreement. Failure of Parent to notify the Company of its election within the
applicable 10-Business Day period shall be deemed to constitute Parent's
election to accept such title objections, which title objections will then be
deemed for all purposes herein as "Company Permitted Encumbrances."
(b) Notwithstanding anything to the contrary set forth in clause (a)
above,
(i) The Company shall not be obligated to pay the cost of any
policy of title insurance and of any survey relating to the Property;
(ii) Unpaid Liens for taxes, water charges and assessments which
Subsidiary is obligated to pay and discharge shall not be deemed an Encumbrance,
Property Restriction or other defect of title which is not a Permitted Company
Encumbrance;
(iii) If, on the Closing Date, there shall be financing statements
which were filed more than five years prior to the Closing Date and which were
not continued, such financing statements shall not be deemed an Encumbrance,
Property Restriction or other defect of title which is not a Permitted Company
Encumbrance, provided that (i) the Title Insurer shall afford Subsidiary
affirmative coverage against any loss or damage (including reasonable attorneys'
fees and expenses of litigation) resulting from the enforcement or attempted
enforcement of the security interest evidenced by such financing statement(s) or
(ii) each such financing statement is omitted as an exception from the title
insurance coverage afforded to Subsidiary by the Title Insurer;
(iv) In the event there are unpaid state franchise Taxes and/or
municipal corporate business Taxes due from any Persons in the chain of title,
which franchise taxes and/or municipal business Taxes are or may be a Lien upon
the Property, such Taxes shall not be deemed an Encumbrance, Property
Restriction or other defect of title which is not a Permitted Company
Encumbrance, provided that either (x) such Taxes reduce the Merger Consideration
pursuant to the terms of this Agreement or (y) the Title Insurer (i) shall
afford Subsidiary affirmative coverage against any loss or damage (including
reasonable attorneys' fees and expenses of litigation) resulting from the
enforcement or attempted enforcement of any such execution or Lien or (ii) shall
otherwise insure Subsidiary against collection of such taxes out of the
Property.
ARTICLE 6
CONDITIONS TO CLOSINGS
SECTION 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligations of each party to effect the Merger shall be subject
to the fulfillment (or to
37
the extent legally permissible, waiver) at or prior to the Effective Time of the
following conditions:
(a) The Company Stockholder Approval shall have been obtained in
the manner required by applicable laws;
(b) Any waiting period applicable to the consummation of the
Merger under the HSR Act, if applicable, shall have expired or been
terminated or the Company and Acquiring Entities shall have mutually
concluded that no filing under the HSR Act is required with respect to the
transactions contemplated hereby;
(c) The consummation of the Merger shall not be restrained,
enjoined or prohibited by any order, judgment, decree, injunction or
ruling of a court of competent jurisdiction or provision of applicable
law;
(d) The Form S-4 Registration Statement shall have become
effective under the Securities Act and shall not be the subject of any
stop order or proceedings seeking a stop order, and any material "blue
sky" and other state securities laws applicable to the registration and
qualification of the shares of Parent Common Stock following the Merger
shall have been complied with.
(e) The shares of Parent Common Stock to be issued in connection
with the Merger (i) shall have been validly registered under the
Securities Act and (ii) shall be listed for trading on the NYSE.
(f) The Company shall have received the opinion of a nationally
recognized law firm selected by the Company, dated the Closing Date, to
the effect that the Merger will be treated for federal income tax purposes
as a reorganization within the meaning of Section 368(a) of the Code.
SECTION 6.2 CONDITIONS TO OBLIGATION OF THE COMPANY TO EFFECT THE
MERGER. The obligation of the Company to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Time of the additional following
conditions, unless waived by the Company:
(a) The Acquiring Entities shall have performed in all material
respects its agreements contained in this Agreement required to be
performed at or prior to the Effective Time and the representations and
warranties of the Acquiring Entities contained in this Agreement shall be
true and correct in all respects (but without regard to any materiality
qualifications or references to Parent Material Adverse Effect contained
in any specific representation or warranty) when made and (except for
representations and warranties made as of a specified date, which need
only be true and correct as of such date) at and as of the Effective
Time as if made at and as of such time, except for inaccuracies that in
the aggregate would not reasonably be expected to, individually or in
the aggregate, constitute a Parent Material Adverse Effect; and the
Company shall have received a certificate of an officer of Parent to
that effect.
SECTION 6.3 CONDITIONS TO OBLIGATIONS OF THE ACQUIRING ENTITIES TO
EFFECT THE MERGER. The obligations of the Acquiring Entities to effect the
Merger shall be subject to the
38
fulfillment at or prior to the Effective Time of the additional following
conditions, unless waived by Merger Sub:
(a) The Company shall have performed in all material respects its
agreements contained in this Agreement required to be performed at or
prior to the Effective Time and the representations and warranties of the
Company contained in this Agreement (other than the representations and
warranties set forth in the first two sentences of Section 3.11(a)),
shall be true and correct in all respects (but without regard to any
materiality qualifications or references to Company Material Adverse
Effect contained in any specific representation or warranty) when made
and (except for representations and warranties made as of a specified
date, which need only be true and correct as of such date) at and as of
the Effective Time as if made at and as of such time, except for
inaccuracies that in the aggregate would not reasonably be expected to,
individually or in the aggregate, constitute a Company Material Adverse
Effect; and Merger Sub shall have received a certificate of the Chief
Executive Officer or Chief Financial Officer of the Company to that
effect.
(b) Since December 31, 2004, there shall not have been any change,
circumstance or event which, individually or in the aggregate, has had or
would reasonably be expected to have a Company Material Adverse Effect.
(c) Merger Sub shall have received the opinion of Wachtell,
Lipton, ▇▇▇▇▇ & ▇▇▇▇, dated the Closing Date, to the effect that the
Merger will be treated for federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code.
(d) The Acquiring Entities shall have received those opinions and
reliance letters, if any, requested by the Acquiring Entities of Proskauer
Rose LLP and/or Wolf, Block, ▇▇▇▇▇▇ and ▇▇▇▇▇-▇▇▇▇▇ LLP in the forms
agreed to by the parties prior to the date hereof and dated as of the
Closing Date, unless otherwise agreed to by the parties.
(e) The Buyer Entities shall have received from the Company
executed Tenant Estoppels contemplated pursuant to clauses (a) and (b) of
the first sentence of Section 5.14 hereof.
(f) The representations and warranties set forth in the first two
sentences of Section 3.11(a) shall be true and correct in all respects.
ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval by the
shareholders of the Company of the Merger and by the shareholders of Merger Sub
of the Merger and the Board of Directors of the Parent of the issuance of the
Parent Common Stock contemplated by the Merger:
(a) by mutual written consent of Parent, Merger Sub and the
Company;
39
(b) by the Company, upon a material breach of this Agreement on
the part of Merger Sub or Parent which is not curable or has not been
cured within 20 Business Days after the giving of written notice to the
Parent of such breach and in either case which would cause any of the
conditions set forth in Section 6.1 or Section 6.2 to be incapable of
being satisfied by June 30, 2006;
(c) by the Parent, upon a material breach of this Merger Agreement
on the part of the Company which is not curable or has not been cured
within 20 Business Days (60 Business Days in the case of a breach of a
representation or warranty set forth in the first two sentences of
Section 3.11(a) hereof) after the giving of written notice to the
Company of such breach and in either case which would cause any of the
conditions set forth in Section 6.1 or Section 6.3 to be incapable of
being satisfied by June 30, 2006;
(d) by either Parent or the Company if any court of competent
jurisdiction shall have issued, enacted, entered, promulgated or enforced
any order, judgment, decree, injunction or ruling which restrains, enjoins
or otherwise prohibits the Merger and such order, judgment, decree,
injunction or ruling shall have become final and nonappealable;
(e) by either Parent or the Company if the Merger shall not have
been consummated on or before June 30, 2006; provided that the right to
terminate this Agreement under this Section 7.1(e) shall not be available
to any party that is in material breach of its representations, warranties
or obligations under this Agreement;
(f) by either Parent or the Company if the meeting of the
shareholders the Company to approve the Merger (as such meeting may be
adjourned from time to time) shall have concluded without the Company
having obtained Company Stockholder Approval;
(g) by Parent if, prior to the Company Stockholder Meeting, (i)
there has been a Change in the Company Board Recommendation or (ii) the
Company Board of Trustees shall have refused to affirm the Company Board
Recommendation within 5 days of any written request from Parent;
(h) by the Company, if (i) the Company Board of Trustees shall
have determined that a Competing Proposal constitutes a Superior Proposal
in accordance with the requirements of Section 5.4, (ii) the Company shall
have delivered to Parent a written notice of the determination by the
Company Board of Trustees to terminate this Agreement pursuant to this
Section 7.1(h) and followed the procedures required by Section 5.4, and
(iii) immediately prior to such termination the Company shall have made
payment of the full amounts required by Section 7.2(b) and 7.2(c) and
immediately after such termination the Company shall have entered into a
definitive acquisition, merger or similar agreement to effect such
Competing Proposal;
(i) by Parent pursuant to Section 5.15 hereunder; and
(j) by Parent pursuant to Section 5.16 hereunder.
40
SECTION 7.2 PROCEDURE AND EFFECT OF TERMINATION.
(a) In the event of termination of this Agreement by either or both of
the Company, on the one hand, and the Acquiring Entities, on the other hand,
pursuant to Section 7.1, written notice thereof shall forthwith be given by the
terminating party to the other party hereto, and this Agreement shall thereupon
terminate and become void and have no effect, and the transactions contemplated
hereby shall be abandoned without further action by the parties hereto, except
that the provisions of Section 5.2 (Public Announcements; Confidentiality),
Section 7.3 (Expenses), Section 8.2 (Governing Law), and Section 8.4 (Notices)
shall survive the termination of this Agreement; PROVIDED, HOWEVER, that such
termination shall not relieve any party hereto of any liability for any breach
of this Agreement.
(b) In the event that (i) this Agreement is (A) terminated by Parent
pursuant to Section 7.1(c), or (B) by the Company or Parent pursuant to Section
7.1(e) or Section 7.1(f), and either (C) a Competing Proposal shall have been
previously publicly proposed or publicly announced or any person has previously
publicly announced an intention (whether or not conditional and whether or not
withdrawn) to make a Competing Proposal, or (D) within 12 months after such
termination, the Company or any of its Subsidiaries enters into any definitive
agreement with respect to, or consummates, any Competing Proposal, or (ii) this
Agreement is terminated by the Company pursuant to Section 7.1(h) or the Parent
pursuant to Section 7.1(g), then the Company shall pay Parent a fee equal to
$2,475,000 (the "TERMINATION FEE") by wire transfer of same day funds to an
account designated by Parent, in the case of a payment as a result of any event
referred to in Section 7.2(b)(i)(A) or (B) and (D), upon the first to occur of
the entering into any definitive agreement or the consummation of any Competing
Proposal and in the case of a payment as a result of any event referred to in
Section 7.2(b)(ii) or Section 7.2(b)(i)(A) or (B) and (C), promptly, but in no
event later than the date of such termination.
(c) The Company shall reimburse Parent and Merger Sub for all their
expenses incurred in connection with this Agreement and the Merger in the event
this Agreement is terminated in the circumstances described in Section 7.2(b),
promptly, but in no event later than the date of such termination; PROVIDED,
HOWEVER, that the aggregate amount of such reimbursement shall not exceed
$412,500 in the aggregate. All payments made pursuant to this Section 7.2(c)
shall be made by wire transfer of the same day funds to an account designated by
Parent.
(d) Notwithstanding any other provisions in this Agreement, any
payments otherwise to be made by the Company to Parent under Sections 7.2(b) and
(c) hereof for any calendar year shall not exceed the sum of (a) the amount that
it is determined should not be gross income of Parent for purposes of the
requirements of Sections 856(c)(2) and (3) of the Code, with such determination
to be set forth in an opinion of outside tax counsel selected by Parent, which
opinion shall be reasonably satisfactory to Parent (which opinion is referred to
as a "NO GROSS INCOME OPINION") plus (b) such additional amount that it is
estimated can be paid to Parent in such taxable year without creating a risk
that the payment would cause Parent to fail to meet the requirements of Sections
856(c)(2) and (3) of the Code, determined as if the payment of such amount did
not constitute income that qualifies as gross income for purposes of Section
856(c)(2) of the Code, which determination shall be made by independent tax
accountants to Parent and (c) in the event Parent receives a letter from tax
counsel (the "ALTERNATIVE TAX
41
LETTER") indicating that Parent has received a ruling from the Internal Revenue
Service holding that Parent's receipt of the additional amount otherwise to be
paid under this Agreement either would constitute income that qualifies as gross
income for purposes of Section 856(c)(2) of the Code ("QUALIFYING INCOME") or
would be excluded from gross income of Parent for purposes of Sections 856(c)(2)
and (3) of the Code (the "REIT REQUIREMENTS"), the aggregate payments otherwise
required to be made under this Agreement (determined without regard to this
Section 7.2(d)) less the amount otherwise previously paid under clauses (a) and
(b) above. The obligation of the Company to pay any unpaid portion of any
payment otherwise required under this Agreement that remains unpaid solely by
reason of this Section 7.2(d) shall terminate three years from the date such
payment otherwise would have been made but for this Section 7.2(d). In the event
that Parent is not able to receive the full payments that otherwise would be due
under this Agreement as and when such payments otherwise would be required to be
made, the Company shall place the unpaid amount in escrow and shall not release
any portion thereof to the Parent unless and until the Company receives any of
the following: (x) a letter from Parent's independent tax accountants indicating
the amount that it is estimated can be paid at that time to Parent without
creating a risk that the payment would cause Parent to fail to meet the REIT
Requirements for the taxable year in which the payment would be made, which
determination shall be made by such independent tax accountants, (y) an
Alternative Tax Letter or (z) an opinion of outside tax counsel selected by
Parent, which opinion shall be reasonably satisfactory to Parent, to the effect
that, based upon a change in law after the date on which payment was first
deferred hereunder, receipt of the additional amount otherwise to be paid under
this Agreement either would be excluded from gross income of Parent for purposes
of the REIT Requirements or would constitute Qualifying Income, in any of which
events the Company shall pay Parent the lesser of the unpaid amounts due under
this Agreement (determined without regard to this Section 7.2(d)) or the maximum
amount stated in the letter referred to in clause (x) above. At the end of the
three-year period referred to above in this Section 7.2(d) with respect to any
amount placed in such escrow, if none of the events referred to in clauses (x),
(y) or (z) of the preceding sentence shall have occurred, such amount shall be
released from such escrow to be used as determined by the Company in its sole
and absolute discretion.
SECTION 7.3 EXPENSES. Except as set forth in Sections 7.2(b) and 7.2(c)
or to the extent included in Company Merger Expenses, whether or not the Merger
is consummated, all legal and other costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such costs and expenses.
ARTICLE 8
MISCELLANEOUS
SECTION 8.1 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each
party hereto and delivered to the other party. Copies of executed counterparts
transmitted by telecopy, telefax or other electronic transmission service shall
be considered original executed counterparts for purposes of this Section,
provided receipt of copies of such counterparts is confirmed.
42
SECTION 8.2 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE
TO THE CHOICE OF LAW PRINCIPLES THEREOF, EXCEPT TO THE EXTENT THE LAWS OF THE
STATE OF MARYLAND ARE MANDATORILY APPLICABLE.
SECTION 8.3 ENTIRE AGREEMENT. This Agreement (including agreements
incorporated herein) and the Schedules, Annexes and Exhibits hereto and the
Indemnification Agreement contain the entire agreement between the parties with
respect to the subject matter hereof and supercedes all prior discussions,
negotiations, arrangements, agreements, and understandings.
SECTION 8.4 NOTICES. All notices and other communications hereunder
shall be sufficiently given for all purposes hereunder if in writing and
delivered personally, sent by documented overnight delivery service or, to the
extent receipt is confirmed, telecopy, telefax or other electronic transmission
service to the appropriate address or number as set forth below. Notices to the
Company shall be addressed to:
Atlantic Realty Trust
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Proskauer Rose LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Esq.
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address and to the attention of such other person as the
Company may designate by written notice to Parent and Merger Sub. Notices to
Parent and/or Merger Sub shall be addressed to:
Kimco Realty Corporation
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
43
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 8.5 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors; provided, however, that this Agreement may not be assigned or
transferred by either of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other party; provided,
however that Merger Sub may assign all of its rights and obligations to any
direct or indirect wholly owned subsidiary of Parent.
SECTION 8.6 HEADINGS. The Section, Article and other headings contained
in this Agreement are inserted for convenience of reference only and will not
affect the meaning or interpretation of this Agreement. All references to
Sections or Articles contained herein mean Sections or Articles of this
Agreement unless otherwise stated.
SECTION 8.7 AMENDMENTS AND WAIVERS.
(a) Except as may otherwise be provided herein, any provision of this
Agreement may be amended, modified or waived by the parties hereto, by action
taken by or authorized by their respective Board of Directors or Board of
Trustees, as applicable, prior to the Effective Time if, and only if, such
amendment or waiver is in writing and signed, in the case of an amendment, by
the Company and the Acquiring Entities or, in the case of a waiver, by the party
against whom the waiver is to be effective; provided that after the adoption of
this Agreement by the shareholders of the Company, no such amendment shall be
made except as allowed under applicable law.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
(c) The waiver by any party hereto of a breach of any term or provision
hereof shall not be construed as a waiver of any subsequent breach.
SECTION 8.8 CERTAIN DEFINITIONS; INTERPRETATION; ABSENCE OF
PRESUMPTION. (a) For the purposes hereof,
(i) "2005 DIVIDEND" shall mean that certain dividend, the record
date for which shall be December 19, 2005, in an amount equal to the
dividend the Company determines is necessary for the Company to declare
and pay in order to qualify as a REIT for its taxable year ended December
31, 2005.
(ii) "BUSINESS DAY" shall mean any day on which banks are not
required or authorized to close in the City of New York, New York.
44
(iii) "COMPANY MATERIAL ADVERSE EFFECT" shall mean any change,
event, circumstance, development or effect, which has had or would
reasonably be expected to have, individually or in the aggregate, a
material adverse effect on the financial condition, assets, liabilities,
properties, results of operations or business of the Company and its
Subsidiary taken as a whole, or on the ability of the Company to
consummate the Merger and the other transactions contemplated hereby;
PROVIDED, HOWEVER, that no change, event, circumstance, development or
effect arising out of or in connection with the execution or announcement
of this Agreement or the transactions contemplated hereby shall be deemed
in itself, or in any combination, to constitute, and none of the following
shall be taken into account in determining whether there has been or will
be a Company Material Adverse Effect.
(iv) "GAAP LIABILITIES" means any Liabilities that would be
required by GAAP to be reflected on a consolidated balance sheet of a
person (including the notes thereto); provided however that for purposes
of this Agreement, the GAAP Liabilities arising under the Tax Agreement
shall equal the difference between (x) $4,700,000 and (y) the amounts paid
under the Tax Agreement between the date hereof and the Closing Date.
(v) "LIABILITIES" means any losses, debts, dues, royalties, costs,
charges, expenses, obligations, liabilities, settlement payments, awards,
liens, judgments, fines, penalties, damages, demands, claims, Actions,
causes of action, assessments, amounts paid in settlement, or deficiencies
(including the expenses of investigation and attorneys' fees and
expenses in connection therewith) including those arising out of any
Action of any nature, whether known or unknown, accrued or unaccrued,
liquidated or unliquidated, absolute, contingent or otherwise and
whether due or to become due, and whether or not resulting from
third-party claims.
(vi) "PARENT MATERIAL ADVERSE EFFECT" shall mean any change,
event, circumstance, development or effect, which has had or would
reasonably be expected to have, individually or in the aggregate, a
material adverse effect on the ability of Parent or Merger Sub to
consummate the Merger and the other transactions contemplated hereby.
(vii) "PERSON" shall mean any individual, corporation,
partnership, limited liability company, joint venture, trust,
unincorporated organization or other form of business or legal entity or
governmental entity.
(viii) "SUBSIDIARIES" shall mean with respect to any person, any
corporation, partnership, limited liability company, joint venture,
business trust or other entity, of which such person, directly or
indirectly, owns or controls at least 50% of the securities or other
interests entitled to vote in the election of directors or others
performing similar functions with respect to such corporation or other
organization, or to otherwise control such corporation, partnership,
limited liability company, joint venture, business trust or other entity;
provided, however, with respect to the Company, "Subsidiaries" and
"Subsidiary" shall mean Atlantic Hylan Corp., a Delaware corporation.
45
(ix) "TAX AGREEMENT" shall mean that certain Tax Agreement dated
as of May 10, 1996 by and between the Company and Ramco-▇▇▇▇▇▇▇▇▇▇
Properties Trust.
(x) "TELCO STORES LEASE" shall mean that Lease Agreement dated
September 26, 2005 between Atlantic Hylan Corp., as Owner, and Telco of
Hylan Plaza, LLC, as Tenant relating to stores 43 and 44 at the Property.
(b) For purposes hereof,
(i) words in the singular shall be held to include the plural and
VICE VERSA and words of one gender shall be held to include the other
gender as the context requires, the terms "hereof", "herein", and
"herewith" and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a whole (including all of the
Schedules, Annexes and Exhibits hereto) and not to any particular
provision of this Agreement, and Article, Section, paragraph, Exhibit,
Annex and Schedule references are to the Articles, Sections, paragraphs,
Exhibits, Annexes and Schedules to this Agreement unless otherwise
specified,
(ii) the word "including" and words of similar import when used in
this Agreement shall mean "including, without limitation," unless the
context otherwise requires or unless otherwise specified,
(iii) the word "or" shall not be exclusive,
(iv) references to the "knowledge of the Company" shall mean the
actual knowledge of the officers (as such term is defined in Rule 3b-2
promulgated under the Exchange Act) of the Company or its Subsidiaries, or
such knowledge that such officers would have had but for the negligence or
bad faith of such officers,
(v) the terms "affiliate(s)" shall have the meaning set forth in
Rule 12b-2 promulgated under the Exchange Act, and
(vi) provisions shall apply, when appropriate, to successive
events and transactions.
(c) This Agreement shall be construed without regard to any
presumption or rule requiring construction or interpretation against the
party drafting or causing any instrument to be drafted.
SECTION 8.9 SEVERABILITY. Any provision hereof which is invalid or
unenforceable shall be ineffective to the extent of such invalidity or
unenforceability, without affecting in any way the remaining provisions hereof.
SECTION 8.10 INDEMNIFICATION AGREEMENT. The Indemnification Agreement
shall remain in full force and effect.
SECTION 8.11 FURTHER ASSURANCES. The Company, Parent and Merger Sub
agree that, from time to time, whether before, at or after any Closing Date,
each of them will execute
46
and deliver such further instruments of conveyance and transfer and take such
other action as may be necessary to carry out the purposes and intents
hereof.
SECTION 8.12 SPECIFIC PERFORMANCE. Parent, Merger Sub and the Company
each acknowledge that, in view of the uniqueness of the parties hereto, the
parties hereto would not have an adequate remedy at law for money damages in the
event that this Agreement were not performed in accordance with its terms, and
therefore agree that the parties hereto shall be entitled to specific
enforcement of the terms hereof in addition to any other remedy to which the
parties hereto may be entitled at law or in equity.
SECTION 8.13 THIRD PARTY BENEFICIARIES. This Agreement is solely for
the benefit of the Company and its successors and permitted assigns, with
respect to the obligations of Merger Sub and/or Parent under this Agreement, and
for the benefit of the Acquiring Entities, and their respective successors and
permitted assigns, with respect to the obligations of the Company under this
Agreement, and this Agreement shall not, except to the extent necessary to
enforce the provisions of Section 5.8 hereof be deemed to confer upon or give to
any other third party any remedy, claim, liability, reimbursement, cause of
action or other right.
SECTION 8.14 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties contained herein and in any certificate or other
writing delivered pursuant hereto shall not survive the Effective Time. All
other representations, warranties and covenants contained herein which by their
terms are to be performed in whole or in part, or which prohibit actions,
subsequent to the Effective Time, shall survive the Merger in accordance with
their terms.
[SIGNATURE PAGE FOLLOWS.]
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IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of
each of the parties hereto as of the day first above written.
KIMCO REALTY CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chairman and Chief Executive
Officer
SI 1339, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Executive Officer
ATLANTIC REALTY TRUST
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Executive Vice President
Chief Financial Officer